Customs fund - further tax free allowance

Phil3822

I work for the civil service and in one of our magazines there is an advert by the National Deposit, Custom fund. It says save tax free between £12 and £25 per month. It then says look forward to a tax free sum in 10 years time or more.

The site is here - http://www.nationaldeposit.co.uk/ol/pages/adult_intro.aspx

Just wondering if this is worth doing and any good? ust looking for general advice. Thanks.

ReportInvestor

Looking through the website, it is noticeable that National Deposit is very reticent about charges, just saying these are deducted from the with profits fund.

That's unacceptable to the modern investor / consumer.

So I had to work them out from what they said growth of 7% on £25 pm over ten years would return i.e. £3650.

Unfortunately, on that basis, charges would be a whopping 3.45% pa (admittedly including life assurance) - leaving you with growth of only 3.55%.

On that basis you are likely to be better off saving in a mini-cash ISA or investing via a unit trust regular savings plan, not with profits, if you want stock market growth.

Unfortunately most friendly societies plug the "tax free" bit without making the drawbacks more explicit .

BUT the National Deposit With Profits Fund has performed better than other with profits funds since the concept practically went out of fashion.

And the investment does get you membership of National Deposit FS, so if they demutualised in the next 10 years you would at least be eligible for a windfall .

Phil3822

Ok, thanks for that. I already use my maximum amount via ISA but am looking for a long term savings plan only saving maybe £25 a month. I also want something I cant touch or dip into which is my biggest downfall. I'm 22 so am just looking towards my future and having a sum put away. I realy do know very little about the whole thing though. So all help is great to steer me in the right direction! :beer:

ReportInvestor

Is £25 pm your limit? If you could go up to £50 then I think there might be more stock market type regular saving plans available to you.

Phil3822

Well me and the other half we're looking at 2 accounts of £25 each so combined that would be £50. Even so I could push to £50 if it was worth it. Ifso what do you have in mind?

ReportInvestor

Fidelity offers the cheapest tracker fund going & lots of flexibility for your investment. It starts at £50 pm & tracks the UK FTSE All Share Index.

See here

Foreign & Colonial Investment Trust managers have a low charge regular investment facility also starting at £50 pm

See here

You can choose from lots of funds, but the F&C Investment Trust is a broad based trust that invests both in the UK & internationally & so is a fairly sound base for a starter portfolio.

There will be others at £50. I've just noticed, over the last decade, that the bottom limit seems to have gone up from £25.

Does anyone know decent options that cater for £25 pm?

Phil3822

Thanks for that, I shall try and have a read. As a newbie how easy is this to run? And do you or anyone have any advice. Thanks again!

ReportInvestor

I can't advise on the investments, they are just possibilities open to you assuming that you are prepared to take on stock market risk.

But few would strongly criticise either choice given that your investment sums wouldn't interest a financial adviser & we are struggling to find options available.

AFAIK both schemes are dead easy to manage & you'll get 6 monthly statements showing the state of your investments & detailing the money that has gone in, so you can keep a track of performance.

The F&C fund price appears in the papers & you can follow its perfomance

Here on Trust Net
As you can seen, recent performance has been steadyish but not startling or particularly strong.

The All Share Index will appear in the financial press and Fidelity should be able to keep it within sight (trackers rarely succeed in matching their index).

SeanW

ReportInvestor wrote:

Does anyone know decent options that cater for £25 pm?

Fidelity let you invest in funds @ £20pm per fund, so you could do £25 in the tracker.

http://www.fidelity.co.uk/direct/buy/isa/monthly.html

I am just saying Fidelity let you start at £20pm, I aint recommending the tracker, I dont know enough to recommend these things:rotfl:

ReportInvestor

This Fidelity link says £50 pm minimum for its low charge tracker

Maybe they have raised the limit recently?

SeanW

ReportInvestor wrote:

This Fidelity link says £50 pm minimum for its low charge tracker

Maybe they have raised the limit recently?

Yes Fidelity are contradicting, upto a point, their online system let you buy lump sums of just £20, because of a bug in the system

However, they confirmed to me in an enquiry that £20pm is allowed if you do it online, and I do this with some funds to complete this years ISA.

This is what they sent me:

I also confirm that the minimum investment for a Monthly Savings Plan (MSP) is £50. However, we can accept an online MSP contribution of £20. Please note that you can use the Buy-MSP application form to set-up the MSP for the current tax year. This would not open an ISA for the next financial year.