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Don't become one of Les Miserables says Scottish Friendly

Mutual adds guaranteed With-Profits to Investment ISA

Scotland’s largest mutual organisation, Scottish Friendly, is set to arm citizens throughout the UK with the means to fight back against “les miserables” returns on offer from Cash ISAs.

Research carried out by the Glasgow-based mutual at focus groups in February has found that while Cash ISAs are tremendously popular with the majority of savers, many are unaware that there is another ISA they can invest in which comes in the form of an Investment ISA.

While Cash ISAs remain an ideal place for short to medium-term savings, as they offer continual capital guarantees and often penalty free instant access, present interest rates mean many complain that they currently produce unattractive returns.

Investment ISAs on the other hand contain risk so their value can go down as well as up. Scottish Friendly believes they are a valuable vehicle for those with longer-term horizons as they can offer greater growth potential.

To help longer term investors make the most of their Investment ISA allowance Scottish Friendly is today adding a 10 year guaranteed With-Profits option to its My Choice (ISA) product.

This flexible ISA offers customers the ability to set up multiple policies within their Investment ISA for different long term goals, such as saving for children, a new car or a rainy day fund but now with the comfort of a 10 year capital guarantee.

Neil Lovatt, Scottish Friendly’s sales and marketing director said: 

Customers tell us that savings rates on Cash ISAs are now so low that the return on their money is struggling to outpace inflation. The new with profits option within My Choice (ISA) offers potentially better returns but with a defined level of risk through a guarantee that the customer will get back at least what they have invested in the fund if they cash in on their investment’s 10th anniversary.

To really help customers start to make the most of an Investment ISA, Scottish Friendly’s My Choice (ISA) starts from just £10 a month with no commitment and customers can stop, restart, raise, lower payments or make penalty free withdrawals direct to bank accounts over the phone, on paper or online provided they are within the current ISA investment limits.

With many families feeling the pinch, it makes sense to use the valuable tax breaks offered on ISAs so less of your savings and investments ends up in the hands of the taxman. Scottish Friendly’s new approach to ISAs, with affordable payments and flexibility, means that more and more people will now find an Investment ISA more appealing.

How an investment in the With-Profits fund works

When a customer cashes in or switches out of their with profits investment they will receive a return which is linked to the value of a managed portfolio of cash, government and corporate bonds, property and stock market assets. This is achieved by adding a final bonus or deducting a market value reduction. Investors can see this cash in value on line on a daily basis. The value of their investment will rise and fall on a daily basis and is designed to provide better potential returns than a cash only investment.

Assuming the client doesn’t switch out or withdraw before the 10th anniversary of their investment in the With-Profits fund then their cash in value will be guaranteed to be at least equal to the amount they have paid in. The client’s original investment is not guaranteed if cashed in outside this period.

The value and basis of tax legislation is subject to change and depends on individual circumstances.

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