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Each month we ask different Independent Financial Advisers (IFAs) to give us their solutions to issues facing those who take an interest in their money. Expert opinions each and every month.
It is easy to contact an independent financial adviser in your local area, call 0800 085 3250
1.Frank wallwork:
I have a large amount of monies in a with profits 'Prudential International Bond', which is based in Dublin and part of the Prudential Assurance group, what I would like to know is:
a) How safe is this investment?
b) Should I keep the investment going for the full term (5 years left of 10)?
I do not seem to be able to find exact information on this type of investment and how it 'fits' in with the current situation.
You are protected under the UK Financial Services Compensation Scheme Long-Term Insurance for all of the first £2,000 and 90% of the balance of your investment. Further details may be obtained in the Key Features Document, which was issued to you.
Answer: You should not disturb this investment, as your objectives when taking the 'Prudence Bond' are likely to have remained the same, irrespective of the recent turmoil in the markets. If you must take some of the money, you should check as to whether a Market Value Reduction (MVR) applies to your policy. In any case, the Pru allows withdrawals of £25,000 each year, without an MVR applying. Withdrawals may have UK Tax implications, which you should check beforehand.
Further information on your investment may be found at www.pru.co.uk .
With Profits and its "smoothing" of investment returns fits in very well with the current stockmarket volatility, as there should not have been big swings in your investment's value.
Paul White, IFA, Belgravia Insurance Consultants
2. Michael, London:
Re: ISA. I know that the ISA subscription limit is £7200 for 2008/09, but what if I need to subscribe to a Rights Issue?
Am I allowed to subscribe additional funds to cover the costof the Rights or must I buy any Rights with cash from the £7200?
Answer: It is not clear from your question, whether you are fully subscribed or not. I assume that you are, therefore any Rights Issues must be executed outside of this year's ISA in an ordinary account.
Paul White, IFA, Belgravia Insurance Consultants
3. Margaret Jordon, Cornwall:
My IFA has recommended my husband and I put our savings and pensions in a 'wrap platform'. He thinks this would be a reliable safe haven and will save money on fees. Any comments please.
Answer: Wrap platforms are a useful tool for managing your investments, cutting down on paperwork and administration and the convenience of having everything in one place and all the information you need at your fingertips. This makes portfolio management much easier and less time consuming and thanks to technology, allows you to keep track of how things are doing day to day if you so wish. You may; however, have questions over the amount of compensation available should the worst happen.
In the case of Wrap platforms this will depend on the type of business transacted and the circumstances of the claim. I would recommend that you check the position for the Wrap platform being recommended before going ahead.
Donna Bradshaw, Financial Planning Strategist,IFG Group Plc, T: 020 7315 6566, Email: donna.bradshaw@ifg.co.uk, Web: www.ifg.co.uk
4. Sheila, Essex:
My son and his partner have split up with a joint mortgage in place. His partner does not want to contine paying the mortgage, but have explained that now is not the time to sell as they are in negative equity. My son is trying to let out a room to help with the mortgage repayments, as he does not want to loose the property, is there any other option available.
Answer: As it is a joint mortgage they are both jointly responsible for the Full mortgage payments.
If a room is let out permission should be obtained from the mortgage lender.
As there is negative equity the property could only be sold if there are other funds available to pay the difference from the sale value and the mortgage debt.
You could ask the mortgage lender if you could pay interest only, rather than the capital and interest payment, this will reduce the monthly mortgage payment.
It is recommended that you Son contacts his mortgage lender and explains his situation.
Yours sincerely, Bob Riach, CertPFS, RIACH INDEPENDENT FINANCIAL ADVISERS.
5. Ms Bharti, Deptford:
I HAVE INVESTED £7000 IN a Halifax shares ISA, a CAUTIOUS MANAGED PLAN, WHICH IS CLEARLY GOING DOWN, IS IT POSSIBLE I MAY LOSE ALL MY MONEY? AM I COVERED BY FSA COMPENSATION SCHEME FOR THIS PLAN?
IS IT ADVISABLE TO WITHDRAW FUNDS AT THIS POINT WITH LOSS, OR WAIT FOR SHRES TO GO UP AND WITHDRAW MY PRINCIPAL AT LEAST IN, SAY, ONE OR TWO YEARS ?
PLEASE ADVISE. THANKS, BHARTI VIJ
Answer: In theory, with any unit linked plan such as this it is possible to lose all of your money invested. This should've been explained to you at outset. Whilst this fund is described as cautious managed it currently holds approximately 43% in equities. Any stockmarket investment should be viewed as a medium to long term investment, as a minimum 5 years plus.
With this in mind and given how low the stockmarket is at the moment it may well be best to sit tight. Having said that if you are uncomfortable with the level of risk that the stockmarket exposes you too it may be sensible to encash. If you are able to leave the funds invested then over the longer term you would expect this type of fund to outperform other less risky assets.
You cannot claim any compensation on the basis of poor performance of the funds. However, if you feel you were poorly advised and have been invested into a fund that you did not understand or is unsuitable for you then you could make a complaint to the original adviser and possibly obtain compensation if you were mis-sold.
Kelvin Lillywhite, IFA, Albany Financial
6. Cyril Davies, Pontypool: I have a one year savings account (£25,000) with Icesave with the interest paid out annually. This was due to mature at the end of November. Will I get interest pro rata when the compensation is paid up to the date when the bank became insolvent. i.e 7th October. Or will I only get my original capital back? Answer: The issue of the return of all your capital has been clarified, in that 'no-one will lose any money'. The separate issue of interest due has not yet been made clear, but you should keep an eye on the link for any announcements. http://www.moneymadeclear.fsa.gov.uk/news/firm/icesave.html Paul White, IFA, Belgravia Insurance Consultants 7. Keith, Birmingham: We have less than£50k with RBS (Natwest) which we believe must be safe.
However, we also have Flexible Investment Bond with Natwest which is valued (04-'08) at more than £50k AND With Profit Bond with 04-'08 value more than £35k - which is managed by Norwich Union, but through (or is it on behalf of?) Natwest. Can you advise how secure are these bonds - especially if Natwest were to 'do a Northern Rock'. Thanks, Keith Asnwer: As you correctly say, the government recently increased the compensation scheme for private depositors to £50,000 per person per banking licence (be careful as two different brands may only have one licence, such as First Direct and HSBC). Therefore if you hold less than £50,000 in cash with them this would be fully protected. The Flexible Investment Bond would not fall under the same arrangement as it is not a cash deposit it is an investment bond. This would fall under the FSCS which is a compensation scheme for retail investors where financial administrations are no longer trading, I would very much doubt that you would need to worry about such an event in relation to Natwest. The Norwich Union Bond is held with Norwich Union although arranged through an adviser at Natwest. This would fall under the same compensation scheme as the Natwest Bond. I would suggest that if you were to consider surrendering this you check with Norwich Union as they are currently reattributing assets to eligible with profits policy holders. If you were eligible but surrendered you may miss out.
Kelvin Lillywhite, IFA, Albany Financial
