Let's break down the With-Profits fund in simple terms!
Think of our With-Profits fund as a big pot where everyone's contributions come together. Our main goal? To grow this pot as much as possible over time while keeping risks manageable and looking out for our investors. We've got a neat trick up our sleeves called the bonus process, which helps smooth out the bumps in short-term investment performance for you.
Now, it's important to remember that investments can be a bit like a rollercoaster - the value can go up and down. So, while we strive to make your investment grow, there's a risk you may not get back everything you put in. The value of your plan depends on how much profit the fund makes and how it's shared out.
What exactly is smoothing?
Smoothing is like adding a cushion to your investment journey to provide a more stable return. When times are good, we tuck away some of the investment returns to help support your investment returns during rougher patches. While smoothing helps protect you from market downturns, it won't stop your plan's value from dropping if returns have been poor.
Got a Unitised With-Profits Plan with us? We apply a Market Value Reduction (MVR) in place to make sure everyone's treated fairly. If the value of the underlying assets falls below what your plan is worth, including all bonuses, we may adjust any payment made to keep things balanced.
What does the Scottish Friendly With-Profits fund invest in?
So, where does your money go? Our With-Profits fund invests in a mix of assets, both at home in the UK and abroad. From company shares to property, fixed interest securities, and deposits, we've got a broad portfolio to help grow your investment.
Now, let's talk bonuses!
Bonuses are our way of sharing the profits of the fund with you.
You'll receive regular bonuses normally added throughout the year, and when it's time to cash out, there might even be a final bonus waiting for you. Our aim? To give you, and each investor in the fund, a return that reflects the earnings on the underlying investments over the time you're invested, all while smoothing out the ups and downs of short-term investment performance.
The two types of bonus
Here are the two types of bonuses:
Regular bonuses
Normally added throughout each year. We can change the rate of regular bonus at any time without prior notice.
Final bonus
May be paid when you take money out of your plan. A final bonus may vary and is not guaranteed.
Remember, we're not here to recommend one product over another. Your financial journey is unique, so if you're unsure about what's right for you, we recommend you seek financial advice.