IFA and my mums investments

Aminatidi

Confirmed with Investec that there's no penalty for cashing in early so as of now it's around 5% up and of course my mum has had the income since 2017.

Can anyone think of a reason to stay with the Investec product rather than the original plan which was to transfer it to Vanguard and then have a single "pot" of LS40?

Malthusian

Aminatidi wrote: »

Can anyone think of a reason to stay with the Investec product rather than the original plan which was to transfer it to Vanguard and then have a single "pot" of LS40?

She is happy with the risk of total loss if Investec go bust and the risk of dramatic losses if the FTSE 100 drops by 55%+, and thinks that something around 2.5% a year is sufficient compensation for that risk. Only she knows whether that reason applies to her.

(She will get 5% if she cashes it in now, which has to be deducted from the two years of ~5% pa she will get by holding on. So it's ~5% over ~2 years which is ~2.5%.)

I was going to give another reason of "she can't be bothered and just wants to let it run to maturity", but she has to get the money back off them at some point, and it makes little odds whether she does that now or on maturity in 2022.

Aminatidi

She doesn't need the £20/month of income.

I guess I'm looking at it as a novice and wondering why a "structured product" was chosen by the IFA rather than a straight FTSE tracker.

I can't see any obvious benefit in retaining it.