15 year tied in savings plan

llh189

I am currently maxing out my ISA allowance, have a company pension ( for at least the moment anyway ) but I have about £50 month that I can easily put away. I would really like something that I can't touch that just grows away in the background and matures in about 15 years.

I have done a little bit of research and have found a Scottish Friendly plan - I have not heard of them as a financial institution but their plan is kind of what I am after. The plan I have looked at is their moneybuilder.

Does anyone deal with them already - recommend them or recommend an alternative type of plan.

Thank you in advance

Lisa

somethingcorporate

How old will you be in 15 years time?

I think putting cash away in this fashion for such a long time is not a great idea, you will probably struggle to keep up with inflation. It may be best invested or added to your pension.

Are you maxing your full ISA or just the cash element?

llh189

I am 37 now, so 52 ideally when it matures!

Just using the cash isa element to be honest not overly sure about the other products to be honest.

To be honest I am in a bit in the camp that I would prefer a cash fund on my retirement that I have control over and not a pension with an annuity especially as I am unmarried and childless, so would prefer to have control over my estate ( such as it will be ) and not to die with me.

Lisa

coastline

£50 a month for 15 years...£9,000 to invest...don't forget you have a Capital Gains Tax allowance..currently over £10,000 and hopefully rising in time..so you could simply invest in a unit trust or something..
Maybe by then all your profits will be free of tax given you'll have at least £20,000 before any further tax outside of an ISA wrapper at the moment..
I'd be investing in a growth fund or even a UK tracker fund..

llh189

Thanks coastline, where might I find such a growth fund or UK tracker fund?

MoneySaverLog

llh189 wrote: »

I have done a little bit of research and have found a Scottish Friendly plan - I have not heard of them as a financial institution but their plan is kind of what I am after. The plan I have looked at is their moneybuilder.
Lisa

Do not bother with Scottish Friendly Plans, you'll end up making something silly like £50 on your total investment over 15 years if you're lucky to even get that. They are a waste of time and these schemes really should be scrapped.

coastline

llh189 wrote: »

Thanks coastline, where might I find such a growth fund or UK tracker fund?

If I'm reading correctly you're not using your full stocks and shares ISA allowance...so your £600 per year could go into this and cover future tax...instead of my original suggestion...
I'm not sure if the original link below is your savings idea as I see its a UK tracker investment....I see Scot Friendly has been given the thumbs down in a previous post..
I'm sure someone will come along with an idea of a growth fund inside a ISA wrapper...

http://www.scottishfriendly.co.uk/tax-free/flexible

xylophone

Maybe open a S&S Isa with Hargreaves Lansdown, choose the £50.00 a month option http://www.hl.co.uk/investment-services/isa/regular-savings-in-an-isa.

You have a wide choice of funds - choose acc units if you are investing for the long term.

You might also consider a regular investment into an Investment Trust through an ISA. Might be cheaper through Alliance?
http://www.thisismoney.co.uk/money/investing/article-1724731/The-best-ways-buy-hold-investment-trusts.html

jimjames

I would avoid tax free savings plans like Scottish Friendly like the plague.

1) You are tied in to a fix payment and fixed term.
2) Charges are exceptionally high and your returns will not be great
3) The tax free designation is a red herring in most cases - unless you are a higher rate taxpayer there is no extra tax to pay anyway

It might be reassuring to know you can't access your money for 15 years but there are far better places to put money than this.
http://www.scottishfriendly.co.uk/uploads/pdf/products/moneybuilder/moneybuilder-key-features.pdf
Edit - Had a quick look at the plan on their website. With any investment the money invested in the early years is very important as it has the most time to grow. A plan like this that loads the charges at the front therefore is very bad value as your first savings are wiped out by charges. In fact 100% of the money you put in for years 1 & 2 is taken in charges.

A S&S ISA would definitely be a better bet with more flexibility for varying payments and starting/stopping contributions as well as lower charges.

baby_boomer

Don't touch FS policies.

High charges, low returns and lack of flexibility.

If you want tax free then the current ISA allowance is £11, 280, without the chains that will tie you to the Scottish FS policy.

These are institutions that the FSA and Treasury are looking to close down in order to simplify their regulatory task. That is why they won't raise the annual savings allowances to a rate at which charges could conceivably be fair.

As a result they have no future. Watch them fold sooner rather than later.

You don't need the external discipline of a lousy 15 year policy to save regularly, you just need self-discipline .

dunstonh

I have done a little bit of research and have found a Scottish Friendly plan - I have not heard of them as a financial institution but their plan is kind of what I am after. The plan I have looked at is their moneybuilder.

Awful plan. Obsolete and poor quality. Should have been killed off nearly 20 years ago.

Although compliance companies are now recommending that this are not recommended by advisers as they could well end up being classed as mis-sales as there is little justification for them nowadays with alternatives offering better value. When the advice channel stops recommending plans, the direct to consumer channel tends to be around 5-10 years behind.