Disappointing Investment Bond

banister

I have an Investment Bond originally with Axa, now Friends Life which seems to be very disappointing. I have had it for 5 years and it has gained 12%. Reading various posts I learn that it was not really an ideal investment for me, a non taxpayer. I was sold it when I tried to open a savings account at a building society. I would have been better off if I had managed to do that.
I wonder if I should sell the Bond or change the funds the money is invested in.
75% is in Active Protector 80 and 25% in Deferred Distribution which has a higher unit selling price.
I understand from the posts that selling would incur a tax charge.

I think an alternative would be to take out a payment every year, but that would only be 5%, so it would take a long time. I am a pensioner.

Cotta

banister wrote: »

I have an Investment Bond originally with Axa, now Friends Life which seems to be very disappointing. I have had it for 5 years and it has gained 12%. Reading various posts I learn that it was not really an ideal investment for me, a non taxpayer. I was sold it when I tried to open a savings account at a building society. I would have been better off if I had managed to do that.
I wonder if I should sell the Bond or change the funds the money is invested in.
75% is in Active Protector 80 and 25% in Deferred Distribution which has a higher unit selling price.
I understand from the posts that selling would incur a tax charge.

I think an alternative would be to take out a payment every year, but that would only be 5%, so it would take a long time. I am a pensioner.

What was your original investment and what have you now?

dunstonh

I have an Investment Bond originally with Axa, now Friends Life which seems to be very disappointing.

AXA's investment bond was quite good. Large enough fund range with all the usual external funds you would expect as well as their internal range. Although the IFA version may well have been better than the tied agent version the building society had.

Reading various posts I learn that it was not really an ideal investment for me, a non taxpayer. I was sold it when I tried to open a savings account at a building society. I would have been better off if I had managed to do that.

On investments, you would expect ISA and unit trust to be ahead in the pecking order. Or ISA and investment bond (differences are small between bond and unit trust. Whilst tax can advantage unit trust, the bond often had lower charges which could offset it)

I wonder if I should sell the Bond or change the funds the money is invested in.

Your issues are with the investment. Not the Bond. So, first look at the funds.

I understand from the posts that selling would incur a tax charge.

only a potential tax charge if it is onshore. If it is an offshore bond then it will create a tax charge. Fund switches incur no charge.

sabretoothtigger

Five years ago Lehmans went bust, nothing to do with you but thats the biggest failure ever. 12% could be alot worse, Im sure it was at some point and recovered.

I agree 12% (or 2.3% APR)is not acceptable at all because of inflation. Fixed savings rate for five years would have taken some foresight, I didnt do that.
I had some shares five years ago and a unit tracker tracking the asia pacific, I dont know thats suitable now from your position but it did realise more then 12% over the years.
Also I scaled in over 12 months not a lump sum (so 12 different prices bought) which I will recommend as a serious positive for people wanting to avoid the worst

banister

Thank you for your comments. Perhaps it is not as bad as I thought. Maybe I should move some of the Active Protector funds into into a more profitable one without the guarantee. But looking at the list of funds is Double Dutch to me.

banister

Thanks for your answer. I had not forgotten the crash but the Bond was sold as the safest thing I could do with the money. I should have remembered the "advisor" was a salesmen. I like the idea of tracker funds and was told they played a large part in the Bond, but I cannot see them.

Forumnewbie

We have a Friends Life Deferred Distribution Fund which we thought we could simply withdraw when needed. However they have now informed us that income tax is payable on every withdrawal over and above the original amount, of which we still have £23,500 in the fund, out of a total of £81,400. This is rather alarming for us.

We need a strategy to withdraw as we are probably going to be buying a property. We haven't used up our ISA allowances for the year yet - deadline approaching - but wonder if any such move will cost us in fees, if only invested for a short time. Also my income tax is nil at present, my husband's is the higher rate 40%.

So could I withdraw up to the personal allowance level and also transfer to an ISA? What are the advantages and disadvantages of this? We have been told we can assign the fund to me, so withdrawals will incur less tax, but is there any more efficient other way?

Since September the value of the bond has increased from £78.4k - an annual increase of 7.65%, although the value is not guaranteed, they tell me.

Dunstonh you say fund switches are free. Is this another strategy? They told us that it only takes 7-10 days to get the money, but if we need to withdraw my tax personal allowance for this tax year we need to get our skates on. They tell us we first have to withdraw the tax-free amount of £23.5k before we can withdraw the profit we have made over the years. Also if the fund is in both our names, the withdrawal will be divided in half for tax purposes. We also have old ISAs like Perpetual and Jupiter we were thinking of cashing in to assist with buying a property.