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Scottish Friendly MoneyBuilder Review


We’re venturing into something new here on Money Bulldog today by reviewing our first financial product. As savings rates are so low at the moment I thought a Scottish Friendly MoneyBuilder review would be a good place to start.

For more up to date reading please see our recent Scottish Friendly reviews:

What is the Scottish Friendly MoneyBuilder

The Scottish Friendly MoneyBuilder is a regular, long-term investment vehicle designed to help those who only have small amounts of cash available for regular investment to grow their money over a long period. You can start investing from as little as £15 a month and you can invest upto £3600 per year (at the time of writing) as long as you are not currently investing in any other qualifying endowment life policies.

Main features of the MoneyBuilder

Although payments start from just £15 a month the MoneyBuilder gets its name from a feature in the product that slowly increases your payments by 20% per year for the first 5 years before freezing your payment amount at double your initial investment level. So if you started out investing £15 per month then your payment level will slowly increase by £3 a year before freezing after 5 years at £30 per month for the remaining ten years of the plan.

At this point we should mention that the Scottish Friendly MoneyBuilder is designed to run for 15 years with a guaranteed minimum cash sum being paid to you at the end of the 15 year term.

Another notable feature of the Scottish Friendly MoneyBuilder vehicle is that the minimum cash payment you receive at the end of the 15 year term is tax free even if you’re a higher rate tax payer. You’ll also get a small amount of life cover included as a part of your investment.

What is your money invested in?

The money you pay into the MoneyBuilder buys units in the Scottish Friendly With-Profits fund which includes investments in the stock market, cash, bonds and property.

Points to consider before investing in the Scottish Friendly MoneyBuilder?

As with any investment there are points to consider before investing in the Scottish Friendly Moneybuilder.

The first thing to note is that should you decide to pull out of the plan within the first two years, you will not receive any return at all. I suppose this could be viewed as a good thing or a bad thing depending on your investment goals. Some people find it difficult to resist the urge to dip into their savings, making money saving difficult over the long term. Having to keep the plan in place for at least two years before seeing any return could help to build a regular savings habit. It is something to give serious consideration to though because you will only start to see a positive return on your investment after year 10 assuming the fund grows at an average rate of 5%. Do keep in mind that some of the fees being deducted from the plan go towards life cover which may or may not make the plan more attractive for you. Be sure to inquire whether – due to the life cover element – your age will have a significant impact on your expected return.

When it comes to tax the MoneyBuilder pays out a tax free cash lump sum at the end of the term but because the MoneyBuilder invests in growth stocks there will be some tax on the growth element deducted along the way.

It’s a good idea to think ahead and make sure you can afford the yearly increases in payment amount before signing up. Also please be sure to take into account the effect of inflation on your expected return.

Finally I should stress that this is a Scottish Friendly MoneyBuilder Review and I am not here to advise you on whether or not you should invest in the MoneyBuilder. Either way I hope you have found the information in this review useful and if you do decide to go ahead and invest, Scottish friendly are currently offering a £25 My Rewards card which can be redeemed for gift cards at over 70 UK retailers as a welcome gift.

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