Regular Savings Plans

longleggedhair

Archi_Bald wrote: »

Do you savings plans fans really truly all believe you get money for nothing, and that you couldn't have got a lot better elsewhere?

Archi Blad, some plans provide high charges and very poor value for members. The policy holders are basically bank rolling the cushy directors fees and pensions.


I am not for one minute suggesting they should be the only thing a person invests in and perhaps make up around 5% of my overall investments.


However some societies provide niche benefits outside of a simple investment return, for example sickness, optical, winter fuel, educational payments etc. This can in many cases outweigh the premiums paid in, and I have found the plans I have taken out to be very lucrative financially. Its all about good research and finding the strongest societies sitting on a cash pile ready to pay out.

patientperson

longleggedhair wrote: »

Archi Blad, some plans provide high charges and very poor value for members. The policy holders are basically bank rolling the cushy directors fees and pensions.

I am not for one minute suggesting they should be the only thing a person invests in and perhaps make up around 5% of my overall investments.

However some societies provide niche benefits outside of a simple investment return, for example sickness, optical, winter fuel, educational payments etc. This can in many cases outweigh the premiums paid in, and I have found the plans I have taken out to be very lucrative financially. Its all about good research and finding the strongest societies sitting on a cash pile ready to pay out.

Quite agree longleggedhair.. back in 1999 I bought 'The Association of Friendly Societies' Year Book. Not for everyone I can see that but it showed me membership numbers, number of employees, funds under management, Income, Expenditure. All this helped my decisions as to which societies I would be interested in joining having then looked to their websites and the products on offer. Many of the FS are now gone but I suggest that some of the remaining ones can form part of a portfolio. I have no regrets.

planteria

Archi_Bald wrote: »

Do you savings plans fans really truly all believe you get money for nothing, and that you couldn't have got a lot better elsewhere?

longleggedhair seems to be doing extremely well, Archi Bald. whether the fund he is invested in performs is another matter. but if he is getting a free investment, he'd be mad to stop investing, wouldn't he?

planteria

you have both successfully, if geekily, benefited from doing your research and investing wisely in Friendly Societies.

im not benefiting from dental or optical support at all....perhaps i should be:D:cool:........and i am also in the wonferful West Midlands:)

planteria

going back to my RSP-specific point, I understand entirely patientperson. i can see a logic that using FSs for small contributions that are hardly missed is a good strategy, and using ISAs and Pensions for 'serious' investing for the future is wise. No Friendly Society With-Profits fund is matching the AXA Framlington Biotech Fund in my SIPP, i suspect:).......but this point about RSPs having bonuses added on the Sum Assured is a bit special, in my opinion.

"the point that interests me is that, despite some suggestions to the contrary in another thread, the bonuses on RSPs with Kingston Unity are calculated similarly to those on their TESPs. ie. from the first year of the 10 years, the bonuses would be applied to the £30,000+ Sum Assured. So, the bonuses could be quite substantial compared to the amount invested. If the policy term was extended, then this would become even more significant, but, of course, the commitment would be similarly increased."

patientperson wrote: »

The key word is maturity.

entirely agree. the commitment to invest for the full term is the 'price' you pay for the bonuses to be calculated based upon money you haven't yet invested.

guymo

I can't say that I fully understand what all the benefits of a RSP with Kingston Unity might be, but from a look at the illustration provided with the application pack, it appears to me that the charges are pretty nasty. It says

"if the growth rate were to be 6%, which is in no way guaranteed, Kingston Unity's charges would have the effect of reducing it to 3.2% a year."

This effectively eliminates the tax benefits, doesn't it? It doesn't look to me like a benefit worth making a 10-year commitment for.

And how well do these funds perform, anyway? According to

http://www.kingstonunity.co.uk/news/news46/kingston-unity-reveals-competitive-new-bonus-rates-for-2013.html

the bonus rate on the RSP for this year was 1.75%. My brain can't figure out what that really means, given that bonuses are paid on the sum assured; but it doesn't look like a big number

planteria

i'm not sure about 1.75% either. and i don't understand why the same WP fund kicks out different rates to different products...other than that the societies are keen to match peers on similar products.

the point re. the bonus being paid on the sum assured would mean that an investment is earning the rate on the sum assured right from the start. so if the policy was over 10 years, and £250/m, then the sum assured would be c.£30,000 from the outset (i assume slightly higher). so at 1.75% it would generate a bonus of c£525 first year, which would be a 17.5% return.

from the second year the bonus would be paid on the new sum assured ie. including the previous year's bonus.

guymo

What bothers me is that what you state above (which I agree is what the documents seem to imply) is not even close to what the illustration documents say, and there does not appear to be any historical illustration available detailing actual returns on such a plan over the last 10 years. It's impossibly mysterious.

planteria

i will come back to you re. this guymo..

planteria

Reversionary (Declared) Bonuses on the Kingston Unity RSP were 1.75% for each of 2009, 2010, 2011 and 2012. the product was only launched in October 2008. Their ISAs, Bonds and TESPs all paid higher bonuses.

i like the 17.5% return i mention above, but from the info i have seen i would have thought the bonuses could be higher still. i plan to query this during the next few weeks/months.