Friendly Bond Forester Life was Children's Mutual

Zanderman

jonnym6 wrote: »

But what I don't understand is that the return seems to be about 10% less than that invested,

This was an investment. Investments can make profits or losses. I'm not sure why you can't understand that this particular investment has (or is projected to) made a loss. Be at least fairly happy it wasn't a bigger loss!

jonnym6

Mainly because when it was sold to us we were led to believe that it was a risk free investment - so I expected to get back at least the amount invested. We weren't looking to make a massive property - just an easy was of saving a sum for children's future. I feel we were very misled on this - but it seems our issue is not with the bond itself but with the adviser who set it up. Had we been aware that there was a chance to return less than invested we would not have done it - but our mistake for not reading the small print I guess.

Malthusian

I'll ask again - what is the current value of the bonds, the value you would get if you cashed them in today?

That is a far better indicator of whether you are actually likely to get out less than you put in than the useless paper projections.

*edit* The useless paper projections may be showing you the maturity value in "today's money" i.e. after deducting an assumed rate of inflation.

If I produced an illustration for you showing a £10,000 investment for 10 years, assuming a 2% growth rate and 2.5% inflation, then my illustration would show that after 10 years you would get back £9,463. However, if those assumptions actually proved correct (which they won't), what you would actually get paid into your account after ten years would be £12,190. The value of that £12,190 in 2018 money would be £9,463.

A 0% cash account, by contrast, would pay £10,000 into your account. The value of that £10,000 in 2018 money would be £7,763.

jonnym6

The current value if cashed in now of the 2 separate accounts are:

2004 £25 a month - matures 2021- £4527.68
2010 £50 a month - matures 2029 - £3517.51

PeacefulWaters

jonnym6 wrote: »

The current value if cashed in now of the 2 separate accounts are:

2004 £25 a month - matures 2021- £4527.68
2010 £50 a month - matures 2029 - £3517.51

A small gain on the old one then.

jonnym6

Currently yes - but projected not so. Is there an option where I cut my losses and pay no more in to these and let them sit until maturity? The lower one seems to have done well earlier on but with the higher one it looks like I carry on paying in for another 11 years but for every £50 I pay in I will see a return of £45? I am financially far more secure now than when I set these up so trying to work out what to do for the best.

dunstonh

The current value if cashed in now of the 2 separate accounts are:

And what is the current value?

Surrender values are usually lower than the current position.

jonnym6

Current value?

I have sum assured, current guaranteed benefits, cash in value listed on the statement. Do you mean how much I have actually paid in? If so it would be £4200 on the £25 a month scheme and £4800 on the £50 a month one.

dunstonh

jonnym6 wrote: »

Current value?

I have sum assured, current guaranteed benefits, cash in value listed on the statement. Do you mean how much I have actually paid in? If so it would be £4200 on the £25 a month scheme and £4800 on the £50 a month one.

Current value will be the basic sum assured, plus annual bonus plus final bonus accrued to date.

Surrender value will see a reduction in that and is not the true value.

Reaper

I never liked With Profits funds. They sound great to risk averse investors like yourself - a bonus added each year which is never removed again, plus a final bonus.

BUT the reality is the annual bonus is conservative and a major part of the growth is the terminal bonus which is a gamble on how well the investment company is doing in your final year.

I've always avoided them, I stick to stock market funds which are more "honest". If the stock market goes up they go up, if it goes down they go down.