Investing in Funds

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  • EdGasket
    EdGasket Posts: 3,503 Forumite
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    AlanP wrote: »
    This will cost you less per annum to run than an IFA provided service but nobody knows whether it will deliver a better or worse performance over the period of the investment.
    But one thing is for certain; going DIY will definitely save you ongoing IFA charges. IFA's don't have a crystal ball so on average will not beat the market any more than you can on average BUT they will charge you for not beating the market.
  • dunstonh
    dunstonh Posts: 116,378 Forumite
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    IFA's don't have a crystal ball so on average will not beat the market any more than you can on average BUT they will charge you for not beating the market.

    IFAs bring structure, research and due diligence. It may not beat the market but then it may do.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • eskbanker
    eskbanker Posts: 31,062 Forumite
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    EdGasket wrote: »
    IFA's don't have a crystal ball so on average will not beat the market any more than you can on average BUT they will charge you for not beating the market.
    Surely the role of the IFA is to help investors identify the right markets to be in, not to try to beat them?
  • AlanP_2
    AlanP_2 Posts: 3,252 Forumite
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    edited 22 September 2015 at 1:00PM
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    EdGasket wrote: »
    But one thing is for certain; going DIY will definitely save you ongoing IFA charges. IFA's don't have a crystal ball so on average will not beat the market any more than you can on average BUT they will charge you for not beating the market.


    I'm not saying you are wrong Ed, my investments are DIY using low cost Trackers.

    BUT if I had a £70k lump sum I'd think twice about going DIY and that's after reading Monevator, Tim Hale and a few other books and some (few months) experience.

    The main reason being that I was moving away from investing a small regular amount into a SIPP and gaining a tax break along the way (and it is a very small %'age of total pension arrangements) to a point where a "full on" review of our overall situation and future plans would be worthwhile.

    I make a clear distinction between trusting myself to invest a few thousands a year into simple tracker funds which, ultimately we are not relying on, and investing a significant lump sum where a greater number and more complex options should come into consideration.

    Or putting an alternative scenario in place I trust myself to maintain my tyre pressures, top up the oil and water etc. but there is no way I am going to carry out a full service and carry out regular maintenance on my car.

    DIY would be cheaper as I wouldn't be paying a specialist who has all the tools, equipment and vastly more experience but would I be better off in the long run?
  • EdGasket
    EdGasket Posts: 3,503 Forumite
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    eskbanker wrote: »
    Surely the role of the IFA is to help investors identify the right markets to be in, not to try to beat them?

    Isn't that the same thing as 'beating the market'? If you claim to know the right markets to be in (presumably the ones that will go up) then you are claiming to beat the (overall) market, no? They might offer advice about bonds vs equities but your average joe can read that up in a day and find out what they need to know. Otherwise equity markets are pretty much global these days; take today for example, everything is down!
  • dunstonh
    dunstonh Posts: 116,378 Forumite
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    Isn't that the same thing as 'beating the market'?

    What market? The primary objective above all other things for an IFA is suitability for the individual.
    If you claim to know the right markets to be in (presumably the ones that will go up) then you are claiming to beat the (overall) market, no?

    That isnt what an IFA does. An IFA should be looking at structure and process. Not trying to time which markets are best or not best for the future.
    They might offer advice about bonds vs equities but your average joe can read that up in a day and find out what they need to know.

    yet this site shows that most of the new DIY investors are investing above the risk profile of the average Joe. We also know that new DIY investors are prone to fashion investing. And lets be honest, the average Joe isnt going to have a clue about fixed interest and equity ratios and how some fixed interest can be low risk and some high risk.
    Otherwise equity markets are pretty much global these days; take today for example, everything is down!

    To some extent yes. However, the variances still exist. How much is the US down compared to China for example.
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • funkey_monkey
    funkey_monkey Posts: 391 Forumite
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    Al. wrote: »
    Funkey,

    Do you know what your capacity for investment risk and loss is? 6% for a cautious fund? I wish!


    As I'm youngish still. I'm prepared to take an above average level of risk and then towards retirement start pulling it back into safer options in order to protect any gains.
    I'm assuming too, that the 0.75% doesn't include the cost of the funds and/or investment platform?


    There was a setup charge that is being waived.
  • jimjames
    jimjames Posts: 17,621 Forumite
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    eskbanker wrote: »
    Surely the role of the IFA is to help investors identify the right markets to be in, not to try to beat them?
    It seems like there is a misunderstanding about the role of an IFA. Doesn't make it easy for people to recommend using or not when they aren't even clear about the role they perform.

    I'd agree with your description and probably add that they also suggest the proportions for bonds vs equities as well as how to split across funds covering different assets/regions.
    Remember the saying: if it looks too good to be true it almost certainly is.
  • funkey_monkey
    funkey_monkey Posts: 391 Forumite
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    AlanP wrote: »
    As said it is reasonably straightforward to go DIY, select your own mix of Funds / ETFs / Bonds and the like that are invested in different geographic and market sectors (small / large companies, property etc).
    Knowing how to mix these and continually monitor their performance and knowing when to switch etc are my concerns.
    This will cost you less per annum to run than an IFA provided service but nobody knows whether it will deliver a better or worse performance over the period of the investment.
    I'm not sure what to do - is 0.75% a lot for management. I assume that the funds in the portfolio will also have fees attached - which means a double hit if I go down the IFA route. Whereas if I go it alone I only get stung for the fund fees. Compounding of 0.75% of the fund over the period could be a significant amount.
    When do you need that £70k available as cash again?
    Not for the long term ~ 10 years.
    What other cash savings have you got access to as an emergency fund?
    I have approx split between £50k in mostly in ISA's and some cash. Both can be got at relatively easily if required.
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
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    dunstonh wrote: »
    To some extent yes. However, the variances still exist. How much is the US down compared to China for example.

    US companies are borrowing to fund share buybacks. All is not what it seems.
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