Friendly Bond has matured

acousticuk

Hi
My 10 year £25 a month friendly bond has matured with a profit of £137.90. I wonder if anyone else has some figures to compare or have I picked a bad society.
Off to buy some lottery tickets.

Speculator

All friendly societies are bad.

Reaper

You are unfortunate that the market plummeted just before maturity. I expect you will have been offered the opportunity to leave it invested, probably with reduced charges. I'd check the details for your particular policy and give the option some thought if you don't need the money for anything right now.

dunstonh

Friendly society plans are obsolete and have been for over 10 years. They still survive for some strange reason.

Stewster

dunstonh wrote: »

Friendly society plans are obsolete and have been for over 10 years. They still survive for some strange reason.

Why are they obsolete ?:question:

dunstonh

Stewster wrote: »

Why are they obsolete ?:question:

1 - High charges
2 - Fixed term requirement
3 - Many still insist on a with profits fund
4 - not as tax free as you would think

Modern contracts tend to be open ended, cheaper and give you almost whole of market fund choice.

The tax free status of these friendly plans is more than wiped out by the higher charges and changes in the tax credits system many years ago.

Stewster

dunstonh wrote: »

1 - High charges
2 - Fixed term requirement
3 - Many still insist on a with profits fund
4 - not as tax free as you would think

Modern contracts tend to be open ended, cheaper and give you almost whole of market fund choice.

The tax free status of these friendly plans is more than wiped out by the higher charges and changes in the tax credits system many years ago.

I disagree. I had a 10 year friendly bond that matured in August of this year with Scottish Friendly and I was very happy with my near £1,000 profit (this on approx £200 annual payment). High charges or not (charges made by SF were lower than other fund managers that I looked at) I would recommend them from personal experience and have another one running as well due to mature in 2018. Do you not think that is a decent return even allowing for what you say are high charges ?

Stewster

acousticuk wrote: »

Hi
My 10 year £25 a month friendly bond has matured with a profit of £137.90. I wonder if anyone else has some figures to compare or have I picked a bad society.
Off to buy some lottery tickets.

Which society did you use acousticuk ?

dunstonh

I disagree. I had a 10 year friendly bond that matured in August of this year with Scottish Friendly and I was very happy with my near £1,000 profit (this on approx £200 annual payment).

Just think how much more it would have been had you used a lower charged contract then.

What bit do you disagree with. The high charges, the fixed term requirement, that many still only use a WP fund or that they are not really that tax free?

Do you not think that is a decent return even allowing for what you say are high charges ?

That would be a return of just 7% p.a. It would have been 8% had you used a cheaper contract.

To be fair, they were only just becoming obsolete in the 90s. However looking at them now going forwards, they are very obsolete.

Stewster

dunstonh wrote: »

Just think how much more it would have been had you used a lower charged contract then.

What bit do you disagree with. The high charges, the fixed term requirement, that many still only use a WP fund or that they are not really that tax free?



That would be a return of just 7% p.a. It would have been 8% had you used a cheaper contract.

To be fair, they were only just becoming obsolete in the 90s. However looking at them now going forwards, they are very obsolete.

I disagree with your whole opinion. The £25 a month you can save under tax regulations is tax-free. There is nothing wrong with having a fixed term requirement as it gives an ideal opportunity to save regularly with the prospect of decent returns - 7% after tax in my book is not to be sniffed at. Yes you can get the posibility of much higher returns but surely they also come with the possibility of much higher losses ? Why though don't you like With Profits Funds ?

Just out of curiousity, in your business as a financial adviser, are you able to offer your clients products from mutual societies ?

acousticuk

It is the Children's Mutual and was Tunbridge Wells Equitable 10 years ago when it was recommended by my financial adviser as a plan for savings for our children. My wife and I took out one each to maximize our tax free allowance. What percentage have we obtained.
I was told recently that these investments should do better than life insurance ones.

Different days now though and I cannot see me ever investing in bonds or insurance again and find that young people today are not making any pension or savings plans which must be hitting the industry very hard.

There has been no mention of a reduced charge for reinvestment as if I would anyway