Retirement investment??

Worden1

Please please help I am a pensioner and last year I invested £200,00 in a flexibond with NFU Mutual. I have just had the end of year return figures and I have made £5580. (total rubish). I know I asked for a safe investment and was told that this bond usually averaged 8% even in this climate if it had paid 4 0r 5 % I could have understood, but this works out at about 2 &3/4 %.
Where am I going wrong and where could I invest to get a fair return on my money I need it to live on

dunstonh

I have just had the end of year return figures and I have made £5580. (total rubish).

Seems ok to me. 2007 was a bad year to invest when looking at the short term (just 12 months) and most people made a loss at the lower to medium risk end. 2007 was a year for the higher risk investment.

Where am I going wrong

First thing is that you didnt get financial advice. NFU Mutual employ sales reps. Investing £200k with a sales rep who only offers a limited product range and cannot give proper investment advice (from next year not able to give any advice at all) was not a sensible move.

However, your main issue is that you are looking at an investment that will have good years, bad years and nothing years. You have to average the returns out which is why you invest for a minimum of 5 years (ideally longer) as over the long term you would expect a decent investment spread to beat cash savings.

where could I invest to get a fair return on my money I need it to live on

Investing it and taking some investment risk makes sense as you are drawing an income. If you put it in the bank you would be losing money in real terms due to inflation. So, that £200k could be worth around £140k (or even less if inflation keeps on going as it is) in 10 years time. Not only will the capital be less but the spending power of the income would be as well.

So, in your case you have no nil-risk option.

Problem now for you is that the NFU bond probably has a 5 year tie in or penalties on early exit. If that is the case, you may not be able to move it cost efficiently to something better. You may be able to get a part mis-sale if no ISA was recommended to be taken at the same time. It may be then possible to get the bond voided on the basis that ISA and unit trust was a more tax efficient option but that may be pushing it as tied agents dont have to give best advice. Just offer the best option from their product range.

It still may be worth a visit to an IFA though as the IFA may be able to get an allocation rate to cover the penalty or offer an alterantive that may be more tax efficient (and over time make up the penalty due to tax saved). Plus you can discuss and learn about the investment options better than seeing an insurance company rep.