Dilemma - PruFund Cautious

starshine4

Hi, need some advice. I'm an OAP retired from UK to Europe and approx. 7 years ago invested in a Sterling Prudential International Prudence Bond (with profits). Current cash-in value last year, with estimated final bonus, was £1000 less than my initial investment but have withdrawn regular amounts to the value of approx. £13,500 so, with my extremely limited knowledge and old age, think that’s probably OK?

My dilemma is that I also have an investment portfolio about 7 years ago in Euros with another company (can’t find the paperwork at the moment!) and am thinking of closing that and moving the money into a Prudential PruFund Cautious (Euro) Fund or PruFund Protected Cautious (euro) Fund. Current value is €20,000 approx less that initial investment but have had regular withdrawals amounting to approx. €22,000 – was led to believe that after smoothing out the initial capital would have stayed nearer to initial investment but I know that’s not guaranteed. The charges seem very high too.

My aim is to try and preserve as much of my capital as I can so I won’t run out of money if I live another 10-20 years and also be able to leave something to my children. The withdrawals top up my State Pension and I could reduce the amount of my withdrawals a bit too.

Any advice as to whether closing and moving to the PruFund is a good idea and whether the Prudential is fairly safe please?

Thank you.

Linton

The Prufund Cautious Bond has been a very safe place to hold money over many years. It is intended to be safe and attempts to keep the returns stable by keeping money back in the good times to payout when market returns are low. Assuming that you originally invested around £40k (you have not told us) and have been withdrawing about 5% per year for 7 years the returns seem pretty reasonable for such an investment.

I have held the standard version of the Prudential WP fund for nearly 20 years during which time it has consistently performed as expected with better returns. Perhaps you may not need the Cautious version. Whether the Sterling International Bond wrapping is appropriate for your tax situation may be something you should check.

It would be helpful to know more about your problematic investment but it would appear to have performed poorly.

starshine4

Thank you Linton. You are correct, the Pru one was 45k initial investment. The other one is called Lombard International Assurance and was 85k initially. Does that help?


Also I was a bit concerned that if I moved it to the Pru cautious euro I would have 'all my eggs in one basket' - would it matter?


Thanks for your reply.

starshine4

Could someone respond to my query please as to the safety of having 2 different Prudential bonds. One would be in Sterling and the other in Euros. Or is it safer to try and find somewhere else for the larger amount to be invested?

I'm worried that if the Pru crashes then all my money is at risk – is this a valid concern?

Would really appreciate your advice as made up my mind to move the 65k one.

Thanks.

dunstonh

What do you mean by safety?

I'm worried that if the Pru crashes then all my money is at risk – is this a valid concern?

You are not invested in Pru.

The main risk is when Pru sell their UK book to Reassure or Phoenix when they finally leave the UK. They have been structuring their UK divisions for breakup and the keep threatening to leave the UK. Their product range is obsolete and would need a lot of money and its only the Prufund that keeps them going.

starshine4

Really sorry but I didnt understand what you meant which maybe because i dont really understand much of this at all. Basically, I need to know if having 2 bonds 1) PruFund Cautious Euro and 2) my existing one of Sterling Prudential International Prudence Bond (with profits) exposes me more to loss.


Thanks for replying.

Linton

In theory yes. In practice the risk is extremely small and if there was a serious impact the chances are we would be in a world economic collapse when all bets are off anyway. During the 2008/2009 crash my prufund investment including terminal bonus dropped about 5%.

starshine4

Thank you Linton, what you say makes sense. Think I will have to go for it as I have no idea of what else to do.


Thank you for the info.