Scottish Friendly My UK Tracker Options (ISA)

gil2625

Hi don't really understand this type of ISA. Has anyone any experience of Scottish Friendly and are there any hidden charges to beware of?

dunstonh

No serious investor would use this option. Why are you considering it (and which version)?

view

There's an offer on today via topcashback where you can receive £93 cashback if you invest as little as £10 a month (has to be for 5 years or they charge you £50 to close the account).

I'm fairly clueless when it comes to investing ISA's etc, so was wondering about this myself.

Here's the info for anyone in the know to shine a light!

From topcashback:-
My UK Tracker Options (ISA)
Get cashback once premium(s) invested in your plan total £90 and your ISA has been set up for more than 30 days.

From Scottish Friendly site:
There’s so much more to ISAs than just cash

We don't offer Cash ISAs and unlike banks and building societies, we're not asking you to transfer your secure cash savings accounts to us. Instead, we can offer you something different - a UK Investment ISA.

• Give your money access to the growth potential of the UK stock market.
• An accessible investment for you - start from just £10 a month.
• Know your rights - you can have this ISA in addition to a Cash ISA.

The table below contains the things you need to know about My UK Tracker Options (ISA). For more information, please visit the detail tab.

JohnRo

I've used the calculator, £10 a month over 20 years with zero escalation would return £2390 at a return rate of 2%

That appears to show that they are charging at least a 2% fee for a tracker!

What about the dividends?

view

JohnRo wrote: »

I've used the calculator, £10 a month over 20 years with zero escalation would return £2390 at a return rate of 2%

That appears to show that they are charging a 2% fee for a tracker!

do you think zero escalation over 20 years is something that may occur?

JohnRo

I'm assuming the escalation refers to the amount you put in each month increasing?

The explanation they provide states that

The annual rates of growth for the illustration have been based on our reasonable estimate of potential returns. They are subject to the maximum rates specified by the Financial Conduct Authority. All the figures include the deduction of the actual charges assumed on the plan. These charges may vary in future.

It looks like a total rip off to me, obscene in fact.

dunstonh

It is a damned expensive product with a reduction in yield due to charges of 2.7% p.a. for monthly contributions.

That is nearly 3 times what most investors would comfortable paying with no cost of advice included (for a general multi-asset fund). That is why they pay this cashback and that is why they use cashback sites to get sales. However, it gets worse as its a UK equity tracker and with platform costs you are looking at around 0.35% p.a. as a typical ballpark figure. So, 2.7% compared to 0.35% is a big difference.

bigfreddiel

Forget about all the previous answers, which are all correct, and not worth any further discussion.

The bottom line is that these products are too expensive and you can achieve the same growth if not better from a straight forward s&s ISA

For example just buy a vanguard Lifestrategy 60% fund and leave it for the same period.

Cheers fj

jimmeee

view wrote: »

There's an offer on today via topcashback where you can receive £93 cashback if you invest as little as £10 a month (has to be for 5 years or they charge you £50 to close the account).

Thanks for pointing out the 5 year min term / closure fee. Was about to set one up for the cashback and then close it later.. but not worth the hassle now given that they'll take 50 back.

jimjames

view wrote: »

do you think zero escalation over 20 years is something that may occur?

If charges are high enough then that's possible

mal48

My Options is expensive, but My Choice is a lot cheaper and has the same underlying funds. It is 1.5% with no initial or exit charges. This is still too expensive for the Uk Tracker fund, but the policy works like a platform with 9 funds to chose from. The Higher, Medium and Lower funds are based on a number of Legal and General funds and are robo advised with active management of tactical changes between the underlying funds. There is also an active fund managed by SVM which is in the top quartile of growth funds. I currently hold 60% in the Higher fund and 40% in the Active fund. This portfolio has outperformed the Uk All Stocks Index by at least 5% and considerably outperformed, for example, Nutmeg . It compares well with similar Vanguard funds on net results. Platform charges for Vanguard should be taken into account. SF's portfolio is easy to handle with a good website. Hope this helps, Mal