Halifax Managed Income - how bad?

markw5

My mothers only income is £87 per week widows pension plus the interest she can get on her savings of 70k. As she is 82 the tax age allowance will kick in at £7420 (06/07) so something that is paid tax free (NS&I Pensioner Income Bond for instance) and an ISA for the first £3000 would be best?

Then she would only pay tax on the amount over the £7420 threshold rather than the whole amount if left in a B. Soc account?

I have gone off the Managed Fund completely

EdInvestor

The only reason the banks and advisors are getting away with flogging these unsuitable extortionate bonds is because the markets are in good nick and thus people are not losing money -yet.

Here's another example over here

But the minute there's a downturn, watch out for trouble, because there's little leeway after the charges and the taxes, especially if an income is being taken, before capital starts to dwindle.

They got away with it last time because it was mostly oldies who got taken for a ride via the With-profits version of these bonds and they are usually too shy to complain.

But these days, far more younger people are keeping a closer eye on their parents' investments, and they are far more well informed about the ways the industry has of relieving you of your capital - and how to fight back.

dunstonh

Good that you have gone off the Halifax fund.

. As she is 82 the tax age allowance will kick in at £7420 (06/07) so something that is paid tax free (NS&I Pensioner Income Bond for instance) and an ISA for the first £3000 would be best?

Depends on the savings or investment route.

If she is drawing the income/interest to live on then the capital is going down in real terms. At 82, she may not be too concerned with that but what if she does live to 95?

Investing in a cautious portfolio would include some risk but it can be limited and she could always get capital protection on death. So, even if it doesnt perform as well, if the value is lower on her death, the provider will make up the difference. That is often the main guarantee that many retired people are looking for. A cautious portfolio would be looking to achieve 7-10% a year on average. That wouldnt be guaranteed but is a typical assumption (although you can get some guaranteed options).

There are actually quite a lot of options and variations depending on your mum and what she wants. Sometimes people wont go for the best option but with something they are more comfortable with.

But the minute there's a downturn, watch out for trouble, because there's little leeway after the charges and the taxes, especially if an income is being taken, before capital starts to dwindle.

I'm afraid Ed has a very low knowledge of investments and often repeats this rubbish despite evidence supporting different. Investment bonds can be cheaper and more tax efficient for some. We know that isnt the case for your mum Mark but for the others that may be reading this thread, an investment bond could be the best option and it could be the cheapest option.

And any product whether its investment bond, ISA, unit trust or savings account, if you draw more than it makes, the value will go down. I'm afraid Ed seems to think that it only happens with investment bonds. If your interest on your Cash ISA is £300 and you draw £400, then you are drawing more than its making.

They got away with it last time because it was mostly oldies who got taken for a ride via the With-profits version of these bonds and they are usually too shy to complain.

"They" got away with it because it was often the best product and over the years proved it. Times have moved on though. However, Ed looks back with hindsight and makes these judgements of a period when things were different. Indeed, most providers in the 80s and 90s didnt even offer unit trusts.

But these days, far more younger people are keeping a closer eye on their parents' investments, and they are far more well informed about the ways the industry has of relieving you of your capital - and how to fight back.

There is nothing different there to years ago. All those endowments that used to pay out 3 times more than was needed often resulted in children getting the same or parents telling their children to get the same. We have more information available nowadays. Not all of it accurate and much of it based on media articles going for a sensationalist headline. We also have different products available to today that were not available 20 years ago because legislation has changed. You cannot use the benefit of hindsight to change the past.