10 - 15 year savings plans

patientperson

Where is the Newbie Hom? Is it normal on this site that a Newbie arrives .. makes a request and then nothing is subsequently posted ?

atush

yes, unfortunately. But perhaps they will be back later?

hom

Thank you for all of your replies.

I think the £25 max pcm is for friendly society plans (tessas?).

I gather from what I've read that it's generally accepted endowment plans are poor savings plans.

However, I do recall over 10 years generally receiving roughly a 150% return on payments, and over 15, doubling your money. That was pretty much guaranteed in the 90s.

ISAs, I have two - Virgin (stock/share based) and Barclays. Neither seem to have built up at all since they started, and it seems no different to just putting cash into a tin at home. Guess I'm missing something here.

bowlhead99

hom wrote: »

I gather from what I've read that it's generally accepted endowment plans are poor savings plans.

However, I do recall over 10 years generally receiving roughly a 150% return on payments, and over 15, doubling your money. That was pretty much guaranteed in the 90s.

In January 1990, the bank of england base rate was at 14.875%. It declined thereafter but spent most of the 90s over 6%. It briefly got as low as 5.0% for three months in summer 1999 but was back at 6% by Feb 2000.

So given it was a generally high interest environment you could have made decent % returns (pre inflation) on instant access cash without exit penalties - and if you didn't mind the vagaries of the stock market, from 1990 to 2000 even the most basic FTSE100 tracker would have trebled the capital value and paid healthy dividends year in year out.

The type of plan you're talking about wasn't great but there were also lots of other poor investment plans around and very few people (relatively) were able to research properly because this was before broadband internet was ubiquitous. So they got customers, as people would just sign up to what they read in a magazine or some workplace blurb. Now there is so much free information out there it's almost the opposite problem for a newbie - too much choice, of reasonable products. Endowment savings plans and endowment mortgages have pretty much died out.

But having a very wide choice of what to invest in and whether to pay 0.25% or 0.3% or 0.4% for the management fees and platform fees for your tracker (rather than 1%+ with Virgin and the others who think they can charge what they like due to being a big 'trusted' name) is a nicer problem to have.

ISAs, I have two - Virgin (stock/share based) and Barclays. Neither seem to have built up at all since they started, and it seems no different to just putting cash into a tin at home. Guess I'm missing something here.

Like any investment it depends when you invested, what you get back - returns vary from one period to the next..

As mentioned if the Virgin one you have is their tracker, it is very expensive for what it is and the tracking error is poor (the fund lags behind the market by more than their fees, at least it has over last 5 yrs or so). You could/should shop around and perhaps maybe find a fund that is not just UK equities. If the Barclays one is a cash ISA (you didn't say if that one was S&S) then it has not been a best buy for years, if ever. You'll find some high interest current accounts from various banks pay better.

dunstonh

I think the £25 max pcm is for friendly society plans (tessas?).

I gather from what I've read that it's generally accepted endowment plans are poor savings plans.

TESSAs were something different and no longer exist. Cash ISAs were their replacement. Friendly society savings plans share more in common with endowment policies. The only real difference is that they dont pay corporation tax on the gains.

However, I do recall over 10 years generally receiving roughly a 150% return on payments, and over 15, doubling your money. That was pretty much guaranteed in the 90s.

And had you had a PEP in that period instead and a multi-asset fund of similar risk profile, you would probably have made more still.

ISAs, I have two - Virgin (stock/share based) and Barclays. Neither seem to have built up at all since they started, and it seems no different to just putting cash into a tin at home. Guess I'm missing something here.

Virgin ISAs (and pensions) are awful. Expensive and limited investment options. Barclays is probably better as far an investment style goes but probably damned expensive. However, what you are missing is time period. The 90s didnt really suffer any major negative periods. The last 13 years have seen two major market drops that would be more like 1 in 30 years in occurrence.

atush

hom wrote: »

Thank you for all of your replies.

I think the £25 max pcm is for friendly society plans (tessas?).

I gather from what I've read that it's generally accepted endowment plans are poor savings plans.

However, I do recall over 10 years generally receiving roughly a 150% return on payments, and over 15, doubling your money. That was pretty much guaranteed in the 90s.

ISAs, I have two - Virgin (stock/share based) and Barclays. Neither seem to have built up at all since they started, and it seems no different to just putting cash into a tin at home. Guess I'm missing something here.

Your S&S isas could not be performing well for a few reasons, one you put a LS into something speculative, or into a limited index tracker just before a major market correction. Or you are invested thru somewhere like a bank into investments with high initial and ongoing charges. Esp if you choose to invest thru a bank such as Barclays, or into banking stocks when they are out of favor.

If you want low monthly amts, you can look at investment trust savings plans, where some like Invesco start at 20/m and others start from 25. If you invest monthly, then major market corrections aren't such a problem, as all you money isn't invested on one day/time. And better yet, when prices fall you get more shares/units for your cash each month. Will see you get good returns like the days of old, w/o high charges over 10-15 years/

As for your ISAs, say where they are invested, in what, when you invested. And if you are still paying trail commission.