money builder from scottish friendly

millsmum

I just got a mailing from scottish friendly asurance It was for a moneybuilding plan over 15 years. I thought it looked like a good idea so I had a quick look on here to see what other things I could do, but can't see much excepts some stuff on axa

what i what to know is is this a good return?

Initial Monthly PremiumGuaranteed Minimum Cash SumProjected values after 15 years, starting plan at age 352 4%6%8%£103£2,959£3,580£4,080£4,660£304£8,877£10,700£12,200£13,900£505£14,795£17,900£20,400£23,300
Past performance is not a guide to future performance. If you cash in your plan before the end of the term you may not get back as much as you have paid in. The final value of the plan depends on how much profit we make and how we distribute it. If you cash in early, in some circumstances we may also have to apply a Market Value Adjustment which could further reduce the amount we pay you. Full details can be found in the the Key Features.

1. Based on someone aged 35 at outset paying £50 a month initially, assuming future investment growth of 6% each year.
2. These figures are only examples and the projected benefits are not guaranteed. They are based on premiums being paid for the full 15 years. They are not maximum or minimum amounts; what you get back depends on how your investments grow and the actual level of future bonuses. You could get back more or less than this. All friendly societies use the same rates of growth assumptions of 4%, 6% and 8%, but their charges may vary. Do not forget that inflation would reduce what you could buy in the future with the amounts shown. Premiums increase by 20% of the initial monthly premium at the end of each of the first five years of the Plan as explained above. For further details on the effects of deductions on your plan, please see The Early Years section of the Key Features.
3. A total investment after 15 years of £3,240.
4. A total investment after 15 years of £9,720.
5. A total investment after 15 years of £16,200.

or am I better just putting it in a saving account?

dunstonh

Do a search on the board for "friendly society" and read some of the responses.


On that illustration, the important figure is near the back. It will say something like "putting it another way, if the return was 6%, the effect of charges will reduce that to 4.2%". Look for the figures that it is reduced to.

You will find it is very expensive. Also, this isnt tax efficient. Unit trusts are better. It isnt flexible, unit trusts are.

The AXA thread you mention is actually a good reference as this is an identical product. That product is called endowment.

Neil_Lovatt

Remember also that you can get a Tax Exempt Savings Plan from a friendly society (this one isn't tax free), so provided you haven't used up your £25 per month savings allowance you can invest tax free with them.

Scottish Friendly (I work for them) also have a Family Savings Plan (I designed the product!) which allows you to save more than £25 per month (provided you have other "family" members who you can club together with to use each other's allowances) and there are reduced charges for investments of over £30 and £50 per month.

dunstonh

Neil, whats the current reduction in yield on the £25pm TESP?

Neil_Lovatt

On the Family savings plan it's 2.5% on our new (just lauching) unit linked plan it's 3.3% on the (£25 pm) tax-free product and 2.5% on the net product.