How can I invest my money with Foresters Friendly Society?

As the 5th oldest mutual society in the UK, Foresters Friendly Society has been around for an impressive amount of time (since 1834!) and weathered a few storms along the way.

But, you may not be familiar with who we are or how you can invest your money with us.  Let us bring you in to the best kept secret in the world of financial services…

What is a mutual fund?

A mutual fund, also referred to as a with profits fund, is a fund into which you can put your money which will then be invested into a combination of different types of investments (also known as assets) such as stocks, bonds, property and other assets that are professionally managed.

Mutual funds can be an ideal solution for investors looking to invest money in a variety of assets. By pooling their money together in the fund, this enables investors to gain access to types of investments that ordinarily they might not have been able to afford as an individual, sole investor.

Investing in a variety of assets, rather than putting everything into a single investment, can help to better manage the risk associated with investing.

Growth on your money can come in the form of regular and final bonuses from the profits the fund might make.

How does a mutual, with profits fund work?

A mutual, with profits fund works by a number of investors investing their money into the fund and the company who oversees the fund investing that money on their behalf.

A fund manager will oversee your investment and decide when and where to invest your money, in keeping with the company’s outlined investment strategy, to maximise your chances of the best return whilst also keeping within their acceptable levels of risk. Essentially managing your money in a well considered way.

The company will combine your investment with the money of others and use this to invest in multiple assets. Their decision on which assets to invest in will be based on several factors including market research, insight and market expertise.

As with any type of investment, there is no guarantee how these assets will perform.  Their performance can rise and fall so it is important to be aware that mutual fund investments don’t come without risk. You might not get your initial investment back.

That said, whilst past performance is not a reliable indicator of future results, stock market and alternative investments have historically tended to outperform money held in cash savings accounts, e.g. cash ISAs, over the longer term so by taking a bit more risk with your money, it may provide the potential for better returns.

Types of assets in a mutual with profits fund

Categorised on their levels of risk and potential returns, the most common types of assets held in a mutual with profits fund are:


There are different types of bonds that may be invested in through a with profits fund.  Government bonds are called gilts, and allow governments to borrow money to finance public spending. Corporate bonds allow companies to grow their business or undertake new projects by raising more funds than a bank might be willing to loan them.  These are low-level investment options for potential long or short-term financial return, in the form of interest.  Bonds are a great option as they help to remove some of the unpredictability of the stock market as, with most bonds, the return is known from the start.


Also known as equities or shares, stocks carry a greater risk than other asset types. Stocks and shares are units of ownership in a company. Companies sell them to shareholders to provide funding to grow their business. Some companies have millions of shareholders, who all own a tiny piece of the company; others have just a handful. Investing in stocks through a mutual with profits fund means that the fund manager chooses the shares on behalf of all the investors in the fund taking the worry out of the buying process for you.


Higher risk assets, such as equities and property, offer the potential for higher returns over the long-term than lower risk assets such as deposits and bonds. At Foresters, about 10% of our investors money is invested in property in order to try and increase returns for our with-profits policyholders.

Find out more about our mutual with profits fund at Foresters Friendly Society.

How do with profits funds make money?

We aim to increase the amount your money grows by adding bonuses to your investment. There are two types of bonus. These are annual bonus and final bonuses.

Annual bonuses

Annual bonuses are normally added to your investment each year. The level of annual bonus can go up and down and there is no guarantee that a bonus will be added each year.

The level of annual bonus may be different for different products and for similar policies taken out at different times that invest in the with profits fund.

Final bonus

A final bonus may be added to your investment when you leave the with profits fund because, for example, your investment matures (reaches its end date), you retire or you cash-in your investment.

The level of final bonus can go up and down and there is no guarantee that a final bonus will be added.

What is smoothing?

What distinguishes with profits funds from other pooled funds is ‘smoothing’. Smoothing aims to reduce the direct impact of market changes on the assets in the fund and means that investors are less directly exposed to rises and falls in the value of their investments over the shorter-term.  In good years where investment returns are positive, smoothing is applied to annual bonuses to ensure that some of the investment return is held back with the aim of paying annual bonuses in years when the fund’s assets may not perform as well.

Are they short-term or long-term investments?

Investments made into a with profits fund are longer-term investments which are designed to be held over a number of years, usually 5-10 years as a minimum.

What are the benefits of a mutual with profits fund for personal savers?

A mutual with profits fund investment can provide several benefits including:


As a personal investor, with profits funds enable you to invest in many different asset types allowing you to spread your money amongst a variety of assets, rather than putting everything into a single investment type.

A ready-made investment option for you

A with profits fund is managed by a specialist, experienced fund manager. They will set the fund’s investment strategy, and approach, research the investments and make the trades. They will also monitor the fund’s performance and provide insight and feedback to all investors.

With Profits fund  

Find out more in: Big banks v Friendly Societies – who’s taking care of your money?

Invest with Foresters Friendly Society today  

If you are looking for mid-long-term investments or looking to diversify your investment portfolio, our with profits fund may offer the solution.

Get in touch with our friendly, expert team today to find out more.

The content of this article is for information purposes only and does not constitute financial advice. We do not offer financial advice. If you’re unsure as to the suitability of a product you should seek advice from a Financial Adviser. You may have to pay for this advice.