10 year savings plans: alternative to with-profits?

Enigmaman

I like the idea of saving a monthly amount in a long term savings plan which then pays you it all back at the end of a fixed period.

A with-profits plan of mine which has just matured, however, paid back barely what had put in - so a very poor investment. It was a similar story with another one which matured a few years ago. :mad:

Can anyone please suggest alternatives, either deposit account-type or stock market based?

TIA

dunstonh

ISAs have replaced these

EdInvestor

Unfortunately "With profits" was a flawed concept which is why it is now out of favour: it couldn't in fact deliver when forced to make good on its guarantees.

dunstonh

with profits wasnt flawed. It just became obsolete as better alternatives came along. As do many other things.

People used to make a fortune out of with profits plans but time moves on and with a few exceptions, they are largely out of place. I say a few exceptions as the good ones have still averaged around 8-9% p.a. in recent times which isnt bad for something that has some capital security.

EdInvestor

With profits wasnt flawed.

Of course it wasn't.People are just joking when they say their endowments won't pay off their mortgages.

:rolleyes:

Get real.

baby_boomer

dunstonh wrote: »

with profits wasnt flawed. It just became obsolete as better alternatives came along.

How can a professional make such a casual comment, which ignores ordinary investors' suffering?

My mum's got a 25 year plan which is set to pay her back what she put it if the underlying fund grows at 6% for the final 8 years :eek:.

And see this link to a 15 year Axa Sun Life WP plan has left many MoneySavers badly out of pocket

The fact is that with profits plans were deliberately styled as long term investments so that insurance companies could screw savers.

Most people were stuck in them an unable to switch as "better alternatives came along" without very serious penalties.

Retired_I.F.A.

Your the one who needs to get real Ed. The downfall of the with profits buisness started with the building societies and their greed and is now left in such a poor state by liars jumping on the compensation wagon, encoraged to do so by the regulators.

An endowment mortgage does gaurentee to pay off the mortgage always has and always will. A low cost endowment does not but as is the case with both they have the gaurenteed amount printed on them.

baby_boomer

Retired_I.F.A. wrote: »

An endowment mortgage does gaurentee (sic) to pay off the mortgage always has and always will. A low cost endowment does not but as is the case with both they have the gaurenteed (sic) amount printed on them.

Nonsense. No endowment mortgage has the final target guaranteed.

And no former IFA worth his salt would fail to spell both "business" and "guarantee". I smell a rat.

Retired_I.F.A.

Smell whatever you like. Go take a look at that policy of your mums then call me a liar.

nrsql

Maybe it's not the concept but the way it's run (and perhaps regulated).
Anything that is locked-in has the problem of companies seeing it as a cash cow once there is a lot of money available.

Sound like any other products?

(looks like a finger-keyboard interface problem rather than spelling)

dunstonh

How can a professional make such a casual comment, which ignores ordinary investors' suffering?

Doesnt matter what emotion you want to bring in to it. There are many that are seeing double digit returns with their with profits funds. Do you want to ignore them? You have to look at the facts and not the emotion.

With Profits had been round for a very long time and did the job it was required to do. A raft of changes in quick succession from tax, regulation, laws and mismanagement by some insurance companies along with the introduction of cheap unit trusts made available more widely to the retail market coupled with the longest and largest stockmarket decline for generations made with profits obsolete.

They went on past their sell by date without making changes but when changes were made which would have brought them upto date, it was too late and the damage was done. The better with profits funds still have a place but as a minority niche fund and not a mainstream fund.

Most people were stuck in them an unable to switch as "better alternatives came along" without very serious penalties.

Sometimes you have to take that step backwards to take two forward. Many people investing in with profits have the opportunity to switch internally to unit linked funds at no cost.

Nonsense. No endowment mortgage has the final target guaranteed.

Retired IFA is correct. An Endowment does guarantee to pay off the mortgage on maturity. Problem is that you rarely (if ever nowadays) come across anyone with an endowment. They all have low cost endowments which do not carry a guarantee.