Friendly Bond has matured

payless

Effectively endowments which are considered old hat - and those I've seen have much higher charges than the much hated standard endowment ( as calculated on reduction in yield)

some of this ( but not much) is balanced out by their favoured status , but they are not totally tax free as dividend

income received from investments in UK company shares, from which
corporation tax at a current rate of 10% is deducted.

dunstonh

The £25 a month you can save under tax regulations is tax-free.

Its tax free at personal level but it has the same taxation as a unit trust unless you are higher rate. You are never going to suffer a CGT liability on that small a contribution. The tax free bit is more of a marketing gimmick for most people.

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

Inflexible, front loaded charges and structured like an old endowment and surrender charges if you cant go the full term vs pay as you go, no front loading of charges and no surrender penalties.

7% after tax in my book is not to be sniffed at.

I guess I am too used to double digit p.a. returns over 10 years.

Yes you can get the posibility of much higher returns but surely they also come with the possibility of much higher losses ?

You can use funds of lower, equal or higher risk.

Why though don't you like With Profits Funds ?

Most companies no longer have the financial strength to run a with profits fund as intended and bonus rates have dropped accordingly. Also, unlike unit linked funds, your money isnt ringfenced away from the provider so you are relying on the solvency of the provider. The only two mainstream with profits funds that are worth considering nowadays are Norwich Union and Pru.

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

Yes. And I can offer them cheaper than buying direct as well. The whole point of being independent is that you are whole of market. IFAs also have to analyse products as well.

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.

Thats a bit daft isnt it? You chose a product that was going out of date and had just one fund. Despite the 2000 odd unit trust funds out there, you are never going to invest again because one fund during a particularly poor period didnt do well?

Any young person not making retirement plans is in for a rude awakening when they find out the basic state pension is just £4700 a year and even if they get pension credits, that only takes them up to nearly £7000. If thats all they want to live on then good luck to them.

acousticuk

Just worked out I got less than 1% return is this going to affect future predictions for this product. The figures are
Guaranteed Minimum amount £2609.00 has this been reduced as market.
Total of Yearly bonuses added £324.48
final bonus £204.42

Stewster

dunstonh wrote: »

Its tax free at personal level but it has the same taxation as a unit trust unless you are higher rate. You are never going to suffer a CGT liability on that small a contribution. The tax free bit is more of a
marketing gimmick for most people.

I am a high rate taxpayer. Also I thought that the government gave you an allowance to invest with a mutual and wasn't aware that it was some sort of marketing gimmick ?


Inflexible, front loaded charges and structured like an old endowment and surrender charges if you cant go the full term vs pay as you go, no front loading of charges and no surrender penalties.

If you have no intention of cashing the policy in until maturity and have plenty of spare cash around (as I do) then what's the problem ?

I guess I am too used to double digit p.a. returns over 10 years.

Those sort of returns we wont see again for a long time.

You can use funds of lower, equal or higher risk.



Most companies no longer have the financial strength to run a with profits fund as intended and bonus rates have dropped accordingly. Also, unlike unit linked funds, your money isnt ringfenced away from the provider so you are relying on the solvency of the provider. The only two mainstream with profits funds that are worth considering nowadays are Norwich Union and Pru.

Surely then that shows the financial strength of a mutual society ?

Yes. And I can offer them cheaper than buying direct as well. The whole point of being independent is that you are whole of market. IFAs also have to analyse products as well.

Fair enough, that is nice for your clients and if I had access to the services of a financial adviser then they might be able to get products cheaper for me. In any rate, we are not talking big sums of money in any case - why not use both a mutual and one of the big names. Nothing wrong with that. I might take a look at the big name ones again now you have commented on them.

acousticuk

I was advised by one of your colleagues to take out this dying bond 10 years ago. I do not have one fund I have a portfolio of investments from bonds to properties.

I think the old age pension might out perform a pension plan in the future and most people will be able to rely on inheritance as well as we are a generation of property owners and low performing investments.

dunstonh

I was just reading a compliance update and it said the following:

FRIENDLY SOCIETY PLANS: Although Friendly Society plans have been popular historically, they are now expensive compared to other products on the market. The impact of charges on these plans can be significant, with returns after 10 years being affected accordingly.

When compared to Child Trust Funds, Unit Trusts or even deposit accounts, Friendly Society plans are a more expensive option and are therefore unlikely to be suitable for the vast majority of clients.

These plans include an element of life cover, which has an impact on cost, and may not be needed by your client.

---
So, you can see its not just me saying this. The compliance companies that supply data and information to IFAs say something similar.

napoleon

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.

Charges, charges and then even more charges make these plans absolute pants

pfpf

i have one of these policies (Scottish Friendly) maturing next year, infact both me and my OH have one.

after 10 years of paying in £50.00pm between us i am not expecting much more than our outlay.

however what i would say is that 10 years ago we were not savvy or even interested in savings, this has only come over the last 2-3 years. so even though the return will not be anything to shout about, it will be 6k cash that we wouldnt have had as we would not have been putting that £50.00pm anywhere else.

for people like me (there must be lots of us) we will have 6k that we would have otherwise spent on nothing.

i am glad i will have 6k this time next year which hopefully will take us close to being MF (who knows, maybe even get us there).