Don't let the tax tail wag the investment dog

friendly societies

The main attraction of friendly society children's savings plans is their tax advantage, however this is not enough to compensate for a number of disadvantages that undermine this initial appeal

One of the key problems with friendly society children's products is the charges levied, in particular during the first year. The maximum that can be invested in a year is £270 leaving little scope for growth, especially if the amount is reduced by the charges. For example, some friendly societies charge an upfront fee of £100 to £200, and charges in the early years vary from £15 charged by Engage Mutual Assurance, to a hefty £421 charged by Healthy Investment, according to the FSA's database on the products. Critics claim the products are inflexible because they have to be invested for a ...