Scottish Friendly launches Guaranteed
10 year ISA in Cash ISA challenge
Scottish Friendly, Scotland’s largest mutual society, has launched a brand new savings and investment product in a bid to encourage consumers to exploit the potential of their second ISA allowance.
Past research conducted by Scottish Friendly has shown that the vast majority of consumers don’t know they are entitled to 2 ISAs each year; a Cash ISA and 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 but could also offer the potential to beat cash returns over the long run.
The My Prosperity (ISA) is a new regular savings policy within a Scottish Friendly Investment ISA and is available to all those over 18 with investments from £10 per month.
On the 10th anniversary of the start date of the policy customers are guaranteed to get back at least as much as they have invested, assuming of course they haven’t made any withdrawals.
The money within the policy is invested in the Scottish Friendly Unitised With-Profits fund which includes stock market, property and cash and bond assets.
The plan is fully flexible with no commitment on the part of the customer– payments can be increased, decreased or stopped at any time and the client can cash in whenever they want.
Neil Lovatt, Sales and Marketing Director at Scottish Friendly, commented:
We’ve made it our mission to highlight the potential of what we call the people’s ISA allowance. The investment ISA is usually the preserve of the wealthy and well advised but we are doing our best to change that.
With this new product we’ve added a defined form of security over 10 years and coupled this with the potential for long term growth potential in excess of a cash only investment.
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 switched out or withdrawn outside this period.
The value and basis of tax legislation is subject to change and depends on individual circumstances.
*Legally known as a Stocks and Shares ISA but it can invest in much more than the name suggest which is why we call it an Investment ISA.