With Profit Bond

missile

I invested £100,000 in a with "profits" bond with Liverpool Victoria four years ago. I took the option to withdraw £5,000 per year. I have received my anual statement current value £101,741.56. This is less than value last year (£105,478.07). The surrender value after deducting 10.13% MVA and 3.00% exit charges is £84,402.23.

Should I cut my losses and surrender now or retain until 2007 when hopefully MVA might be less and there will be no exit charge?

My IFA gave me no help. Any advice greatly appreciated. :money:

ManAtHome

If you withdrew £5k presumably it's gone up by £1700 ish? Didn't they have a guarantee for the first couple of years - may be winding some of it back now.. If you've had £20k out, looks like it's been averaging around 5% tax paid at basic rate (probably more in APR terms), or have I missed something?

dunstonh

Should I cut my losses and surrender now or retain until 2007 when hopefully MVA might be less and there will be no exit charge?

MVRs are reducing quickly at the moment and that MVR could be gone within 12 months.

My IFA gave me no help. Any advice greatly appreciated.

Change your IFA then.

missile

Thanks for your very prompt replies.

My original investment was enhanced in 2002 was enhanced to £109,000 but current value has declined year on year. I have withdrawn £5,000 per annum ie £20,000. So in theory the bond has produced a yield of ~ 5%pa. My concern is the current value may be missleading as the surrender value is only £84K, which equates to a return circa 1.00%pa.

I guess if the MVA reduces to zero in 2007, I will get back circa £100K and that would be my best option? LV have suggested that MVA may be zero in 2007, obviously this depends on their performance and the market in general. It seems most unlikely terminal bonus will be re-instated.

I note your comment about the IFA :rotfl:

ReportInvestor

It is unfortunate that Liv Vic had already withdrawn their 10 year anniversary MVR free redemption by 2000.

I would ask them the composition of the fund in terms of % of equities, property, bonds (they should also detail this in their annual bumpf to investors). If there is a reasonable equity content (and I think LivVic will have been able to keep a decent proportion of shares) then there is a good prospect of the MVR reducing after a decent 2005.

hansi from this site recently went on BBC 2's Working Lunch to have a go at Liverpool Victoria and their MVRs.

It could be that they are just a tad off the pace on lifting these. Give them time, they are a mutual.

missile

The breakdown for investments @ 30th Sptember 2005:
UK Equities 43.5%
Gilts 16.7%
Property 15.5%
Europe equities 15.5%
US Equities 5.1%
Japan equities 4.9%
Pacific equities 3.2%
Cash 3.1%
Venture funds 3.1%

hansi

This is a subject dear to my heart. I recently appeared on BBC's "Working Lunch" programme to highlight this MVR problem. Like you I invested in the Mutual Investment Bond (albeit only 5k) with a first year guarantee of 7.38%. I left it for five years so there was no exit charge but the was an MVR of 15.5% which equated to about £900 which would have wiped out my total gains. So the news that MVR's may disappear in 2007 is music to my ears!

ManAtHome

Don't be too harsh on LV - received my update from Scottish "Equitable" today (WPB) - the top-line value has actually gone DOWN from last year (no withdrawals)!! Fortunately a pretty minimal part of my investments - has been an excellent guide as to where not to bung my pension fund though...

ReportInvestor

missile wrote:

The breakdown for investments @ 30th Sptember 2005:
UK Equities 43.5%
Gilts 16.7%
Property 15.5%
Europe equities 15.5%
US Equities 5.1%
Japan equities 4.9%
Pacific equities 3.2%
Cash 3.1%
Venture funds 3.1%

Very good news . That is highly untypical of WP Bonds.

The future prospects look even brighter than I had expected. With that spread you should probably hang in there until the MVA reduces. The equity content has a good chance of pulling you through in the medium term.

Recent market performance ought to start getting reflected in LivVic statements some time soon, otherwise the FSA will start to get involved to stop confused investors exiting with less than their fair asset share.

I suspect that they are the only WP Bond to have surfed the Pacific 2005 wave.