Urgent Advice Needed

gwendolyne_2

Can anyone out there help me ?I took out a Britannic Portfolio Investment Bond in the year 2000 I put in 26,597.23 I asked them what it is worth now and they gave me this figure of 26,892.66 surely this cannot be right I have tryed asking questions but they seem that they do not wont to help me or they cannot be bothered Do you think that I should cash them in ?They also said that I will have to pay MVR as it for ten years,:

grumbler

gwendolyne wrote:

...surely this cannot be right

I cannot give you advice, but can explain that this can be right. Look here (choose 'Period' > 10 years, then 'Display') and you will see that 2000 was one of the worst years for investing ...

gwendolyne_2

What would you do ? Should i get the money out now ?I really do not know what to do

dunstonh

gwendolyne wrote:

What would you do ? Should i get the money out now ?I really do not know what to do

Maybe. Maybe not. It depends on the actual charges, actual MVR free withdrawal allowances (most have them), possibility of switching some annually within the bond to another fund. Your attitude to risk, personal circumstances and ongoing goals need to be considered as well.

If you are not in a position to work all this out for yourself, then see an IFA (do not see a tied adviser).

EdInvestor

Hi Gwendolyne

Very unfortunate timing

First you should find out when you can withdraw the money without any penalties - usually on the 5th or tenth anniversary of the bond purchase, sometimes annually.Aim to take the remaining money out then

Second, you can usually take out a percentage of the money tax free every year, often 5% sometimes more. These amounts can often be carried forward so you might be able to get 6x 5% =30% out penalty free right now. If so, suggest you take that out, then keep on taking out 5% a year until the penalty free anniversary arrives or the bond matures and you can get it all out.

While you are talking to them about this, ask them how much of the With profits fund is invested in "equities and property". This will give you an idea of how the bond is going to perform in future.If the answer is 50% or more, that's quite positive.

gwendolyne_2

I am sure he said that it was invested in stocks and shares if that is of any help If I did cash it in would I lose a lot of money ?

barak

gwendolyne wrote:

..... I took out a Britannic Portfolio Investment Bond in the year 2000 .....

As has been said, 2000 was not the best year to invest a lump sum, but your question is a bit like asking someone who was against the Iraq war what to do about it now. I personally wouldn't touch any kind of Investment Bond with a bargepole. This isn't much help, but you certainly need some expert advice now.

Some people are much worse off than you. At about the same time, they invested lump sums in Split Capital Investment Trusts and lost all their money.

dunstonh

I personally wouldn't touch any kind of Investment Bond with a bargepole.

Why? Seeing as an investment bond is just a tax wrapper and can be a very tax efficient wrapper in the right circumstances and has access to exactly the same investment funds you get in ISAs and Unit Trusts and often cheaper, I can't understand why you wouldnt touch it.

Tiggs_2

barak wrote:

I personally wouldn't touch any kind of Investment Bond with a bargepole.

as has been said above.....bit of a lack of understanding here it seems. for the right person a bond may be perfect, i put millions into investment bonds in 2000 and all my clients are quite happy.


back to the OP....you need to get advice, there are far too many varibles to work out what to do yourself.

EdInvestor

Investment bonds tend to apply very high charges.

Check them out here:

https://www.fsa.gov.uk/tables

They are also opaque and have many restrictions.Many people were not told properly about the MVA withdrawal penalties on the With profit version of the bonds.

People often do not realise that the annual "income" they can withdraw actually comes from their capital, which can deplete quite rapidly if the markets start to fall.The bonds do not appear to offer any tax advantages to basic rate taxpayers.

They are extremely popular with advisors because they can earn very high upfront commission ( 7% is normal) from the product, which is often used for large lump sums as a result.

Exercise caution when anyone tries to flog you one of these, especially if you have no experience about investment at all ( like Gwendolyne).:(.

dunstonh

Investment bonds tend to apply very high charges.

Check them out here:

www.fsa.gov.uk/tables

Here we go again.

Ed is measuring the tax wrapper but the highest charge possible. You can buy any investment of any type with high charges if you want. Ed fails to mention that investment bonds can also be cheaper than unit trusts. Ed also fails to mention the examples in those tables assume maximum commission and the FSA publish tables that show the average is 30% lower than that.

They are also opaque and have many restrictions.Many people were not told properly about the MVA withdrawal penalties on the With profit version of the bonds.

You cannot measure the quality of the product by one particular fund available to it. There are no MVRs on 99% of the investment bond funds out there. With Profits funds are available in ISAs as well. I dont see you telling people not to invest in ISAs.

People often do not realise that the annual "income" they can withdraw actually comes from their capital, which can deplete quite rapidly if the markets start to fall.The bonds do not appear to offer any tax advantages to basic rate taxpayers.

What has that got to do with the investment bond? If you have money in the bank and you draw out more than the interest, your balance goes down. If you have a unit trust and you draw out more than it makes, the value will go down. Why do you think that the investment bond should be different to that?

They are extremely popular with advisors because they can earn very high upfront commission ( 7% is normal) from the product, which is often used for large lump sums as a result.

The FSA has done research on this and found no commission bias towards investment bonds. It should be noted that the net effect of the commission on charges is no different to that of unit trusts which pay less up front but pay an annual amount thereafter. If a bond is taken on the same terms as a unit trust (which many are), then there is little or no difference in the commission paid.

Exercise caution when anyone tries to flog you one of these, especially if you have no experience about investment at all ( like Gwendolyne).:(.

Of the millions of pounds I invest every year, I will put around 40% into bonds and find it easy to justify every time I do. Lower charges and tax advantages being the most common reasons when I do.