bond investment going up and down

JeffMason

ChopperST wrote: »

If its for a house purchase needed in a few years get it out and into cash ASAP. Worryingly you still haven't told us what the "bond" actually is...

I said it was an investment bond, what else do you need to know? I can look into anything else.

Linton

JeffMason wrote: »

Thanks for all the comments. All very interesting! I'm not sure I'm any closer to knowing if I should leave it or get it out of there asap.

It's more than 100K, closer to 200K, and is the vast majority of money I have. I'll be using most of it to buy a house in the next few years.

If you are very determined to use the money to buy a house and "the next few years" is say 1-5 then it probably would make sense to cash in the money you need from the investment bond (or move to less risky investments) as otherwise you run the risk of having insufficient should share prices crash. However maybe you need to have longer to think about what you want the money for as cashing the bond in when you arent going to use the money will mean you steadily lose out to inflation. Using it all to buy a house may be the right thing or it may be better to keep a significant amount for the longer term.



What you should do with the bond really depends very much on your particular circumstances (eg age, employment, other assets, any dependents) so it is not possible for someone on the internet who knows virtually nothing about you to provide specific suggestions.



Do you have friends/family you could talk to? Certainly if you are going to keep a significant amount of the money I suggest you talk to an Independent Financial Advisor. For that size of pot and with your lack of knowledge professional advice is in my view essential. Ideally you should chose one local to yourself (rather than a national company) who has been recommended by friends or family. Or you search for say 3 and arrange an initial meeting with each one. They will explain what they can do for you and likely costs. You can then chose the one you feel most comfortable with.


Make sure that you are talking to an IFA. Someone who is just styled a Financial Advisor, such as you may find in a bank, is likely to be a salesman. An IFA on the other hand gets his income from providing advice rather than commission.

JeffMason

SonOf wrote: »

If it is an investment bond tax wrapper and nearly £200k, then you need to be looking at tax. It may be better to surrender over multiple policy years and not just all in one go.

How will I know if it's a "tax wrapper"? I've been told that tax and fees have been taken off via St James's Place, the company it is with, although I'm not sure how that works. Like I said, I didn't set this up but just inherited it. I know it couldn't be touched for the first 5 years but now that has passed.

JeffMason

I'll definitely be buying within the next 5 years. But right now, it's just that it dropped by 5-6k earlier in the year and has this week gone up by 3-4k more than it was before it dropped. So should I be taking some off the top and putting elsewhere while it's riding high? Or will that make no difference overall?

Linton

JeffMason wrote: »

I'll definitely be buying within the next 5 years. But right now, it's just that it dropped by 5-6k earlier in the year and has this week gone up by 3-4k more than it was before it dropped. So should I be taking some off the top and putting elsewhere while it's riding high? Or will that make no difference overall?

I think its all or nothing. You convert all you need for the house to cash in the knowledge that the money really will be there when you need it or you just let it do whatever it is going to do. Fiddling at the edges is unlikely to be very helpful.



If this is your first house note there will be a lot of expenses beyond the simple cost of the house. Sorry if this is obvious to you but we dont know if you are in your teens or your 60's.



SonOf's point on tax is relevent and could be important though I am assuming since you have recently inherited the bond that may not be an issue. But an IFA would be able to tell you exactly what you have got and the best way you can manage it.

Linton

JeffMason wrote: »

How will I know if it's a "tax wrapper"? I've been told that tax and fees have been taken off via St James's Place, the company it is with, although I'm not sure how that works. Like I said, I didn't set this up but just inherited it. I know it couldn't be touched for the first 5 years but now that has passed.

Aargh. St James Place has a reputation for being very expensive. A local IFA should be much cheaper.

Malthusian

JeffMason wrote: »

How will I know if it's a "tax wrapper"? I've been told that tax and fees have been taken off via St James's Place, the company it is with, although I'm not sure how that works.

It's an insurance bond which is a type of tax wrapper.

Ask St James's Place how much tax will be payable on encashment.

If they won't tell you as they only advised your benefactor(ess) and not you, consult an IFA.

Taxation of insurance bonds is complicated and full of hidden traps.

Malthusian

Linton wrote: »

I think its all or nothing.

Cashing in the bond over several tax years may save tax compared to cashing in all of it at once, depending on the OP's circumstances and the chargeable gain. We don't know. The OP needs professional advice. Ideally independent, but if he is already paying SJP for advice...

aroominyork

The key point is that the word 'bond' can be confusing because on this site it is mostly used to mean loans to companies or governments. Posts 4 and 8 clarified that you are at least partly invested in company shares so if you will want the money for a house purchase in the next few years you should definitely think of liquidating. I agree that a consultation with an IFA (not with St James Place) would be a worthwhile investment.

Linton

Malthusian wrote: »

Cashing in the bond over several tax years may save tax compared to cashing in all of it at once, depending on the OP's circumstances and the chargeable gain. We don't know. The OP needs professional advice. Ideally independent, but if he is already paying SJP for advice...

Agreed. I had assumed that it was a recent inheritance with minimal chargeable gain but now we hear it's 5 years that could change things. Its circumstances like this where professional advice is essential.