Norwich Union Portfolio Step-down: any good for income for a 63-yr-old?

EdInvestor

jem16 wrote: »

I have seen many occasions on this board where it has been explained how a basic rate taxpayer with less than £100k can benefit. For example;

Using a trust

But you can put anything in a trust, including a deposit account.there is no need to put it in an IB first.

Age allowance reduction

If you vare trying to avoid getting additional income invest in growth funds which make their returns from capital gains

BRT but close to HRT

As above

Pension credits

I don't approve of people using IBs to get pension credit IMHO it's equivalent to benefit fraud. In any case any "income" (actually capital) withdrawn from the bond will be counted for pension credit.

Avoiding care home fees

May work: but you could be caught under deprivation of assets rule

Convenience re tax return

A tax return may not be required.


I always mention high charges because that's what many people pay.

jem16

EdInvestor wrote: »

If you vare trying to avoid getting additional income invest in growth funds which make their returns from capital gains

Most of the lower risk growth funds still have dividends whcih count towards income. Those with low/no yield tend to be higher risk.

So still a probelm for those close to HRT and the age allowance reduction.

May work: but you could be caught under deprivation of assets rule

Not if it's done early enough.

A tax return may not be required.

But it easily can too.

I always mention high charges because that's what many people pay.

And many don't as has been shown here many times.

EdInvestor

jem16 wrote: »

And many don't as has been shown here many times.

The more they know, the more capable they will be to bargain down the charges, if they still think the product is suitable.

How can that be bad?

Knowledge is power.All teachers know that

dunstonh

But the capital gain is not taxed at all if you don't sell the fund/shares.

Correct. However, if you dont sell some this year to use your allowance you lose that allowance. If you get a 30k gain each year say for 5 years and then cash in the lot, then you have £150k gain. Take your £9200 off and the rest is liable to 40% even if you are a basic rate taxpayer (you will get a small bit in basic rate but the bulk will be at 40%).

Incredible that you could say that about one of the most complex products on the market.

Its no more complex than ISAs and less complex than unit trusts.

I don't approve of people using IBs to get pension credit IMHO it's equivalent to benefit fraud. In any case any "income" (actually capital) withdrawn from the bond will be counted for pension credit.

It doesnt matter what you approve off or not. And its not benefit fraud as the manual clearly states what is and isnt included.

I always mention high charges because that's what many people pay.

Not with modern plans. You are too busy looking at older plans or the lower quality plans and comparing them against the best alternatives. Start comparing like for like. Compare the best value bonds against the best value fund supermarket. Otherwise your data is flawed from the outset.

jem16

EdInvestor wrote: »

The more they know, the more capable they will be to bargain down the charges, if they still think the product is suitable.

How can that be bad?

It's not bad - it's great.

But if they read your posts alone they will think that IBs are never ever suitable, no matter what.

Knowledge is power.All teachers know that

That's why it annoys me so much when you keep repeating the same wrong information. People assume your knowledge is correct just because you have so many posts.

As jamesd said, keep your reasons accurate.

Wurz

Strewth, a lot's happened on this post since I last visited on the 2nd Sept! I've changed my SWid's bond around with help from an IFA and the slide in value has been halted and has actually risen in a short period of time-will catch up with you all very soon and let munk know what funds were switched into.

munk

We ended up going with the selection I made above in this thread somewhere, hoping it'll work out although SW's steep charges will probably eat up most of the profit Aiming to get my mum out of this SW bond asap when the initial charging period (5 years) is up - annual charges on the funds are up to 2.2% pa which is extortionate

Wurz

Well, that was a useless exercise. To cut a long story short, my original £100k was suffering and the forums view was to use an IFA. I did, and the slump was halted. Briefly. And then all the new funds slid until I pulled the plug today at £91k. Firstly they "revalued" the Property fund which lost me £3.5k (they haven't actually sold anything so where is the moral justification) and then in a space of a few days I went from £97k (having dropped just before Xmas from £99k) to just £91k. My IFA say's that something serious has happened to Scottish Widows to cause all funds to drop so quickly. Money Mail on the 16th Jan advised all to sell any S'Wids Bonds, and I dropped £1400 overnight. Sent a "special delivery" letter to SWid's to get back my money before they lose me more. I invested £100k 4 years ago to get £375.00 per month income. After four years of holding my money they will give me back just £91k of my original investment. Loss, £9k. They will say I have had £18k in income. Ok, less £9k means I got £9k interest from £100k in 4 years. Erm, what % is that? 2.25%? National savings or any over the counter bond would make mincemeat of their expertise, and with NO risk to capital. IS Scottish Widows about to be the next Northern Rock?

munk

Nightmare Sounds similar to my Mum's situation really. Really bad time to be moving over to any other funds at the moment as well which I'm finding out.

What bugs me is that for the last 2-3 years whilst my Mum's money was languishing in underperforming corporate bond funds, equity funds were flying ahead - if I'd been around to work with the money back then it would have been a different story. Instead I'm seeing the carefully constructed portfolio still dwindle! Still, only down by 3% or so over the last 4 months which could be worse I guess. Seriously thinking of moving some of it to cash now though whilst the credit crunch eases a bit.

Wurz

Nice to see that this post is still active! My IFA says the ONLY fund he could recommend at the moment is Canada Life. He says thay are offering 109% of original investment (to entice new business) and if you want to cash-in in the first year you would get the first 75% penalty free. As I won't actually see my money in my bank account until 29th Jan '08 I have told him that the only way I'll be interested is if he gets a history of the funds he suggests, perhaps over the past couple of years and certainly the past few months where Scottish Wids have failed abysmally. I had telephone conversation that SW's had received my letter yesterday (Friday18th) but that they will only send what is the value of the bond "the next working day" as that will be Monday I now have to sweat it out over the next three days as to how much more they can lose. In other words, wait until the posted value on Tuesday morning....what a con! I am terribly tempted to go for an over the counter Bond such as Bradford & Bingley's where they will pay 5.5% [6.31%] which after tax is worth around £41.75 per month on each £1000 invested [£52.19 before tax] On my possible £91k left (if the weekend doesn't wipe it out-bearing in mind that last week my bond dropped £1400 in one day!) I would get £379.93. Thats more than I got (£375) from what was £100k with SWids. Oh, and with no risk to capital. I wonder which web sites and forums we could use to embarrass SWid's and cost them new business?