Please Help! with an Investment Bond

cepheus

richp2k wrote: »

assuming my investments grow by 6%, I will get back £35,000. That's not what I wanted, being £7,000 less than what I invested. It says to get back my initial amount, it would have to grow by 8%. I understand 6% is the average, and in this current climate is 8% a realistic figure to expect my investment to grow? I'm concerned i've been miss-sold this Bond. If it grew at only 4% (a worst case scenario perhaps), then I'd only get back £27,000!

I'm not sure if these rates are before or after all the various charges,

However a sobering thought is that:

1) long term UK stock market total returns (capital + yield) are around 6.3% before inflation and 2.35% after inflation, see
Global Stockmarkets in the 20th Century
these are before any charges and taxes are taken out.

2) few funds beat the market long term, most perform worse.

Linton

cepheus wrote: »

I'm not sure if these rates are before or after all the various charges,

However a sobering thought is that:

1) long term UK stock market total returns (capital + yield) are around 6.3% before inflation and 2.35% after inflation, see
Global Stockmarkets in the 20th Century
these are before any charges and taxes are taken out.

2) few funds beat the market long term, most perform worse.

1) Standard rate tax payers dont pay any taxes on either capital gains or dividends, unless the gains are unusually high and are realised.

2) It depends which sectors you are invested in. If you are talking about straight UK FTSE100 investing your statement may well be true. Other more interesting sectors dont have a market as such (eg special situations, global natural resources, global technology), or are very difficult to invest in directly eg India, or really need specialist knowledge etc etc. A private investor with limited resources wouldnt have a chance.

With these sorts of investments I am quite happy to pay charges of 1-2% when I am getting net returns of 15%+.

cepheus

If you look at figure 1 in the link, it includes other countries (albeit over a period ending more than a decade ago).

Isn't the forward potential priced in? How do you know there isn't a risk of losing 15%+ in these more volatile markets? Do stockmarkets look attractive because of a survivorship basis?

Aren't some underlying dividends received net of some income tax and can't be reclaimed, or are these open ended funds exempt from this rule?

Reaper

If you look at the date in the posts the thread is from 2 years ago so the issue will be academic now. The thread was revived by a new question being asked in post 20.

feesarefare

raschurchill wrote: »

We been advised to invest 100k in to the above fund. looking at the deductions bit it states " putting it anohter way, this would have the same effect as brining the investment growth from 5.35% a year down to 3.1% a year" - is this being greedy ?

thanks in advance for your help

Depends on what you mean by "greedy" . The figures you quote represent the effect of the charges - fund & product charges which are what they are ie set by the provider, in this case Sterling.

The the additional charges on top are for your IFAs remuneration. You can decide whether they are greedy or not. For instance you might think that the maximum commission available on this product of £7000 for a few hours work is good value, others may not.

Update - just ran a quote and managed to replicate the RIY by making commission 7.5%.