How safe are Bank of Ireland's "iFunds" traget saver plan ?

J0hnick

Hi,

Ive always had a few quid put away for a rainy day, and usually just put in into a deposit account and then renewed it when it matured. BOI wanted to speak to me the other day and said that because the interest rates are so poor now I might as well have my money under my bed then in a deposit account. They got me to fill out a survey on a computer and said the best thing I could do is go for their iFunds 3 option, its supposed to be low to medium risk on a scale of 1 to 7.

I was very reluctant at first but was advised since the recession, these types of funds are monitored much more closely in conjunction with Wilshire (dunno who they are but their supposed to be very reputable) so there's a lot less to worry about now. The minimum deposit was €10,000 with €200 monthly payments 10 months a year from February to November for 5 years, and that I can withdraw up to 10% a year. The adviser told me there was only a 5% risk to my funds and that worst case scenario, I could lose €1000 - €1500, where as I will most likely gain around €6000 - €6500.

I agreed, went home and read the documentation, and below all the nice stuff on each page there's a footer at the bottom that reads "If you invest in these funds, you may lose some or all of the money you invest", I panicked and read through the rest and thankfully there is a 30 day grace period since signing up to cancel, though I still had trouble sleeping last night .

I rang the bank back today and said I wanted to cancel it, and just take the money off my mortgage, I was told the adviser would call me back. They assured me I could cancel if I wanted to but I was better off leaving it in and taking an even bigger chunk off my mortgage when it matures.

I realize it is low risk, Id rather no risk and less return but interest rates are no less then 1% on deposit accounts. Would I be better of taking the money off my mortgage as I originally planned ?, I'm paying interest on that as it is. I'm getting married soon (the money for that is already set aside), I'm in my 30's and still don't have a pension (my company have a pension plan that will contribute up to 7%). This mainly due to people I know who lost there's in the recession, those same people told me I should just pay off my mortgage asap.

Any advise would be appreciated, thanks in advance

Prezatch

No fund is risk free and that advisor is simply pulling a "5%" risk figure out of the air so don't be swayed by that. BOI are trying to sell you a product which will result in them earning an annual fee.

The flyer I read online for this product says "the fund management charge for iFunds 3 is 0.20% per annum higher than standard fund charges".... which suggests to me that there is a severe annual management fee. You'll also pay stamp duty of 1% immediately when buying into the fund.

I would strongly advise you not to rush into anything. There is a wealth of free information on askaboutmoney.com in the 'investments' board. The thread below is particuarly pertinent to your situation where you have a mortgage still to pay off and are not contributing to a pension :eek: Pensions are essentially funds, very similar funds to what BOI are trying to get you to invest in... but the key difference is that pensions are dramatically more tax efficient. As Brendan says in the thread, paying off your mortage is truely the only risk free investment option out there.

http://www.askaboutmoney.com/threads/tax-and-fee-efficient-way-to-save-for-childrens-education.190472/

You sound like someone who doesn't have much appetite for risk so for now, while you mull things over, why not open a deposit account with KBC - they offer 3.5% interest on regular saver accounts. And definitely get that mortgage paid off :cool:

dRNk SAnTA

John, my advice would be to cancel whatever arrangement you've made. You should only put your money into something when you feel comfortable you understand the product and what all the risks are.

"only 5% risk", "practically guaranteed returns"
Aren't these exactly the type of things you hear people say when they're on Liveline, complaining that they've lost all their money because were talked into something they didn't understand.

J0hnick

Thanks for the advice ;-) , just signed up to my work pension there now, they pay up to 7% toward it so I'm just paying 7% for now to get the most out of it (14% total), Im getting married in a few months so Ill look at it again after the wedding.

I called BOI, I told them Ill be cancelling it on Friday though they want to have a chat with me first.

Never heard of KBC, had to Google them to find out they are Irish, I assume all deposit accounts are in the same boat now that the guarantee is gone ?.

euroboom13

J0hnick wrote: »

Thanks for the advice ;-) , just signed up to my work pension there now, they pay up to 7% toward it so I'm just paying 7% for now to get the most out of it (14% total), Im getting married in a few months so Ill look at it again after the wedding.

I called BOI, I told them Ill be cancelling it on Friday though they want to have a chat with me first.

Never heard of KBC, had to Google them to find out they are Irish, I assume all deposit accounts are in the same boat now that the guarantee is gone ?.

I have read your financial predicament and after many hours of arm folding, chin scratching and head rubbing, I can't make any sense out of it.Yes BOI can give you misleading advise but........ why the hell are you getting MARRIED.

GOODLUCK!:)

Amirani

J0hnick wrote: »

Never heard of KBC, had to Google them to find out they are Irish, I assume all deposit accounts are in the same boat now that the guarantee is gone ?.

Irish subsidiary of Belgian bank KBC. Pretty safe.

Deposits rates are so high because they're trying to fix their poor loan/deposit ratio, and need to use something other than brand recognition to get deposits.

J0hnick

Diego Simeone wrote: »

Irish subsidiary of Belgian bank KBC. Pretty safe.

Good to know, do they qualify for the same €100,000 guarantee Irish banks do or does Belgium have an equivalent ?.

Amirani

J0hnick wrote: »

Good to know, do they qualify for the same €100,000 guarantee Irish banks do or does Belgium have an equivalent ?.

Yeah, deposits in KBC Ireland are covered under the deposit guarantee scheme.

fits

Kbc also have an investment product right now where the initial capital is guaranteed. Its an investment into eorostoxx 30 fund. Lower potential returns of course than a direct investment but guaranteeing the capital is attractive. You need to sign up by march 20 or so.

Deiseboy01

euroboom13 wrote: »

I have read your financial predicament and after many hours of arm folding, chin scratching and head rubbing, I can't make any sense out of it.Yes BOI can give you misleading advise but........ why the hell are you getting MARRIED.

GOODLUCK!:)

Yep spot on, marriage should carry the same warnings are financial products, 'if you have a cock you can lose some or more likely all of your investment....'!

Truely the riskiest contract anyone can enter into.

For ever odd

Deiseboy01 wrote: »

Yep spot on, marriage should carry the same warnings are financial products, 'if you have a cock you can lose some or more likely all of your investment....'!

Truely the riskiest contract anyone can enter into.

Ah sure how many times were you told by the old boys not to do it, and them asking you "are you right in the head" ya still do it because you and sweetie pie are different and you really love each other. LOL

Make a good thread, the real cost of marriage

J0hnick

Diego Simeone wrote: »

Yeah, deposits in KBC Ireland are covered under the deposit guarantee scheme.

Nice, will definitely look into that so

BOI cancelled the scheme, will take 10 days to clear and the money is going back into my current account, meaning what should just been 1 visit to the bank has turned into 3 :rolleyes:

conorhal

I see this thread is a couple of years old but I find myself in much the same place as the OP. I'm getting cold feet about this 5yr investment in an iFunds 3 low to medium risk investment. I've just put the bulk of my savings into it. I was pretty cheesed off at the low to no returns on deposit accounts.
The potential risk to all the capital invested has me worried, particularly after a conversation with a friend of mine that looked over the fund and thought with Brexit on the horizon and the European political scene in flux that putting money into even a diverse fund that invests in UK property and Irish equities and stocks is not going to perform for anybody but the fund managers. In his opinion the risk is not worth the meager reward, is he right or am I just being a bit panicked?

Frogdog

Your friend is right, but hasn't told you the half of it. Whatever about the "supposed" low risk (their crystal ball must have told them that) and the more than likely low returns, it's the annual fees, charges and costs that they will take out of your savings every year that's the real killer. Bank of Ireland are only in it to make themselves money.

If you still can, I'd cancel your investment with them and put it elsewhere. "Where?" I hear you ask. Well first, educate yourself a small bit. Nothing major, you don't have to go off and get a degree or anything! But I would recommend you read a book on the subject. The best book I've ever read on personal finance/investing is The Millionaire Teacher by Andrew Hallam. It's very easy to read and understand. And it'll almost hold your hand through the whole investment process.