Monthly income from £140,000

EdInvestor

Jen, you have calculated that by using an investment bond with very low charges and a free gift of 7,500 upfront, as a higher rate taxpayer you will make a saving on tax and charges of c.162 quid a year over 10 years compared with investing direct.

It's not a lot, is it?

I have not in the past ever claimed that investment bonds were unsuitable for higher rate taxpayers - only for basic rate taxpayers.Frankly I am quite surprised at the miniscule nature of the saving for HRTs and the extremely cheap terms required of the bond to achieve it.

I congratulate you on finding what must be the UK's cheapest bond salesman.

But to really know what we are talking about here, we need to look at the outcome performance wise, because as you and I both know, charges are only half the story.And since I have absolytely no idea what's inside your bond, it's impossible to given even a vague idea on that.

So I suggest we leave it at that.It's been a useful thread to me anyway.

jem16

EdInvestor wrote:

Jen, you have calculated that by using an investment bond with very low charges and a free gift of 7,500 upfront, as a higher rate taxpayer you will make a saving on tax and charges of c.162 quid a year over 10 years compared with investing direct.

It's not a lot, is it?

It's still a saving, no matter how small although that's not the reason for considering it.

I have not in the past ever claimed that investment bonds were unsuitable for higher rate taxpayers - only for basic rate taxpayers.

Yes you did - only a few posts earlier.

It's interesting to find there is no benefit from investment bonds to higher rate taxpayers.

We can ignore this product completely then - it's already deemed the wrong choice for basic rate taxpayers, as it will cost them more than direct investing because of the tax, regardless of the charges.

But to really know what we are talking about here, we need to look at the outcome performance wise, because as you and I both know, charges are only half the story.And since I have absolytely no idea what's inside your bond, it's impossible to given even a vague idea on that.

I absolutely agree here. That's why I would have an IFA looking after it and whose charges are included.

So I suggest we leave it at that.It's been a useful thread to me anyway.

Well I'm glad to hear that. :j

With that in mind I'm looking forward to not seeing you quote the FSA tables for charges on bonds and then comparing the most expensive bond with the discounted HYP or similar every time someone mentions an investment bond - especially if their circumstances show that it would be a useful wrapper.

However I must admit to having doubts

Anyway I'm off to prepare some lessons - back to the real world!

Chrismaths

Just read through what has been posted over the weekend - and I'm sad. I thought Ed has started to take on board some of the points previously raised. But she hasn't, and keeps making factual errors, including but not limited to - ignoring stamp duty at 0.5% on shares; ignoring the effect of govt benefits; confusing the effect of charges with charges themselves; ignoring correcting posts about the actual tax treatment of investment bonds.

I'm impressed with how well jem16 has managed to counter the misinformation and scare stories, which gives me hope that this board won't be overtaken by those who shout loudest, irrespective of their knowledge and expertise.

Well done that punter! :T

jem16

Chrismaths wrote:

I'm impressed with how well jem16 has managed to counter the misinformation and scare stories, which gives me hope that this board won't be overtaken by those who shout loudest, irrespective of their knowledge and expertise.

Well done that punter! :T

Well thank you

However I think I've failed miserably as Ed's still quoting FSA tables as the great guide to charges.

EdInvestor

Of course I am jem. Do you think everyone on MSE has your superior negotiating skills?

People need to know what charges are expensive in order to negotiate a cheap deal.Unless they have some basic figures,they are operating in the dark.

The FSA's site gives that information, that's what it's for.If you think it's wrong,I suggest you contact the regulator.

jem16

EdInvestor wrote:

Of course I am jem. Do you think everyone on MSE has your superior negotiating skills?

First time I've been told I have "superior negotiating skills"! IFAs - look out

People need to know what charges are expensive in order to negotiate a cheap deal.Unless they have some basic figures,they are operating in the dark.

Yes I agree. However it's only half the picture and you never paint the other half.

League tables for schools have had the opposite effect to what they were meant to do. We now have overcrowded schools where pupils get less attention as parents have looked at the tables and sent their child to the "good school". The "good school" has now become the "bad school" as standards and results have dropped.

Charges aren't everything, just like exam results aren't.

EdInvestor

Indeed they aren't.I was just think how appalling it is that we've had this very long thread and haven't considered the investment aspect at all.

But let me just draw your attention to one of today's threads over on the pensions board.

Guy pays in 3000 quid in first year, 1,750 goes out in charges.:(

Bit different from your arrangement, where they pay you, isn't it?

IME most people who come onto MSE are not like you, but like the other poster, and they need help to make sure they aren't pushed around.

That may simply be because people who are happy (like you) don't complain on bulletin boards.We can't know - all we can do is deal with those that take part.

jem16

EdInvestor wrote:

That may simply be because people who are happy (like you) don't complain on bulletin boards.We can't know - all we can do is deal with those that take part.

As long as we give them factual information.

If I had believed everything you have said about investment bonds, I wouldn't have touched them with a bargepole and would have thought my IFA was a "commission hungry shark"

Then I would have been one of those people on bulletin boards who are unhappy.

dunstonh

Guy pays in 3000 quid in first year, 1,750 goes out in charges.:(

Does he? I havent worked out if that is the case yet. Plus we dont know amounts involved. It could be that £1750 is a small amount if it is an initial charge. Jumping in at this stage and saying that is again taking some infomation and using it out of context.

EdInvestor

As I said before, if you think the information published on the website of the Financial Services Authority specifically for the guidance of consumers is not factual, then you would be best to tell the FSA that.

I think most people actually find it quite an interesting indicator that advisors make such a fuss about this information whenever it is mentioned.