Some advice needed on a big loss

Z

zoe-90

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Hi Guys

First post here being a long time fan of this board hope someone can help me out here.

ln June last year with the advice from a broker l took out a policy with friends first called Corinthian insight property fund.

So about about a month ago l got a letter from friends first saying we are pleased to tell me that the 20,000 l invested is now worth 11,200 :-(

This is a geared property and is a for 5 years minimum it states in the letter that l cannot surrender this policy until the 5 years is up but in exceptional circumstances friends first will consider a request.

My gut feeling is that l should try and get out of this now so my question is can l get out of this? and what do they mean by exceptional circumstances.

Any advice will be greatly appreciated, I really hope someone can help me.


thanks in advance..


zoe
 
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Do the terms & conditions of the investment agreement not clarify?

Why did you/your broker consider this investment (the most?) suitable for your particular needs at the time?
 
This is a highly-specialised fund, invested in just four properties, three in Dublin and one in Bray. It also has borrowing of twice the investment amount, or at least that was the original plan. As such is it a high risk fund - one asset class, one tiny geographical region, one industry sector and highly geared.

While obviously it's uncomfortable seeing the value of your investment go down in its first year, that is the nature of high-risk funds. They can go down as well as up quite dramatically.
 
ln June last year with the advice from a broker l took out a policy with friends first called Corinthian insight property fund.

This was awful advice, sorry!

For reasons not to flame the broker, but rather provide better feedback
for readers to make better financial decisions in future,
do you want to reveal this broker's details??

Have you contacted the broker to ask them to explain his advice now??
- if so what has he/she said??


As far as what to do,
first you have to forget about the initial e20k figure
its history and will only cloud your future short term decisions.

whats important now is the e11k left

do you need access to this e11k? will you in the next 4 years?

have you any alternative options for this e11k?
- do you have ANY overall investment plan taking into account your
current situation in life?? including any other investments, savings,
pensions, mortgages, how close to retirement, etc


if no to above, you could just leave where it is!

it looks bad that you have lost so much, and you probably rightly fear
you will lose more

one idea would be to withdraw 50% (if possible) and probably get
penalised on this cause "early withdrawal" and deposit this in
"secure" high interest account
and just leave the other 50% "bet" on
- at least you wont lose everything.

but my advice would be to cut your losses and learn you lessons
- take it all out and never go near any funds again, unless they are
your pension and you have to

the figures spell a painful financial loss, but if its any comfort
know that there are many many others nursing similar and bigger
losses from the last year and a bit.

JR.
 
As Clubman has said, you cannot decide whether or not zoe-90 received good, bad or indifferent advice while knowing no background whatsoever. How do you know what advice s/he received? How do you know what sort of product s/he required?

As regards your suggestions as to what s/he should do next, again you know nothing about what s/he's trying to achieve, circumstances, attitude to risk, timeframe etc.
 
How do you know? We don't have enough insight into the original poster's specific circumstances as far as I can see.

We just don't know. It would not be just the 20k I would be worried out. As LDF says, the investment was geared at * 2, so 20k invested + 40k from the bank makes 60k. By my reading of it, if the value has almost halved the OP would lose all their 20k and still owe the bank their remaining money, if they pulled out.
 
How do you know? We don't have enough insight into the original poster's specific circumstances as far as I can see.

Are you joking ??? from 20 K to 11 K in such a short space of time ... , I would be looking to prosecute.
 
(This was awfull advice sorry)! Hindsight is a great thing is it not?

To be fair to the op and his broker this was one of the very few of these type of products to be regulated and also having the Friends First wrapper may have influenced things a bit.

Advising him/her to avoid all funds in future seems a bit ott.
 
Are you joking ??? from 20 K to 11 K in such a short space of time ... , I would be looking to prosecute.
I'm not joking. The investment timeframe is at least 5 years. We don't know what advice the original poster received. We don't know what they were looking for. We don't know what their circumstances are (they could be a billionaire taking a high risk punt on a leveraged €20K investment for all we know). In short we cannot judge the investment or advice in the absence of more detailed info.
 
Are you joking ??? from 20 K to 11 K in such a short space of time ... , I would be looking to prosecute.

This always was a high-risk investment product.

If it had gone from 20K to 29K in the same time period, what would you then think? Would you still be looking to prosecute?
 
OP did you or did you not realise the investment could go up as well as down? Did you think it could only go up ? Did you know it was a high risk investment? From your post it seems you took a gamble and you now want to get out of it because it didn't go the way you expected.
 
Zoe

Did you get a "Reasons Why" letter from the broker?

Did it explain clearly that this is a high risk investment?

If it did not do so, then you may well have been mis-sold and should ask the broker to refund your money.

If the broker did tell you clearly that this was a high risk investment, then you have no complaint. And you must decide whether it is still appropriate for you to have this investment.

Brendan
 
Was this a once off lump sum investment of 20K or have you contribuated anything monthly? Also you need to read you policy statement and see what it states there!
 
This always was a high-risk investment product.

If it had gone from 20K to 29K in the same time period, what would you then think? Would you still be looking to prosecute?


Buying into a property fund in June last year, and gettin a 9K bump is highly unlikely.

The fact this fund was sold to a novice buyer is a scandal.
 
Buying into a property fund in June last year, and gettin a 9K bump is highly unlikely.

The fact this fund was sold to a novice buyer is a scandal.

Perhaps but we dont know the details of the transaction, perhaps the client went to his broker and said " I want to invest 20K into a leveraged high risk property product - I am aware that the investment could rise significantly or fall drastically as is the nature of the product" In which case the broker may have sold the above investment as an ideal investment to suit the OP's needs.

It could just be a case of The fact that a novice buyer bought this investment is a scandal.
 
Buying into a property fund in June last year, and gettin a 9K bump is highly unlikely.

You can only say that with hindsight.

The fact this fund was sold to a novice buyer is a scandal.

How do you know that zoe-90 was a novice? Do you know something we don't?

Let me be clear. If zoe-90 posts more information to suggest that s/he was not made aware of the risks of investing in a high risk product or it was in any way mis-sold, I'll be the first to suggest that s/he takes every step necessary to seek redress.

But s/he has not given enough detail for any of us to jump to this conclusion. Until s/he clarifies this, there's no point in leaping to the conclusion that it was a disgrace and that the broker should be hung from the neck until dead or whatever.
 
Buying into a property fund in June last year, and gettin a 9K bump is highly unlikely.
.
I’m not certain on this. If you use the prices of the Hibernian Irish Commercial Property Fund as a proxy for IE commercial property prices, the value of IE commercial property was increasing until November 2007. (Since then the Hibernian fund has declined by about 22%, so a geared fund would decline by more.)

If the OP’s broker advised buying in June 2007, he / she advised buying in a rising and not a declining market, so I suggest it would be difficult to argue mis-selling here.

The OP’s main risk is probably that if the LTV value of the fund declines significantly the fund might breach its banking agreement. Rather than speculate further, it would be prudent for the OP to query his / her broker on this point.
 
Perhaps but we dont know the details of the transaction, perhaps the client went to his broker and said " I want to invest 20K into a leveraged high risk property product - I am aware that the investment could rise significantly or fall drastically as is the nature of the product" In which case the broker may have sold the above investment as an ideal investment to suit the OP's needs.

It could just be a case of The fact that a novice buyer bought this investment is a scandal.


You could be right, the inference I took was OP did not get good advice, maybe she can update with information broker gave.
 
You can only say that with hindsight..


Not true, property market was weak in 2006.


How do you know that zoe-90 was a novice? Do you know something we don't?

Let me be clear. If zoe-90 posts more information to suggest that s/he was not made aware of the risks of investing in a high risk product or it was in any way mis-sold, I'll be the first to suggest that s/he takes every step necessary to seek redress.

But s/he has not given enough detail for any of us to jump to this conclusion. Until s/he clarifies this, there's no point in leaping to the conclusion that it was a disgrace and that the broker should be hung from the neck until dead or whatever.


Agreed. Lets wait to see what was said.
 
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