Investing in Funds

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  • EdGasket
    EdGasket Posts: 3,503 Forumite
    dunstonh wrote: »
    To some extent yes. However, the variances still exist. How much is the US down compared to China for example.

    And what is an IFA going to tell us about that? Either that China offers better value or the US is safer/more resilient? Either way its just one opinion amongst many and no more likely to be correct than the OP deciding for themsleves.

    OP with £70K to invest you are just small fry to an IFA. Are you really going to put all your money where a complete stranger who you've only just met suggests or take responsibility for the decision yourself?
  • dunstonh
    dunstonh Posts: 116,041
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    And what is an IFA going to tell us about that? Either that China offers better value or the US is safer/more resilient? Either way its just one opinion amongst many and no more likely to be correct than the OP deciding for themsleves.

    The IFA is going to provide structure, asset allocation and research. Not to chase returns (as that usually ends up being futile and gives lower returns. That said, the allocations that advisers use tend to be fluid and get adjusted throughout the economic cycle.
    OP with £70K to invest you are just small fry to an IFA.

    Whilst some IFAs may not be interested, there are plenty that will be.
    Are you really going to put all your money where a complete stranger who you've only just met suggests or take responsibility for the decision yourself?

    A stranger that is qualified, regulated and comes with consumer protection vs none of that if you DIY. And what is every poster on this site to the individual? A stranger.

    I have said many many times before that there is nothing wrong with DIY if you know what you are doing. if you dont then using an IFA makes sense. It is up to each individual to decide for themselves what they should 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.
  • EdGasket
    EdGasket Posts: 3,503 Forumite
    dunstonh wrote: »
    I have said many many times before that there is nothing wrong with DIY if you know what you are doing. if you dont then using an IFA makes sense.

    ...just don't use this one:

    http://forums.moneysavingexpert.com/showthread.php?t=5328644
  • dunstonh
    dunstonh Posts: 116,041
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    EdGasket wrote: »

    1 - we dont know the facts.
    2 - we dont know if its an IFA (or even an FA as its insurance related - I havent done an insurance contract in over 5 years. It could be a protection adviser. I have several mortgage and insurance only advisers that refer to me)
    3 - The consumer protection that exists may be called into play which is why it exists.

    How about we pull up all the failed DIY investor posts as well? It serves no purpose and just brings us back to what has already been said. If you can DIY and do it well then you should DIY. If you cant then use an IFA.
    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.
  • AlanP_2
    AlanP_2 Posts: 3,250
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    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.

    I haven't used an IFA so not sure about the %'age rate but it sounds lower than most I have seen quoted on MSE from memory.

    Assuming 6% growth p/a over 10 years (after fund charges) and a 0.75% pa fee then it would cost in the region of £7k over the 10 year period, reducing your overall return from 68 to 58%.

    Substantial as you say but still a very reasonable overall return.

    Still no way of knowing whether you would do better or worse DIY though.

    My bigger worry about IFA charges is the impact when the value of your investment falls as all they do then is increase the loss as opposed to reducing the gain which "feels" worse to me :D

    So, still no easy answer, and TBH there never will be. The simple option is to pass the problems to the IFA and spend time doing your own research and learning more alongside them. Then, if you feel more comfortable and confident later on switch to DIY.
  • ColdIron
    ColdIron Posts: 8,902
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    EdGasket wrote: »
    Are you really going to put all your money where a complete stranger who you've only just met suggests or take responsibility for the decision yourself?
    Fallacious argument, would you apply the same logic to a cardiac consultant regarding the fitting of a stent or would you take responsibility for the decision yourself?
  • bigadaj
    bigadaj Posts: 11,531
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    ColdIron wrote: »
    Fallacious argument, would you apply the same logic to a cardiac consultant regarding the fitting of a stent or would you take responsibility for the decision yourself?

    I love the irony there, two fallacious arguments don't make a righteous one.

    Diying the stent could be a bit more serious than some investment loss!
  • EdGasket
    EdGasket Posts: 3,503 Forumite
    ColdIron wrote: »
    Fallacious argument, would you apply the same logic to a cardiac consultant regarding the fitting of a stent or would you take responsibility for the decision yourself?

    No because it is not possible to fit a stent to oneself; not even if you are a heart surgeon. It is quite possible and not difficult to decide where to put your own money without paying someone to tell you.
  • Hi,

    Due to a number of reasons which are not relevant to this thread, I've not progressed my investment.

    I have however had a few discussions with IFA's to discover what they could offer me.

    I'm considering now my options.

    I have two IFA offerings:

    1. 1.8% initial fee. 1.6% TER.
    2. 3% initial fee. 1.2% TER.

    All these include annual reviews, rebalancing etc.

    I've been looking into the self invested passive option with more vigour at the minute.
    It would seem that if I opted to plonk the money (£130k) into a passive fund with someone like iWeb and just sat back, the saving on the TER and initial fee would keep it ahead of an actively managed fund.

    Is this understanding correct? I'm currently looking at the Vanguard LS80 fund. It is wise looking at this as I think it has a significant UK bias to the constituent funds.

    Or would a well managed active portfolio beat it over the long term (~15 yrs).

    I need to get this sorted soon.


    Thanks.
  • another option would be to use an IFA but tell them you'd like a passive (or mostly passive) solution. at least some IFAs would be prepared to do that. and it would give you something cheaper than an IFA using active funds, but more expensive than passive DIY.

    £130k in VLS80 with iweb is undoubtedly very low cost, and IMHO a very decent solution providing it's suitable for you. nobody knows whether a more expensive active solution will beat it over 15 years, but the odds are stacked in your favour when you've kept the costs so low.

    VLS80 is pretty high up the risk scale - it's not suitable for everybody. can you happily sit tight (and wait for a recovery) if your investment falls by perhaps 40% in value?

    presumably this will be mostly unwrapped initially. can you deal with "bed and ISA", i.e. shifting a bit more of it into an ISA each year?

    would you be better off shifting some of this into a pension (again, this would probably need to be done gradually) instead of into an ISA? (incidentally, i would have hoped that IFAs would have raised this question.)
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