Scottish Widows Property Fund

dunstonh

If you had money in equities in 1998, you'd likely be down now on then, and that's in ten years of boom!

Not really. FTSE trackers or passive managed funds would but a sector allocated spread across all the risk profiles would have seen significant gains.

the fact was that I was perfectly happy with my money stuck in a high interest account, but both IFAs (and the banks tied ones, naturally) made me feel like I was either completely stupid or a tin-foil hatted lunatic.

Long term and you would have to agree with them. Although there are ways to present it to make you not feel stupid. Also, it shouldnt be all in or or all out.

Commercial property, btw, is not - or should not - be considered cautious.

Why not? Low volatility and typically cyclical. Losses tend to occur rarely and are usually quite low when they do and over a 5 year period it would be very unusual to suffer a loss.

And, what the IFA failed to notice at all, was that it had become a bubble. Everyone and his uncle was being sold into these things (mostly by IFAs) because they'd been rising well in the past. That buy in created a bubble.

I think you credit IFAs too much. Institutional investors dwarf retail investors.

My Mum has a hell of a lot still tied up in a bond which is tanking and would cost a lot to come out of.

Why doesnt she alter the investment spread to suit her risk profile or perhaps remember that investments are for the long term and volatility is expected.

Some people are suited to investments. Others are not. Even if investments are the best option, if you cannot handle a very small decline then you shouldnt touch it. Although there are guaranteed options which could be used which may not be the most cost effective but if risk is the priority concern then guarantee should be placed above cost.

Fergie73

Why doesnt she alter the investment spread to suit her risk profile or perhaps remember that investments are for the long term and volatility is expected.

Well yeah, that's what I'm advising her to do. But she knows - and cares - nothing about finance, and she's the one who has to call the IFA, who argues her out of it every time (as he did with commercial property last year). He tried to argue me out of pulling out to, which was when I cashed in most of the bond and stuck it in a bank account.

But my Mum's of that age where you trust the professional and do what he says, and if he says high yield bonds are safe and everythings just dandy, she'll go with that. But she is definitely one of those people who is not suited to these kind of investments. The money is what she got from my Dad's death benefit and pensions. If she loses great chunks of it, it'll devasted her. She cannot afford to be in highly volatile risky products, especially with the turmoil and risks in the financial market right now. But I'm the daughter, not the financial adviser, so not the one she'll generally go with (although she's listening to my advice a bit more after the commercial property crash).

munk

Fergie - perhaps it would be an idea to write down all your concerns as clearly and concisely as possible and then try and talk your mother through what you've written. You seem to have a good understanding of the risks involved and the way that risk relates to reward and your writing style seems to suggest you might be able to convey the information in an easy to understand way for your mother.

Consider though that the commercial property downturn may be nearing the bottom now and as such it might be as well to leave some portion of the investment in property - 10% max perhaps. The rest of the investment you could look at lower risk areas for now like corporate bonds and HY bonds (not so low risk but have better yeilds right now and generally lower risk than equities), spreading the portfolio out across 8-10 different funds.

It sounds at least like you made a great choice in moving to cash.

Wurz

Well, here we are some months later and I'm curious as to just how far Scottish Widows have fallen. I got out in January just days before they put bond holders into a 6 month lockdown. Cost me a penalty but I'm sure I saved thousands more! Currently I'm in Bradford & Bingley's "What If" account and getting almost as much monthly income as I did from ScotWid's but with no daily losses! and I can switch if the rate goes down with no penalty.