Skandia Bond holders advice please

Hi Chipmunk,

As with my first reply on this post I can only reply with the benefit of my experience and not in terms of giving qualified advice.

The first thing I want to say - and I'm a bit reticent to do so as I don't want to put the frighteners on you - is that with your money sitting in Hansard's cash account, I don't think you are any safer than with it sitting in cash deposits. Assuming that this cash account is IoM based, which I suspect it is, if Hansard goes pop then you are in the same position of being a creditor. Indeed, in terms of risk it is worse as it is all in one place.

With all that said, it is highly unlikely so I shouldn't lose any sleep. But our experiences of the last 3 years have taught us all a great lesson.

How safe is your money in a fund? This is very difficult to answer as there are a myriad of different funds and my knowledge extends to only a tiny subset of them. Generally within a fund, your money is spread throughout a number of entities which may be governments, banks, oil companies, retailers etc etc. The safety you derive is from it being spread through more than one entity and so if one goes bust then you only lose a small percentage of the money. Indeed, it is the aim of the fund manager to make sure it is not in anything that is likely to go pop but that of course depends on the risk profile of the fund you chose (high risk = high return). The big difference between a fund and a deposit is that it will have a buy and sell price and this is subject to the vagaries of the market. So if you put £100 in, you hope it will be worth more than £100 when you take it out but this is not always the case. With the recent Euro debarcle my funds have all dropped a good deal. However, a healthy way to look at it is that now may well be a good time to buy.

I can understand your reticence to use an IFA but by and large they are decent people; the one I currently use is. Even the one who put me into Kaupthing (who I have now parted company with) was more naive than untrustworthy. There is plenty of fund information online but there are two key things to remember. Much of the information will be marketing bumpf from the companies themselves - e.g. M&G, Invesco, Jupiter etc. While I'm not saying any of it will be lies, you have to remember that they are selling their product just like everyone else. Secondly, if you're looking on the Net you do get drawn into the perils of armchair experts. These people often know no more than you or I but talk as though they do. In terms of getting good advice then I can only say find an IFA - particularly one who has been recommended. It's no guarantee but it increases your chances of finding a competent one. Remember though that the term Independent Financial Advisor is a misnomer; very few are actually independent as the financial companies pay them a commision on the products they sell. Truly independent people will charge you by the hour for their advice.

You can invest in almost any fund you like without having to go through an IFA and generally speaking, without being locked in. With my bond (and I assume it will be the same with yours), I simply fax a sheet through to the bond provider with the name of the fund and how much I want and that's it! The mechanics are very simple but having good advice is key. Some funds will charge you a percentage fee up front but many don't. This sort of information will be on the fund's fact sheet.

I would be happy to recommend my IFA but my note of caution is to say that they are professionals but not soothsayers. My new IFA saved our bacon by putting us into things in 2009 which did extremely well. This year? Not so well. But on balance I'm pleased with the advice.

Hope this helps.

Investor01.