Friends Provident Income Investments Bonds

neewbie

Hi

I took £70K equity out of my house and invested it with FP in May 2006. The idea was that this amount would grown and eventually help pay off the mortgage. The first year was great but now the capital is going down and at present there is only £52K left. The funds are distributed with 33% each in Stewardship, Property and Multi Managed Balance 2. Could anyone give me some advice as which funds are performing better or is there any way to protect the capital or should I withdraw whats left before nothing is left.

Any advice is appreciated.

dunstonh

I took £70K equity out of my house and invested it with FP in May 2006.

Interesting decision.

Could anyone give me some advice as which funds are performing better

It doesnt work that way. They have suffered as the underlying investments have fallen. Not because they are poor quality.

is there any way to protect the capital or should I withdraw whats left before nothing is left.

The FP investment bond is a unit linked single premium, whole of life endowment. It offers a cash fund and fixed interest funds, property and equity funds right through the risk range.

To be honest, I think you are too late now. You cannot effect a fund switch at this time of the day and if the US bail out doesnt happen you will almost certainly see at least 10-20% knocked off the stockmarket on Monday. If the bail out does happen you could see 5-10% gains. However, longer term the investment should be placed in line with your risk profile (it may already be) and the fund choice should be structured more than it appears at the moment.

neewbie

Thank you for replying. I contacted FP and they said to switch into their cash fund, what do you think?

dunstonh

neewbie wrote: »

Thank you for replying. I contacted FP and they said to switch into their cash fund, what do you think?

FP wouldnt make any recommendations. They are not authorised to do so. They have just offered their lowest risk fund, a cash fund.

Your problem is timing. If you go into cash now, you are doing so after a 25% market drop. You would be crystallising that lose with little hope of ever recovering it. If you dont move into cash you could see a recovery or it could get worse.

The US bail out is a defining event that is due to be decided on any point from now to over the weekend. That means its to late for you to do anything before then. If it goes through, then things should be better going forward. If it doesnt go through then you will suffer another drop, possibly quite heavy. Watch this space is really all we can do right now.

whiteflag_3

neewbie wrote: »

Hi

I took £70K equity out of my house and invested it with FP in May 2006. The idea was that this amount would grown and eventually help pay off the mortgage. .

Did you make this decision all on your own?

neewbie

I was given the advice in May 2006 by an IFA. We had a mortgage of 140K and the house at that point was valued at 200K. The IFA advised us to mortgage to 200K on an interest basis only and invest the 70K in the income investment bond with FP. The bonds pays an income every month which goes towards the mortgage payment. The idea was that the 70K would grow and pay off the mortgage quicker that the 20 yr mortgage. We were showed proof of past performance and for the first 18 mths it looked great. The IFA is actually very ill at the moment although I have been in contact which him, the advised is to ride out the storm but I am too scared. After speaking to FP and being advised that their cash fund was safer I have to admit that I panicked on Friday after the first reply and moved all the funds into cash. I am allowed one more move this year(for free) so any advice as to which funds I should place the money into would be very much appreciated or should I take it out and put it in the bank before it loses any more.

Already realised that the above is not going to work so when the mortgage comes up for renewal again next year will change back to interest and capital and start again.

Look forward to hearing from you.

dunstonh

I was given the advice in May 2006 by an IFA. We had a mortgage of 140K and the house at that point was valued at 200K. The IFA advised us to mortgage to 200K on an interest basis only and invest the 70K in the income investment bond with FP.

Borrowing to invest is something only experienced investors should do. You dont appear to fit that profile. As much as I hate to say this, I suggest you get a second opinion on the recommendation as it doesnt sound very good with the way you put it.

neewbie

Could you advise how to get in touch with an IFA, the one we used before was a recommendation by friend.

jem16

https://www.unbiased.co.uk is the database for IFAs. You can do a postcode search to find one near you.

neewbie

Hi Jen16, can you recommend anyone as I am quite near to you?

whiteflag_3

neewbie wrote: »

I

was given the advice in May 2006 by an IFA. We had a mortgage of 140K and the house at that point was valued at 200K. The IFA advised us to mortgage to 200K on an interest basis only and invest the 70K in the income investment bond with FP.

Horrendous advice:eek:

Id love to see the suitability letter for this - borrowing to invest, an interesting idea.

The IFA is actually very ill at the moment

I bet he is-severe and constant bout of diaohrea I would suspect!

Newbie, I dont think its another IFA you need , I think you need to make a complaint and quickly . pm me if you need a hand