Can you help me make sense of this? Was this a foolish investment decision?

[Ritchbitch]

We invested an unexpected nest egg in a “savings and investment policy” held with Zurich (in 5 funds) , and a year later I’m trying to make sense of the annual report.

I’m completely clueless in the terminology, and I’m only starting to resurface from grief and be able to think clearly again. Hoping that some of you might be able to help me understand what this means, whether I’m getting a reasonable return, and also maybe point me to where a complete (and very, very overwhelmed) beginner can learn more.

They’ve given me a fund value (great), and two encashment values, before and after tax. At this point, if I cashed out the fund is worth less than what we started with, after set up fees (admittedly a one off), their annual fees (not specified in the report but presumably in the original paperwork somewhere).

Without having the foggiest notion how encashment is actually calculated (am I likely to get clarity on this if I ask or is it a mystery?), and doing primary school maths, I don’t think we’ll have caught up with inflation in a year’s time if it continued to perform at the same rate. Obviously I know it won’t, nor will inflation stay the same so it’s a pointless calculation but it’s a bit shocking to realise that I’d have been better off if I’d left it under the mattress all year.

Maybe it’s a moot point, because I hope not to be needing to touch it for 20 years, all going well. But I’m a bit shocked tbh.

The “official” version in the report is that we’re averaging 6.05% (and 5.6% after fees) if we leave everything alone. Dh is very happy with this (particularly as neither of us is literate in investments so I don’t have a sensible alternative) and he thinks we should trust the investment advisor. I’m a bit uneasy.

Should I be?

I’m not with that investment group, based on my experience;
the group will have taken that money and purchased a wide variety of stocks and bonds on your behalf.
example 5 shares of Amazon, 10 of Costco, some railway some mining a variety of sectors.
selling those varies hour by hour based on demand.
Generally the past 15 days my stocks in Canada are low due in part to Donald Trump. Yes they will charge a monthly fee.
Personally I let a similar group manage my funds for many years. 4 years ago I took over my portfolio, pared down from 100+ different holdings to 30 which I just leave alone.
pay 0 fee but am comfortable.
In your shoes I’d ask to see the current list of holdings and pick a few to “watch” and learn how the market goes. So that next year you’re more aware.
PS I’m risk adverse and have a solid 25% simply in bonds, at least they won’t loose money.

@BreakingBroken thank you. That’s very helpful.

I don't think you have provided enough info to know whether your advisors are doing a good job or not. What was your risk appetite? Your investment horizon looks to be 20 years - did you share that with them?
I wouldn't be happy with 6.05% given last years market performance, but if you advised them that you wanted a very low risk investment, I'd say 6.05% was good.) 0.55% fees is ok too.

Without knowing specifics in the terms or the funds that were selected it is hard, but we can make some assumptions.

The encashment value probably includes some penalty for taking your money out early, hence why it is lower. Over time that should revert back to the investment value.

If they have provided one report for the five funds, then the net of fees return includes a wrapper fee of some sort. There might be additional management fees at the individual fund level. These may be high, these may be low. It depends on the strategy and how greedy they are being.

Hope this helps

If it’s called a “savings and investment policy” that suggests a reasonable proportion is in cash, which would explain the lower returns. the question is whether you’re happy with lower risk, lower returns.

can you say anything more about what you’re invested in?

If you were advised, they should have given you a suitability report which sets out in plain English what has been recommended, why and how much you are paying.

If you don’t have it, ask for a copy and then ask you adviser to explain anything that you don’t understand.

It sounds fine to me - not worth the faff and cost of moving, certainly - but it’s not fine that you are struggling to understand the info they have given you. Call Zurich, book in an appointment with a real person to discuss, explain and agree a strategy going forward, esp re your risk profile. If you’re still not happy after another year, that’s a different matter.

I’m sorry for your loss. Dealing with long-term financial matters while also grieving is unbelievably hard 😔