Scottish Friendly My Choice Investment ISA - Advice Please

luke222010

Hi,

I've been looking at the below product (via £70 quidco cashback) and was wondering whether there are better products out there where I could invest £30 a month over the course of 5 to 10 years.
http://www.scottishfriendly.co.uk/tax-free/my-choice-isa/funds

Risks associated with the product are obviously weighed up against current climate in terms of stocks and share prices, and there is a low to high risk depending on which option I chose, but as I'm not a stocks and shares fountain of knowledge I'm not sure what would be best for me.

Any advice would be appreciated.

Thanks in advance!

dunstonh

What has attracted you to this product and investment (ignoring the gimmick cashback as that is only short term gain and irrelevant in the case of a long term investment plan suited for a 10-15 year timsecale minimum)?

Fund choice is poor and not ideal for an inexperienced investor. Some of the options appear quite expensive too compared to others available.

luke222010

dunstonh wrote: »

What has attracted you to this product and investment (ignoring the gimmick cashback as that is only short term gain and irrelevant in the case of a long term investment plan suited for a 10-15 year timsecale minimum)?

Fund choice is poor and not ideal for an inexperienced investor. Some of the options appear quite expensive too compared to others available.

Obviously its not just the cash back. I have been thinking of long term investment for a while, this appealed as something where I could put £30 p/m into for 12 months, increasing the amounts by 10% each year. It would act as a savings account if you like, but one where I won't be tempted to dip into, with it being a 10 year investment, to guarantee you get what you put in (Unitised With-profits funds option).
To be completely honest I don't know a lot about investment, ISA's or bonds, so could do with pointing in the right direction or some suggestions on what would be worthwhile for a 5 to 10 year investment, matching the criteria above, where i'd be investing £30-£40 a month into something over a number of years.

I'd appreciate any advice!

jimjames

You may be more limited if your maximum is £30 per month as many ISAs start at £50.

You can read some more about ISAs here

http://www.hl.co.uk/investment-services/isa

I use HL as well as other companies for my ISA.

Unless you are a higher rate taxpayer you may not benefit from using an ISA at £30 per month level and may find something like an investment trust savings plan would be more suited to your needs. As with friendly society tax free plans, just being tax free doesn't make it the best option.

bigfreddiel

all i can say is i took out a scottish friendly 10yr bond at £25/month

worst investment ever - i learnt a litte and then when their isa products were mailed to me i read themand chucked them, do yourself a favour, don't bother with them, buy anything, premium bonds, more pension,cash isa, s&s isa - you won't regret it

cheers

fj

luke222010

Thanks for your advice both.

I could extend to £50 per month, and therefore will look at that link provided by jimjames.

Can anyone recommend any other specific products in terms of a cash ISA/investment ISA/savings account?
Premium bonds were mentioned, where would be a good place to start with those? Are you always guaranteed the whole amount you put in, if say, you wanted to come out of it after 5 years?

I am looking for something really I can keep putting money into each month, over the course of at least 5 years. I'd happily extend to 10 years if it was rewarding enough.

Neil_Lovatt

Let me start by declaring my interest in that I work for Scottish Friendly but as ever on MSE I am posting in a personal capacity.

luke222010

The first thing I would point out is that we have designed My Choice specifically to widen the access to stocks & shares ISAs (currently only 14% of the population use them). Hence the £10 per month starting premium. It's all about making it as easy as possible to get into a long term savings and investment habit.

As Jimjames says most ISAs start at £50 per month and if you can go to that level there are a huge range of options for you to consider across the industry.

The charges have been set at 1.5% a year for the fund to keep them simple and in line with the old Child Trust Fund stakeholder charging structure and the £70 cashback you quote does actually make a difference in terms of the total value of the package over a long period of time especially if you are thinking of investing £30 a month.

If you look at the Key Features you'll actually see an example of £30 a month (increasing by 5% a year I think) and that will give you an idea of the effect of charge taken out from the plan.

I have to disagree with JimJames that you may not benefit from using an ISA if you are a basic rate taxpayer. There are a whole host of benefits from using an ISA for a basic rate taxpayer and that is especially the case for the with profits option which has a capital guarantee over 10 years.

That doesn't mean that you shouldn't look at non ISA options but I wouldn't dismiss the concept of an ISA so easily.

Good luck with your research on this.

Neil Lovatt

luke222010

Neil_Lovatt wrote: »

Let me start by declaring my interest in that I work for Scottish Friendly but as ever on MSE I am posting in a personal capacity.

luke222010

The first thing I would point out is that we have designed My Choice specifically to widen the access to stocks & shares ISAs (currently only 14% of the population use them). Hence the £10 per month starting premium. It's all about making it as easy as possible to get into a long term savings and investment habit.

As Jimjames says most ISAs start at £50 per month and if you can go to that level there are a huge range of options for you to consider across the industry.

The charges have been set at 1.5% a year for the fund to keep them simple and in line with the old Child Trust Fund stakeholder charging structure and the £70 cashback you quote does actually make a difference in terms of the total value of the package over a long period of time especially if you are thinking of investing £30 a month.

If you look at the Key Features you'll actually see an example of £30 a month (increasing by 5% a year I think) and that will give you an idea of the effect of charge taken out from the plan.

I have to disagree with JimJames that you may not benefit from using an ISA if you are a basic rate taxpayer. There are a whole host of benefits from using an ISA for a basic rate taxpayer and that is especially the case for the with profits option which has a capital guarantee over 10 years.

That doesn't mean that you shouldn't look at non ISA options but I wouldn't dismiss the concept of an ISA so easily.

Good luck with your research on this.

Neil Lovatt

Thank you Neil.

You see, the capital guarantee with the "Unitised With-profits funds" option is the one product I was interested in, as you are guaranteed what you put in as long as you invest for the whole 10 years.
Ideally, I was looking for some information from anyone else who had invested in something similar, as well as some opinions from others who had invested in Scottish Friendly in particular to see where they stack up against other investment ISA firms - hence the post on this forum.

As I don't know a great deal about ISA's (cash, investment or otherwise), bonds or the savings accounts on offer, I could do with some suggestions from the others on this forum, and therefore i'll appreciate any information that comes my way.

dunstonh

You see, the capital guarantee with the "Unitised With-profits funds" option is the one product I was interested in

Yet it is probably the one that I would be least interested in.

as well as some opinions from others who had invested in Scottish Friendly in particular to see where they stack up against other investment ISA firms

Historically, Friendly Societies focused on niche products and in particular their savings plan which had a special tax status. However, most of those become such poor value that from an adviser point of view, we were warned by research/compliance companies that recommending them would likely be classed as mis-sales now. The With Profits fund in the ISA is the contemporary version of those.

1.5% for index trackers on non-advised basis as well is just greedy. Even Virgin offer theirs at 1% and they are known to be poor value.

Your problem is that you are not going to get many options as £50 is typically the minimum. However, both M&G and Invesco Perpetual will go down as low as £20. Given the choice of M&G, Inv Perp and Scot Friendly, I don't think you would find many here that would go with Scot Friendly.

luke222010

dunstonh wrote: »

Yet it is probably the one that I would be least interested in.



Historically, Friendly Societies focused on niche products and in particular their savings plan which had a special tax status. However, most of those become such poor value that from an adviser point of view, we were warned by research/compliance companies that recommending them would likely be classed as mis-sales now. The With Profits fund in the ISA is the contemporary version of those.

1.5% for index trackers on non-advised basis as well is just greedy. Even Virgin offer theirs at 1% and they are known to be poor value.

Your problem is that you are not going to get many options as £50 is typically the minimum. However, both M&G and Invesco Perpetual will go down as low as £20. Given the choice of M&G, Inv Perp and Scot Friendly, I don't think you would find many here that would go with Scot Friendly.

Thanks again dunstonh.

Are you able to advise, if you were me, where you would see the best value for money, if say, I were to invest £50 per month, increasing the amount invested by 10% each year, over the course of 5 or 10 years?
I could also invest a one off fee to begin with of £500-1000 if this were to help my cause.

Neil_Lovatt

dunstonh
I'd very much disagree that the With Profits fund in the ISA is the contemporary version of a friendly society tax exempt savings plan. They are entirely different animals and saying so would be liking a Stocks & Shares ISA to a unit linked endowment.

The With profits fund within the ISA is effectively a cautious managed portfolio but with a guaranteed underpin over 10 years, but unlike an endowment there is no life cover, no restrictions on premiums and no long term commitment or lock up. Granted it's possible to argue that contemporary means all of those things but that certainly didn't come through from your post.

Fair enough it's the one you would be least interested in but there are lots of people who demand the comfort of a guarantee over 10 years.

Always happy to debate how you allocate and hypothecate charges but I would point out in this context this started with luke222010 looking at the product through a cashback facility. Just as you should look at the total cost of a financial product including the cost of any advice you should also look at charges in the context of any benefits.

A 1.5% total amc charge on a £30 a month payment inclusive of a cashback is not a high charge when looked at the package as a whole.

luke222010 - given the amounts you are thinking of if you are just looking for something that just tracks the market with no guarantees etc. and looking for something low cost with no cashback(!) then the Fidelity MoneyBuider UK fund is popular and I think cheaper than M&G. Just be aware of the risk of a stock market only fund, could get back less than you have invested etc.

https://www.fidelity.co.uk/investor/research-funds/fund-supermarket/factsheet/fund-insight.page?idtype=ISIN&fundid=GB0003875324