Question for Investment Advisors

[sparkythecat]

10 years ago I took out a Unit Trust based Savings Plan. The premiums were £20 per month in the first year, but increased anually by £1.85 per month. This meant by year 10 the premiums were £36.65 per month. There was also a life insurance element to this, so if I popped my clogs before the policy matured, the policy would pay out £4199 to my beneficiaries.

The Unit Trusts I bought into were classed as medium to high risk - investing in the emerging 'Tiger' economies of the Far East. I was quite happy to gamble with such relatively small sums.

Over the past 10 years I have paid in a total of £3398 in premiums. As my policy has will mature next month, I have been sent an estimate of its maturity value as £3806.

So, how have I done?

Bearing in mind I knew this to be a risky investment, should I consider myself lucky to get my money back, or are the fund managers a complete shower of useless bankers who should have really made me a heap of profit?

[vixpy1]

I've got some Tiger investments, Asia's taken a real battering over the last 5 years.

[beano500]

Always a difficult one - "how have you done?" You could, of course, spend hours doing calculations on spreadsheets and work out whether it would have been better elsewhere.

Rather than try and analyse this to the n-th degree. A couple of observations if I may


1) You started out without this little pot/nest egg. So "anything" is better than nothing Actually making the commitment to save was the smart thing that you should be patting yourself on the back about. If you hadn't - well we wouldn't be having this debate

2) Whether by design or accident, you have had the benefit of some life cover (not a lot, I know) but you mustn't forget you've been paying for that

3) There has been a good deal of pressure on pricing which means that a plan today may have lower charges, so be careful if you make any comparisons

4) You have more money back than you're outlay. That's where the risk factor comes in. You've done well. Overall, had you been £500 down, you would still have done well - since you were (or should have been) always prepared to take the risk.

5) Somebody always did better!!!

Have fun spending it!!!

[sparkythecat]

Thanks for the reply Beanno. I see from yor profile that you're well qualified to comment.

I suppose I just feel a little bit cheated. I took this to be a high risk investment, so given that I expected to either lose a packet or make a fortune (relatively speaking).

What I didn't expect was to get around the same return that I might have done had I chosen a supposedly safe investment. I've already got some of those. Boring,boring,boring

I think to get the buzz that I'm after, I'm going to have to either join a small investment club dabbling in shares or just cart the return from this policy down to Ladbrokes and see how I get on there.

[beano500]

Yup - the "difference" between a "medium" and a "high" risk investment is not necessarily that great. you only have to spend ten minutes poring over the past performance figures in one of the mags like Money Management. The variation when measured in terms of volatility is usually noticeable, but because the investment you have is for a fixed term, with fixed purchases, you don't even get to control the timings for buying low and selling high. Thus you get a pleasant but slightly limiting averaging effect!

Higher risks? 2:30 at Kempton Park? Lottery Ticket?

A risky one, but apparently likely to yield rewards is to cuddle up to a Russian leader and buy oilfields off them.......allegedly!

[alfaman]

Sparky -

one of the issues here is that "Savings Plans" with life cover will have massive inbuilt charges and fees , plus you pay for the life cover.

Any returns from the underlying assets would be reduced by the charges......you would have got more back havings invested in the same assets ( via UT's ) - without the life cover / "plan" wrapper.

You may be better off drip feeding money directly into UT'S via a large discount broker who returns most of the fees back to you.

(BTW - ... used to work in Retail Financial Services marketing and finance )

[sparkythecat]

alfaman said:

Sparky - one of the issues here is that "Savings Plans" with life cover will have massive inbuilt charges and fees , plus you pay for the life cover.

I'm sure you're right and I think this is what really pisses people off about financial services providers.

I'm quite happy for people to cream off a slice of any profits they've made through investing my money - that seems perfectly reasonable.

What irks is that they expect you to pay flat rate fees regardless of whether or not you see any return. Talk about having your cake and eating it. These boys are always in a win-win situation.

[alfaman]

sparkythecat said:

alfaman said: Sparky - one of the issues here is that "Savings Plans" with life cover will have massive inbuilt charges and fees , plus you pay for the life cover. I'm sure you're right and I think this is what really pisses people off about financial services providers. I'm quite happy for people to cream off a slice of any profits they've made through investing my money - that seems perfectly reasonable. What irks is that they expect you to pay flat rate fees regardless of whether or not you see any return. Talk about having your cake and eating it. These boys are always in a win-win situation.

Yep - the salesmen ("advisors") at the Bank where I worked were always heavily incentivised to sell lots of unit-linked bundled products like "Savings Plans" ,"Savings Bonds" , "With Profits Bonds" , and "Endowments" because they were SO profitable (up to 6% upfront margin) regardless of performance!!

[bjwoods]

Arguably is any complex investment product (funds, trusts, ind stocks) worth it...

I'm currently putting all my savings into an investment that absolutely guarantees a 5.5% NET return, YEAR on YEAR... (need to get over 8% gross return for a higher rate taxpayer to beat that)

I do not believe their is any fund, or product that can do this. CAn anyone tell me of a product that beats this - AGain guranteed year on year


What is this wonderful product,

My Offset flexible mortgage. Which as my savings account is offset. Means that is 100 % liquid, with zero notice and no fees.

My feeling if EVER the housing market crashed even 30% GOD knows what state the stockmarkets would be in.


B

>> Edited by bjwoods on Friday 21st January 11:35