Axa Investment Plan

joshua_dylan

Hi - I invested £8000 with Axa in August 2006 (50% in high yield distribution and 50% in property), by August 2007 the value of the plan had increased to £8788.57.

I was informed in January 2008 that a temporary deferral period of 6 months had been introduced and by August 2008 the plan was now only worth £7870.61.

I have now been told a further 6 month deferrment has been invoked and am concerned that by the time I am able to access my savings it will be worthless.

Does anyone have any advice of ways to overcome the deferral period?

dunstonh

I have now been told a further 6 month deferrment has been invoked and am concerned that by the time I am able to access my savings it will be worthless.

First thing is that this is not a savings account. It is an investment. You shouldnt use it as savings. It is long term (in excess of 5 years).

An investment of £8000 into an investment bond is a strange choice. Was it advised or did you do it yourself? If advised, there is the potential for mis-sale as an ISA would have been far more tax efficient and the surplus could have gone into unit trust. Also more tax efficient for this spread.

Does anyone have any advice of ways to overcome the deferral period?

Die.

a7man

The deferral period will be for the property fund, as obviously everyone will probably be trying to get out right now so they have to protect those people who will hold money in there. You cant get round it. You should be able to switch your high yield distribution fund though.

Why are there 2 deferrals though?

joshua_dylan

dunstonh wrote: »

An investment of £8000 into an investment bond is a strange choice. Was it advised or did you do it yourself? If advised, there is the potential for mis-sale as an ISA would have been far more tax efficient and the surplus could have gone into unit trust. Also more tax efficient for this spread.

Thanks for the info, it was advised by an IFA, what's the process for a mis-sale?

dunstonh

You should put the complaint in writing (you can do it verbally but if you do it in writing you keep a copy and note the date you posted it) to the IFA.

Investment bonds have their place but they are a minority product in that they are best advice in only around 15-20% of the time. In your case, even without knowing the facts behind the recommendation, it puts me on guard straight away because of the following:

ISAs had a £7000 limit back then. So, the first £7000 should have been put in an ISA. Even if you had done a cash ISA you still had £4000 to use in the stocks and shares ISA. The ISA is the first point of call on any investment.

Once the ISA allowance has been used you then get a much closer difference between unit trusts and investment bonds. However, with just £1000 being left over after the £7000 ISA allowance would mean by default it should be unit trust.

The ISA is tax free. The investment bond (at the time it was recommended to you) would not be able to claim the tax back on the fixed interest portion of the funds. Plus, on the growth side, the investment bond would be taxed at 20% (its actually lower due to indexation etc and often averages closer to 10% but the amount isnt important. The fact it is charged at all is). The ISA would have no tax on it.

The unit trust for the little bit left over would have virtually the same tax treatment on income within the funds as the investment bond but the unit trust wouldnt be taxed on the growth. So again that makes it better.