Foresters back with-profits – they might be worth another look

03 August 2012

Although with-profits funds have received some negative press recently, Foresters Friendly Society believes they still have a place in today's difficult economic conditions for the cautious investor.  Despite many commentators heralding the end of With-Profit endowments, latest results show that the sector is capable of competing with investment funds and savings accounts across all time frames.

In the UK, around 20 million people invest in with-profits funds*.  They work by pooling all of the investments made by members, and using this pot of money to invest in various kinds of assets such as shares, bonds, property and cash.  Where with-profits funds differ from some other kinds of stock market investment is in the way in which they are able to spread risk, making them particularly attractive to investors who are relatively cautious.

If the value of these assets grow, then so does the value of the fund which can lead to bonuses for members' policies.  Although the frequency of such bonuses is not guaranteed, once made, they cannot be taken away and a key benefit is that they can take away the difficulties of timing the market, minimising the impact should members policies mature during difficult years.

Neil Armitage, Marketing Director at Foresters Friendly Society said:  "With-profits funds form the bedrock of Foresters savings products and our strong reputation has been commended in the highly respected Money Management with profits survey** where we appeared in the top 10 performers in four out of the last five years for 15 and 25 year terms according to maturity value and annual growth rate.

"At Foresters we want to highlight the importance and value of long term saving for everyone.  Saving a little each month can make a real difference to your finances.  As a mutual, our aim is to provide members with a range of straightforward financial solutions whether you're thinking of saving regularly or investing a lump sum and looking for the tax advantage only available from a friendly society."

For more information about with-profits, go to http://www.forestersfriendlysociety.co.uk/tools-guides/guides/

* According to the Association of Financial Mutuals (http://www.financialmutuals.org/resources/press-releases)

**The Money Management Survey appeared in April 2012 and looked at reversionary and terminal bonus rates for a male non smoker who is under 30 paying £50 a month into a With Profits policy.  These figures are then compared with the figures from other providers to calculate which companies offer the best deals for their customers.