A "friendly society" what are they and are they safe?

madhouse1_2

I've recently come across a few adverts for these im my optometry journals. Small deposit schemes typicaly £25 a month for 10-20 years. I was wondering exactly what they were and is your investment realy safe and is it worth it. Coments apreciated many thanks.

Reaper

Friendly societies have an obscure tax loophole that lets them operate small tax free savings policies.

Although that sounds great in practice high charges mean the returns are likely to disappoint, particularly as you have to pay for a small life assurance component even if you don't want it.

There are better alternatives.

ad44downey

madhouse1 wrote: »

I've recently come across a few adverts for these im my optometry journals. Small deposit schemes typicaly £25 a month for 10-20 years. I was wondering exactly what they were and is your investment realy safe and is it worth it. Coments apreciated many thanks.

High charges and rubbish returns. Avoid.

Paul_Herring

Anything that attempts to bribe you with a £15 M&S voucher, free biro or similar to take up typically isn't really worth having. (Same applies to those abysmal 'over 50's' plans for funeral costs.)

Their 'projections' are typically misleading as well, especially when they compare them with other products.

http://www.friendlysocietysavings.co.uk/ - no mention of which 'building society' nor mention of what interest rate(s) they're using. Whether they're assuming the BS holder is a 0%, 20% or 40% income tax payer (I'd assume 20%, but there's no guarantee they're not using 40%.) The footnotes are also missing.

http://forums.moneysavingexpert.com/showthread.html?p=7926061#post7926061 is also worth a read (post #2)