So how does it all work?
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Investing a lump sum
You can invest between £5,000 and £150,000 as a lump sum in the Foresters Friendly Society Investment Bond.
The Bond can either be opened in your name (single life) or both your name and another's name (joint lives).
You cannot make any additional contributions to your Investment Bond once it's in place, but if you want to invest more money, then you simply need to open another Bond. You should aim to keep your Bond invested for a minimum of 5 years.
How will my Bond investment grow?
Your lump sum is invested into our with profits Order Insurance Fund, with the aim of providing investment growth. Your initial sum assured is 70% of your lump sum. This is the minimum amount that would be paid out on the death of a single policyholder or on the death of the second policyholder for joint life Bonds. Taking withdrawals will reduce the sum assured. Depending on the performance of the Order Insurance Fund annual bonuses may be added to the sum assured plus, in favourable investment conditions, a possible final bonus could be added when the Investment Bond is fully cashed in.
Of course, as with most investments, bonuses are not guaranteed, and depend on the performance of the Order Insurance Fund, any deductions made and how we decide to distribute any profits. You should be aware that the value of your Bond is not guaranteed and you may not get back the value of your original investment.
In adverse investment conditions a Market Value Reduction (MVR) may be applied when you cash-in or make a partial withdrawal from your Investment Bond. If applied, this would reduce the value of your Bond. We would only do this to ensure fairness between policyholders leaving the fund at different times.
Please refer to the Important Information document for further information on how our Order Insurance Fund works.
Making partial or regular withdrawals from your lump sum Bond investment
You can make one off partial withdrawals of at least £250 at any time, as long as the remaining balance of your Investment Bond does not fall below £500. You can also make regular monthly, quarterly, half yearly or annual withdrawals, as long as the value of your Bond remains over £5,000.
The maximum regular withdrawal is 5% per annum of your initial investment, not including any bonuses that have been added. The minimum regular withdrawal is £50. You need to remember that making partial or regular withdrawals could reduce your Investment Bond to less than its initial value and could also have tax implications.
Potential for tax-efficient savings with a Foresters Friendly Society Bond
Our friendly society Investment Bond could be another way of getting the most out of your savings and investments in the UK.
There are no immediate tax implications as long as no more than 5% of the initial investment is withdrawn annually. This means that if you don't make any withdrawals for 5 years, you can take up to a 25% partial withdrawal without any tax implications at that time.
You should be aware that tax may be payable on any gains in the Bond's value over the investment term, especially for higher rate tax payers. Please note that tax rules may change and depend on individual circumstances.
Keep your Investment Bond for as long as you want
You should aim to keep your Investment Bond for at least 5 years to gain the full benefit. But as there are no time restrictions, you can let your Bond run for as long as you want, giving it a better chance to benefit from potential growth.
The Foresters Friendly Society Investment Bond is not designed as a short-term savings and investment plan.
Other benefits of taking out a long term Bond Investment
As a Foresters member, you will have access to Foresters Extras - a range of discretionary benefits we offer at no additional cost which include:
- dental or optical grants to assist with covering costs are available to claim each year
- discretionary grants including Educational Awards to assist with the costs of higher education or training.
Membership benefits are not regulated, but we constantly review all our benefits to make sure our members get the best options.
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