Prudence Bond

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Hi All,

I'm an expat in Spain with £60,000 to invest mainly to benefit as a monthly income to use as living expenses. I have spoken to a IFA who thinks a Prudential Prudence Bond would not only give an income but also protect the capital against inflation. To a numpty like me in financial matters it all seems a bit complicated, his fees and the Pru's fees to be paid, plus a low to medium risk factor, no guarantee of returns etc. I'm tempted to just to put it in a bank bond and still get a decent monthly return with no risk!
Any thoughts on this appreciated

dunstonh

I have spoken to a IFA

UK Based or Spanish?

I have spoken to a IFA who thinks a Prudential Prudence Bond would not only give an income but also protect the capital against inflation.

The Prudence bond is available in with profits and unit linked form. Neither has any guarantee of paying an income and protecting the capital. An investment spread can "aim" to do that and historically would achieve that but no guarantees.

I'm tempted to just to put it in a bank bond and still get a decent monthly return with no risk!

I would put the Prus bond above most of the banks bonds. Plus banks take maximum commission on their products and make them more expensive than IFAs.

However, I suspect you are not talking about bonds but fixed term deposits. You are incorrect in assuming these have no risk. If you take the interest as income then inflation is going to be your risk. You are going to lose around 30-40% of your capital in spending power (and therefore your income) over 10 years.

Pru is a strange choice. It was a good option about 3-4 years ago but currently, it's product doesnt offer good terms. Plus as an ex pat, I dont see how an onshore uk investment bond is going to be tax efficient for you.

In which case, I dont think a bank fixed term deposit or a uk onshore investment bond are really what you need.

vhvhvhvh

Dunstonh, you are spot-on, I did mean a fixed term rate - and I see what you mean re no risk. British IFA working in Spain by the way.

dunstonh

British IFA working in Spain by the way.

Check the person is a real IFA. Spain is notorious for having english born individuals going out there pretending to be IFAs and scamming the unsuspecting ex pats. For example, IFA is a British term. It is not a Spanish term. Is this IFA on the fsa register? www.fsa.gov.uk/register

They could be genuine but I would instantly be on guard when investing in Uk products using someone who is not based in the UK. You may get better advice seeing a Spanish adviser using Spanish products.