Save & Invest Plus (Issue Five)
Save or invest? Now it’s easy to do both!
We all like to look ahead to the future. Which is why many of us save – to one day make our plans a reality. Of course, some people have bigger plans than others. So if you have money that you do not need access to in the short term, you may want to think about investing it for long term growth potential.
Investment can be popular because assets such as shares, property and fixed interest securities have the potential to offer greater returns over the medium to long term than traditional savings and deposit accounts.
Unlike savings and deposit accounts however, capital invested in these assets is not guaranteed and the value can go down as well as up. So it’s not an easy decision. Choosing and managing a balanced portfolio is no job for the uninitiated and investments usually involve a long term commitment.
Reason enough to think twice if you have little financial experience or feel you may need to dip into your savings from time to time. But ask yourself, how long do you plan to save for? Probably for the foreseeable future. So why let the practicalities of your present commitments take precedence over your hopes for the future? Why not combine the two?
With the Save & Invest Plus, we've combined a Legal & General investment bond with a savings account from Scarborough Building Society. Your plans for the future combined with the needs of today.
Save & Invest Plus is a smart way to manage your savings. It divides your money between a Legal & General investment bond - a medium to long term investment of at least 5 years, ideally longer - and the Scarborough Building Society Save & Invest Plus savings account - short term savings offering a fixed rate for the first year. So you get short term convenience on part of your money, matched with long term growth potential on the rest.
The Save & Invest Plus savings account is only available after a consultation with a Legal & General adviser who can help you decide whether it is suitable for you. Legal & General advisers can only advise on Legal & General products.
Legal & General investment bonds
You have a choice of investment bonds with access to a range of different funds, professionally managed for growth potential over the long term. Depending on which fund you choose you could have access to the potential returns of assets such as shares, fixed interest securities, property and cash. Alternatively you could opt to include a combination of two or more of these asset classes.
It is a well established investment principle that diversifying in this way can help to reduce your investment risk. Some funds offer a balanced asset mix which means they could be ideal for first time investors looking to extend their medium to long term portfolio. A Legal & General adviser will be able to give you details and discuss the options available.
Bear in mind, however, that your capital in the bond is not guaranteed. Its value and the level of income can go down as well as up and you may get back less than you invested.
You should be prepared to invest for at least five years, ideally longer. Charges are applied if you cash-in the bond during the first five years and may also be applied in other circumstances. Please see the relevant bond Key Features for details.
Interest Rate on the Save & Invest Plus Savings Account
Rates effective at 1 May 2008.
Variable interest rate shown for Scarborough Building Society Save & Invest account shown.| Balance | Gross P.A.* | Net P.A.* | AER** |
|---|---|---|---|
| Annual Interest Rates | |||
| £100 - £250,000 | 10.00% | 8.00% | 10.00% |
| Monthly Interest Rates | |||
| £100 - £250,000 | 9.50% | 7.60% | 9.92% |
The rates shown only apply to the Save & Invest Plus savings account and do not relate to the Legal & General investment bond. They are fixed for the first 12 months after which they track the Bank of England base rate minus 0.50% (annual interest) or minus 0.75% (monthly interest). |
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Any new interest rate will become effective within 30 days of a Bank of England base rate change. If you surrender your Legal & General investment bond during the five year term of the Scarborough Save & Invest Plus savings account, the special rate will change to match the Society’s variable base savings rate applicable at that time (details available on request).
The interest rate guarantees are subject to the account terms & conditions. Should you decide to surrender the Scarborough Save & Invest Plus savings account, your Legal & General investment bond may continue. Please see Legal & General’s investment bond key features booklet for more details.
Save & Invest Plus Savings Account Features
The Scarborough Building Society Save & Invest Plus savings account
Easy access and a high interest rate guaranteed for 12 months. The Scarborough Building Society Save & Invest Plus savings account gives you easy, short term access to your money and full capital security.
You get a fixed rate of interest for one year, after which it tracks the Bank of England base rate minus 0.50% for annual interest paying accounts (minus 0.75% for monthly interest). Any new interest rate will become effective within 30 days of a Bank of England base rate change. The interest rate guarantees are subject to the account Terms & Conditions. This rate is only available when a Scarborough Building Society Save & Invest Plus savings account is opened alongside a Legal & General investment bond as part of the Save & Invest Plus.
What are the asset classes available in the Legal & General investment bond?
The common perception of investment is buying shares in the stock market. In fact, shares are just one of four principal asset classes you can invest in:
- Company shares - Often referred to as equities, shares are subject to changes in value and may therefore not be suitable for short term investment. However, they are widely believed to provide better growth potential than other asset classes other the long term.
- Fixed Interest Securities - Comprising corporate bonds and government gilts, these can be selected to provide a steadier return than shares. The value of corporate bonds and government gilts is sensitive to interest rate trends and an increase in medium to long term interest rates is likely to reduce the value of these assets.
- Property - A tangible asset (in this case, UK commercial property) that adds a measure of diversity to the mix, though it too can fluctuate in value. The value of real property is generally a matter of a valuer's opinion rather than fact.
- Cash - Used as a short term ‘float’ for purchasing other assets or to hold money withdrawn from the alternative classes.
How do I find the right balance?
Many investment options are available to you through the investment bond part of the Save & Invest Plus, including a range of different asset classes. Which is right for you will depend on what you’re hoping to achieve.
Your Legal & General adviser can help you decide between the individual funds but first you need to consider:
- Your investment objective - Are you looking for the potential for capital growth, income, or a combination of the two?
- Your attitude to risk - Are you happy to trade security for growth potential, or would you prefer to keep risk to a minimum?
How much can I invest in the Save & Invest Plus?
The minimum investment is £5,100 with at least £5,000 going into the Legal & General investment bond and £100 into the Scarborough Building Society Save & Invest Plus savings account. You can invest more, but the amount you put into the Legal & General investment bond must not be less than 70% of your total investment. So, if you are investing £15,000 in total for example, £10,500 or more must go into a Legal & General investment bond.
How much can I invest in my Save & Invest Plus savings account?
Single Named account: You can invest from just £100 up to £250,000 in a single name in your Save & Invest Plus savings account providing the total investment is no more than 30% of your original investment.
Joint Named account: You can invest from just £100 up to £500,000 in joint names in your Save & Invest Plus savings account providing the total investment is no more than 30% of your original investment.
Can I add to my Save & Invest Plus savings account?
In the first year you can add to your Save & Invest Plus savings account with Scarborough up to a maximum of 30% of the total original investment. For example, if your original investment is £10,000, you could invest £8,000 into a Legal & General investment bond and £2,000 into your Save & Invest Plus savings account.
You can then add a further £1,000 into your Save & Invest Plus savings account. You will not be able to replace withdrawn funds in the first year. After the first year of opening the account, further payments and withdrawals can be made subject to normal investor limits as set out in the Scarborough Building Society General Investment Conditions.
Can I make withdrawals from Save & Invest Plus?
You can make withdrawals from your Save & Invest Plus savings account at any time without notice or penalty. You can also close the savings account if you need access to your money. However your Legal & General investment bond may continue. Withdrawals from the bond may be subject to charges.
How long must I remain invested in the Legal & General investment bond?
There is no fixed investment period for the Legal & General investment bond, that said, it should be considered a medium to long term investment of at least five years, ideally longer. Ask a Legal & General adviser for more details.
What are the risks?
Unlike the Scarborough Building Society Save & Invest Plus savings account, your capital in the Legal & General investment bond is not guaranteed. Its value and the level of income may go down as well as up. So you could get back less than you originally invested. Please refer to the relevant investment bond Key Features for further details.
What happens to my Save & Invest Plus account if I close my Legal & General bond?
If you surrender your Legal & General bond, then the special interest rate on your Save & Invest Plus savings account will change to match the Society’s variable base savings rate applicable at that time (details available on request).
What returns can I expect on a Legal & General investment bond?
The investment bond provides access to potential returns from a variety of assets including shares, fixed interest securities, property and cash. These returns are not guaranteed.
What are the tax implications?
Legal & General pays tax on the investments underlying the Legal & General investment bond, which is not reclaimable. Higher rate taxpayers may have an additional tax liability if they take a regular income or one-off cash amounts from the bond.
If you are a non taxpayer, you can opt to be paid gross returns from the Scarborough Building Society Save & Invest Plus savings account. You will need to complete the HMRC Form R85 to avoid tax being taken off your interest. All tax assumptions are based on current legislation which may change in the future.
What if I do not have a lump sum or I cannot commit for five years?
Then the Save & Invest Plus is not for you. To discuss other options available to you, speak to a member of our branch team or call Investments Direct on 0845 634 3760†.
What if I change my mind when I make an application for Save & Invest Plus?
As with all Scarborough Building Society investment accounts, you have a 14 day right to cancel period in which you can close your account, without charge or penalty. See the our General Investments Conditions for full details. For details about cancelling your Legal & General investment bond please speak to a Legal & General adviser.
Related terms & conditions
Please ensure you have read all the above terms & conditions, as well as all terms and conditions contained within the terms and conditions section.
How can I apply for an account?
- Book an appointment with a Legal & General adviser. You can do this by either calling into one of our branches or calling Investments Direct on 0845 634 3760†.
If, following advice from a Legal & General adviser, you decide to apply for an investment bond, you will then be eligible for the Save & Invest Plus savings account. You should read the key features of the investment bond carefully and then complete all the application forms relevant to Save & Invest Plus.
You must show your Legal & General adviser one form of identity (such as a full UK driving license or passport) and one proof of address (such as an original Utility bill) before applying for the investment bond.
* The gross rate is the contractual rate of interest payable before the deduction of income tax at the rate specified by law. The net rate is the rate of interest which would be payable after allowing for the deduction of income tax at the specified rate (the net figures quoted assume liability at a tax level of 20% for illustrative purposes only).
** AER stands for Annual Equivalent Rate and illustrates what the interest rate would be if interest was paid and compounded once each year. Please note that the account specific Terms and Conditions may preclude you from earning these rates.