Friendly Societies - Does it make sense?

StinkyMonkey

Hello,

A leaflet landed in my hands this morning. It was with regard to a Friendly Society. Supposedly, the Government allows a total of £25 to be invested in a Friendly Society per month tax-free. The leaflet referred to the money being invested in a bond for a minimum(?) of 10 years.

It is the first time I hear about Friendly Societies. Is it an investment worth considering (even if its a small amount each month)?

Many thanks,
SM

EdInvestor

StinkyMonkey wrote: »

It is the first time I hear about Friendly Societies. Is it an investment worth considering (even if its a small amount each month)?

No.These investments have high charges and poor returns.

mystic_trev

EdInvestor wrote: »

No.These investments have high charges and poor returns.

Yes - I've got one which will mature in two years time. Waste of money!

opinions4u

High charges, poor fund management and naff returns. Often includes unnecessary life cover.

ffacoffipawb

opinions4u wrote: »

High charges, poor fund management and naff returns. Often includes unnecessary life cover.

I had one that matured in November 1997 and it made a tad over 7% per annum, net of any charges.

Not bad in a stock market that practically went nowhere in that time. Wish my PEP/ISA had done that well.

Took another one out last December. Time will tell how that performs!

opinions4u

ffacoffipawb wrote: »

I had one that matured in November 1997 and it made a tad over 7% per annum, net of any charges.

Not bad in a stock market that practically went nowhere in that time. Wish my PEP/ISA had done that well.

Took another one out last December. Time will tell how that performs!

Glad you've done ok - but 7% isn't great.

The FTSE 100 rose 47% while Blair was PM so with those gains, pocketing some dividends along the way and pro-active fund management (that is, after all, what the charges are allegedly for) you would hope to get more.

Still, not bad, but not great.

fatpig_2

StinkyMonkey wrote: »

. Is it an investment worth considering (even if its a small amount each month)?

Many thanks,
SM

no, the charges are a rip-off.

Frugaldom

I took out a 10 year bond with life assurance through a friendly society (and got decent cashback) after using up ISA allowance, but am using this bond more as a basic funeral plan. If I die suddenly then my kids aren't faced with unexpected expense and if I don't die I'll at least get something back. If it's made me a small profit then I'll be happy. Can't say that about life insurance. However, I agree with the others, there are better ways of investing if it's to make a decent return on your money.

dunstonh

The Friendly Society £25 allowance should have been killed off years ago. If one was cynical, one may think that as most Friendly Societies are Scottish and rely on these plans that having a Scottish Chancellor may have something to do with their continued existence.

Like others have said, they are obsolete and expensive. Especially when you consider that there is no cost of advice liability in there.

Speculator

Should be renamed Unfriendly Society.

Saffron Walden BS staff tried to encourage me to speak to thier "Financial Advisor" about opening a LV plan the other day!

EdInvestor

dunstonh wrote: »

If one was cynical, one may think that as most Friendly Societies are Scottish and rely on these plans that having a Scottish Chancellor may have something to do with their continued existence.

Not sure where this idea comes from . Of the 200-odd friendly societies, only 2 are Scottish.

The Labour Party does of course have a long association with the mutual movement, of which friendlies are a part. Some Labour MPs are sponsored by the Co-op, one of the largest mutuals.

But since the demise of the big mutual lifecos, where Scotland played a prominent role, the mutual movement now has a predominantly English character.