Can Unit Linked Life Policies ever be a good investment ?

Seems to me that back in 1995 I'd have been better advised to open a

Wisdom with hindsight is a wonderful thing. You presumably looked at the fund growth rates at the time you took out the policy and accepted that they were OK but had the usual stockmarket risk. Didn't the original illustration tell you anything about charges? Were you made any promises of performance? Did you read about the contract?

Don't forget that during the period of which you speak almost anyone who had any stockmarket investment has lost money. I'm not flying the flag for FP, just wondering why you did it if you now don't like it.

Rob Graham

Ever since Life Assurance Premium Relief was abolished in the 1980s, any such policy has been a waste of money. The associated charges mean that whereas you could make a decent return on a 10-year policy with LAPR, you had a job to make any return under 15 years.

Your best plan is to hang on until the end in the hope of a stock-market rise between now and 2011.

Don't do it again:-)

In message , RedHook writes

It depends on the fund you chose to invest in and the risk you were prepared to take but generally I think Life Office funds arent up to much not unless, exceptionally, the underlying fund performed very well. FPs stewardship fund isnt so bad.

Dont forget you will have had life cover, which is a deduction, and the proceeds generally would be 'free of tax to you' and COULD have done quite well.

Having said all that, if you can tolerate the risk of the stockmarket then there are far better investment house in which to put your dosh, but from the sound of your post the stock market isnt for you.

In message , Terry Harper writes

I tend to agree

No, he should get out now !

Quite!

Thanks for the feedback.

I take Rob's point about hindsight, but back in 95 it was much more difficult for lay folk(non finance sector professionals) to decipher the pros & cons of investment funds. It's much easier these days with many great finance sites providing a wealth of detailed advice and information.

Of course I was aware of an element of risk, but what I feel was not explained fully was how realistic(or not) the projections were given the commission payment, charges etc. I will never make this mistake again.

Just to put the record straight, the plan was bought from London & Manchester - 'The premium savings plan'.

To make matters worse I've just noticed that this plan is not recommended for high rate tax payers, which I have been for the last few years. So, in the unlikely event that this plan might actually provide a modest return in the remaining 6 years, I will lose most of it in tax - great !

Think I'll bite the bullet and get rid of it pronto.

One final question - If I wanted to start a medium to long term saving investment today - what would you recommend as the best investment vehicle/products on the market.

Regards, RH

Certainly nothing sold packaged with life assurance or described as a "Bond" by a lifeco.

Long-term you have to be largely in equities, and the best performances are likely to come from companies which pay reasonable dividends and increase them year-on-year. If you don't wish to select such companies yourself, then you need to look at equity income funds, of which there are a lot to choose from.

You may miss out on the ephemeral fashion fads of investing, but you are most likely to end up with a performance that is better than the alternatives of fixed interest securities (these really are bonds) or cash.

In message , RedHook writes

Unit Trusts or OEICs possibly in an ISA wrapper. Go for 'bottom up' funds and avoid trackers. Go nto a fund supermarket such as Skandia, Cofunds or Fidelity and invest in a few funds from some decent fund managers such as Jupiter, Fidelity, Invesco-Perpetual, Rathbone etc,

Thanks for that - I've had a quick look at the Fidelity site and it seems excellent.

Before I terminate the FP savings plan do you think there would be any mileage in complaining to FP that I was not told this type of plan is unsuitable for high rate taxpayers ?.