Long term savings

funkyali

Hi,

I''m 29 and looking at taking out a long-term saving plan. I dont have any experience with this kind of thing and hope someone here could help me or give me some advice.

I received a leaflet in one of my unions newsletters. It was from Scottish Friendly (www.scottishfriendly.co.uk/walletfriendly). I like the idea of paying between £10 and £50 a month for 15 years to get a large cash amount at the end.Especially since I have a 5 year old and another little one on the way. What are these type of savings called? I'm sure other companies offer a similiar thing so I would like to look around and compare before committing myself.

Again any advice greatly appreciated.

opinions4u

Ditch the Scottish Friendly option. Restrictive, high charges and a track record of poor investment performance.

Research stocks and shares ISAs. Tracker funds with low charges (0.5% or less) would be a good starting point.

CLAPTON

opinions4u is being very very polite about scottishfriendly

a member of my family 'invested' in one of these over 10 years and got a return equivalent to less than 2% per annum; so taking inflation into account a substantial loss.

they are total rip off and you would be much much better off in an ordinary savings a/c

jimjames

I'd echo the previous posts to not bother with the Scottish Friendly option.

It all sounds very nice to have a tax-free savings plan until you look at the details.

1) Your first 2 years savings are taken in commission
2) Term is fixed to 10 or 15 years
3) Amount is fixed for the term
4) Return is not great ("large" cash amount is unlikely) but you could get back less if you need access to the money sooner
5) Tax free status is irrelevant unless you are a higher rate taxpayer

With an ISA your money starts working immediately - there is no massive upfront commission. You can change payments or stop as you wish and you have access to your money at any time.

System

Dont bother with Scottish friendly.
for the kinds of money you are talking, a decent cash ISA is the way to go. By decent I mean 3% interest plus.
If you have a lump sum of money, stick this in a fixed ISA as can get higher rates of up to 4.5%.

Stocks and shares ISAs are a good option if you can save more than your cash ISA allowance each year. Good places to start are Hargreaves Lansdowne or Best Invest as using these services avoids most of the initial charges on buying unit trusts. They also give ratings and guides on different types of funds.

atush

Ditch the Friendly idea.

If you don't want to go the ISA route, invest in a good general (or mroe than one) investment trust via their savings plan. From 20 or more a month, depending on the trust group (many start at 50 but there are some lower ones and some start at 100 or more).

Low charges (but you have to pay stamp duty which tends to be just pence) and the magic of pound cost averging means you will have tidy sum in no time.

jimjames

teepee83 wrote: »

Stocks and shares ISAs are a good option if you can save more than your cash ISA allowance each year.

Not sure I agree with this. If you already have sufficient cash savings then why not put the whole amount into S&S ISAs so you can get maximum benefit from them.

If you are looking long term then some form of share based investment would look to be the best bet and ideally one with low charges to make small monthly contributions cost effective.

MissKitty

funkyali wrote: »

Hi,

I''m 29 and looking at taking out a long-term saving plan. I dont have any experience with this kind of thing and hope someone here could help me or give me some advice.

I received a leaflet in one of my unions newsletters. It was from Scottish Friendly (www.scottishfriendly.co.uk/walletfriendly). I like the idea of paying between £10 and £50 a month for 15 years to get a large cash amount at the end.Especially since I have a 5 year old and another little one on the way. What are these type of savings called? I'm sure other companies offer a similiar thing so I would like to look around and compare before committing myself.

Again any advice greatly appreciated.

I have to agree with the other posts, I have a Baby Bond with "The Children's Mutual" that I took out when my daughter was born. I have paid in £25 a month every month for nearly 10 years and it has made nothing. The value at the moment is approx £150 less than what I have paid in.

It is supposed to run for another 6 years but I'm going to cash it in next year and place the money in my daughters Junior ISA which is currently earning 3%.

The charges are high and I wish I hadn't bothered, an ISA is a better savings option.:o

atush

But saving into equities will be better for all incl children if investing for 10 years or more. A JISA is cash is OK for short term, but i'd go with one in equtities for mine.