£150,000 Investment - Investment Bond maybe?

EdInvestor

dunstonh wrote:

Charges on unit linked funds are explicit. They are declared.

Only some of them are, see above. The "Total Expense Ratio" (TER) excludes all the drealing charges mentioned above, which will add an additional 1.3% on average to the already extortionate 1.5% which is normal on most products.

This wipes out as much as half your fund over 25 years.

Tiggs_2

lol....good luck to any pro still slogging away on this thread!

dunstonh

Think this is the situation where the dividend is kept high to the detriment of the company and eventually causes problems.

Yes. LloydsTSB could be a good example of that. It's dividend is around 8% (not checked for some time as I sold my LTSB shares a while back). However, the share price has hardly changed.

So, whilst a portfolio of growth and income all in equities (to maintain like for like comparison) would have returned around 18% in that year, allowing you to take 8% if you felt like it (not a good idea - a better idea is to rebalance the portfolio to counter any future drops in values) and still have 10% increase in value

lol....good luck to any pro still slogging away on this thread!

I think you are right Tiggs. Just as things seem to be getting somewhere and cannon fodder starting to get a grip of things, along comes Ed to try and steal the limelight with useless information again.

EdInvestor

dunstonh wrote:

Yes. LloydsTSB could be a good example of that. It's dividend is around 8% (not checked for some time as I sold my LTSB shares a while back).

So we see.Current yield is 6.1%.

However, the share price has hardly changed.

Basic principle of share investment: when share price goes up, yield goes down.

Share price chart here

Guess what, share price has gone up. :rolleyes:

EdInvestor

Cannon_Fodder wrote:

if instead of IB, I went direct and got 100 Barclays Shares took dividend as income

Thus your spending money comes from the earnings of your capital, not the capital itself.

and occasionally sold a couple of shares to top off my income

The income top-up would be associated with realising your capital gains tax allowance. So the share you bought at 6 quid, is now worth 8 quid.You sell shares to the value of the 2 quid gain, to top up your income.The remaining share value is the same as it was in the first place and you have paid no tax.

, then in time my "units" (shares) disappear anyway

No they haven't , because you are realising the value of the capital gain, not the capital itself.

Within the bond, not only are you withdrawing the capital for income, so the amount invested diminshes as time goes by, but you are also paying tax on the capital gain.You lose both ways

And that's before we even get to the charges.

dunstonh

EdInvestor wrote:

So we see.Current yield is 6.1%.



Basic principle of share investment: when share price goes up, yield goes down.

Share price chart here

Guess what, share price has gone up. :rolleyes:

Has it gone up? I dont think so.

Feb 05 - share price 505. Feb 06 - share price 505. Aug 06- share price 505. Last couple of months have seen an improvement but March 02 - share price 805.

Why not use this chart to get a better idea. http://quote.fool.co.uk/chart.aspx?s=LLOY.L&c=^FTSE,^FTMC&q=l&l=off&t=5y

Now, tell us about LTSB performance against FTSE100 (which has been very weak in that period) and FTSE250 (which has been quite strong).

Within the bond, not only are you withdrawing the capital for income, so the amount invested diminshes as time goes by,

I think this point has been shown to be invalid and inaccurate enough times on this thread so no need to point out again that Ed is wrong.

Cannon_Fodder

Ed - you say the shares don't disappear, its the capital gain...but you also said "sell shares to the value of the 2 quid gain", whatever you call the gain, some shares have been sold, from 100 down to 98, just like the units that I might hold in an IB, UT or whatever. Then if the share price drops, more shares have to sold to maintain the income desired and so on...time to move on, from this bit I think...

SO

I know that we've all been having such fun with this thread, that I thought it would be nice to spice things up a bit more...

http://www.scottishequitableinternational.com/consumer/products/673.htm

is apparently the product I will be discussing, when the time comes.

APOLOGIES for the misinformation.

This, being Offshore, changes a whole host of tax comments made so far, I know.

http://www.scottishequitableinternational.com/adviser/products/671.htm

gives it from the advisor perspective...commission of 6% sounds a lot, I aim to ask if that can be discounted.

From the tax side it sounds better than the other product...

Any fresh thoughts...?

dunstonh

6% initial is comparable with 3% plus 0.5% fund based trail. i.e. the charges to you are the same on both those commission options. That is the maximum but 3% plus 0.5% is the same as the adviser would earn on ISAs and Unit trusts if they were taking the typical maximum as well. So, no worry of commission bias there although you should push for a discount. Tell them you have spoken to another IFA that only takes 1% initial commission (which isnt a lie as you have communicated).

I dont want to get into a commission debate on this thread as Ed will only try and create more muddle in there but do remember that the commission is gross commission and not net earnings. Every business has expenses and financial services companies suffer quite high expenses. Mine were over 70k last year. So, dont expect a couple of hundred quid but 1% on your amount is what you should be aiming for.

whiteflag_3

whiteflag wrote:

Back to the thread -looks like everyone assumes that its Scot Eqs onshore bond thats been recommended. If its the offshore version an awful lot of this thread is not relevant!

Just proves jumping to the wrong conclusion wastes an awful lot of time and energy;)

jem16

Cannon_Fodder wrote:

Whiteflag - never said that I am 40, did I, so I don't think 5 for life will work for me, at the moment...

I'm confused.

Earlier you said this product wouldn't work for you at the moment. Now you are looking at it?