so confused after meetings with IFA

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  • BananaRepublic
    BananaRepublic Posts: 2,103 Forumite
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    It is a large amount of money, and hence you might wish to do some background reading about investment, and think about the purpose of the money, if you have not already done so. One aspect though is key to the approach you will take, and that is the timescale. Do you want access to the money next year, if so you will need to use very low risk investments such as savings accounts. If you are happy to leave it, or a large portion, for 10 years or more, then so called higher risk investments such as unit trusts may well be the way to go. I know you feel uneasy with such investments, but you would need to do background reading to understand what they are and even then you might still feel uneasy with that approach.

    Alternatively, if you are prepared to lose quick access to the money, what about property? Do you own a home? Your own home has big tax advantages such as no capital gains tax, so you could move to a larger house, or a house in a nicer area, and enjoy the growth in value. This assumes of course that you live in an area that sees worthwhile house price growth.

    But if you do stick the money in savings accounts for 10 years, be prepared to see the value whittled away by inflation.
  • jimjames
    jimjames Posts: 17,619 Forumite
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    jacob.uk wrote: »
    It made me wonder, with all these charges, how the hell are they going to make me any money on a "cautious" investment portfolio.
    The only thing I'd suggest is that you seem to be considering the whole amount as one pot that has to be kept as such. There is no reason why part couldn't be kept as cash savings and part invested. How you arrange the proportion between the two will be down to your risk tolerance but if you had £90k in cash and £10k invested then even if the market drops 50% you'd still have 95% of your money.
    Remember the saying: if it looks too good to be true it almost certainly is.
  • JohnRo
    JohnRo Posts: 2,887 Forumite
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    It's ironic how, when contemplating risk and reward a fear of short term red numbers often leads to long term red numbers.
    'We don't need to be smarter than the rest; we need to be more disciplined than the rest.' - WB
  • jacob.uk
    jacob.uk Posts: 10 Forumite
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    atush wrote: »
    Going forwards, if you meet other IFAs, I would expect to pay not 3%, but a fixed fee, In your case, probably not more than 3-4K max.

    I would at least look at investing 20% of your money, to cover inflation risk long term. The savings ladder looks good for you as well.

    But really it will be hard to keep up with inflation in your case.

    Thank you, that is what we were possibly thinking of doing, holding 75%-80% in cash, Fixed term bonds etc, chasing what interest rates we could
    And just using 20% or so to invest in S&S, Government bonds, etc, but the IFA was advising against that and wanting us to invest the whole lot, which was making me very uneasy
  • jacob.uk
    jacob.uk Posts: 10 Forumite
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    BananaRepublic wrote: »
    It is a large amount of money, and hence you might wish to do some background reading about investment, and think about the purpose of the money, if you have not already done so. One aspect though is key to the approach you will take, and that is the timescale. Do you want access to the money next year, if so you will need to use very low risk investments such as savings accounts. If you are happy to leave it, or a large portion, for 10 years or more, then so called higher risk investments such as unit trusts may well be the way to go. I know you feel uneasy with such investments, but you would need to do background reading to understand what they are and even then you might still feel uneasy with that approach.

    Alternatively, if you are prepared to lose quick access to the money, what about property? Do you own a home? Your own home has big tax advantages such as no capital gains tax, so you could move to a larger house, or a house in a nicer area, and enjoy the growth in value. This assumes of course that you live in an area that sees worthwhile house price growth.

    But if you do stick the money in savings accounts for 10 years, be prepared to see the value whittled away by inflation.
    I dont need the money for 10 years as I am going to be mortgage free after purchasing new home anyway.

    I dont need to earn an income from the money, I just wanted it to be somewhere safe, to possibly grow and in 10 years time I will either upsize on my property again, or I might move to partners home country.
  • badger09
    badger09 Posts: 11,206 Forumite
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    jacob.uk wrote: »
    I dont need the money for 10 years as I am going to be mortgage free after purchasing new home anyway.

    I dont need to earn an income from the money, I just wanted it to be somewhere safe, to possibly grow and in 10 years time I will either upsize on my property again, or I might move to partners home country.

    It will be safe if you deposit it among various banks covered by FSCS, or put it all in NS&I.

    However, if you do that with all of it, it will shrink, rather than grow, due to inflation.

    As jimjames and probably others have said, you don't need to do the same thing with all of it.

    Stick it in NS&I for the time being, or even put some in Premium Bonds, while you gather your thoughts. You really don't need to rush into anything you're not comfortable with.
  • atush
    atush Posts: 18,726 Forumite
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    jacob.uk wrote: »
    Thank you, that is what we were possibly thinking of doing, holding 75%-80% in cash, Fixed term bonds etc, chasing what interest rates we could
    And just using 20% or so to invest in S&S, Government bonds, etc, but the IFA was advising against that and wanting us to invest the whole lot, which was making me very uneasy


    Well i personally would invest more, but if you were thinking of staying only in cash, I was saying you really should consider investing at least 20%. And dont confuse Bonds with equities.
  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
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    jacob.uk wrote: »
    Thank you, that is what we were possibly thinking of doing, holding 75%-80% in cash, Fixed term bonds etc, chasing what interest rates we could
    And just using 20% or so to invest in S&S, Government bonds, etc, but the IFA was advising against that and wanting us to invest the whole lot, which was making me very uneasy

    That's a lot in cash and low interest rate accounts....you are guaranteed to lose money to inflation. How much cash do you really need for other than psychological safety reasons. What is your investing time horizon and what is the money to be used for. If you expect to not need the money for 5 or 10 years or are saving for retirement or financial freedom then you should think about the stock market, I think you'll be well served by some cash in the bank, a savings bond ladder and a VLS fund......do you think you could sleep with 50% in equities.......even retired folks often have a high equity percentage if they are looking at a 30 year retirement and the need to keep up with inflation.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • jimjames
    jimjames Posts: 17,619 Forumite
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    jacob.uk wrote: »
    Thank you, that is what we were possibly thinking of doing, holding 75%-80% in cash, Fixed term bonds etc, chasing what interest rates we could
    And just using 20% or so to invest in S&S, Government bonds, etc, but the IFA was advising against that and wanting us to invest the whole lot, which was making me very uneasy

    There is zero point in my view putting any of the "investment" part in bonds if you are balancing it against 80% cash
    Remember the saying: if it looks too good to be true it almost certainly is.
  • Heedtheadvice
    Heedtheadvice Posts: 2,460 Forumite
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    You are getting lots of good advice on this thread and for what it is worth I tend to agree with much of it.

    What I glean from your aims is you want safety and hopefully a little growth too over a reasonably long period.

    Diversification ought to be key, not just between cash and investments but also medium and longer term potential returns/losses, investment types, geography, low and higher risk, straight growth and those paying income.
    As has been mentioned, apart from a few accounts with relatively limited amounts, cash currently will lose you money and over ten years that will be significant in real terms. At present cash is probably best IMHO for a bit of smoothing (volatility risk reduction) and immediacy of availability such as will be required from an emergency fund.
    Investment will generally have short term fluctuations of market linked but over the longer term, especially if you have no outside influence causing you to sell at a specific time, you should not only equal but beat inflation.
    If you think you will need the capital in say ten years time as that period approaches, if you find yourself beating inflation, crystallise your gains? If you are up by 20% in real terms you are a winner. All you need to do is accept that you might miss out on further gains and otherwise protected against losses. You may be told not to time the market, I tend to agree, but that might just meet your objective!
    A very 'safe' approach might be your instinct to be cautious, but I agree with Atush about a higher amount in S&S as caution in one area just leaves you open to risks in other areas!

    I am a fan of investment trusts, they are not for everybody but like other investments they are collective and help with diversity which helps with safety. Some of the best historically not only protect capital but also provide increasing income which can be reinvested for even better risk reduction and growth.
    It does sound to me that you do need help and selecting an IFA to give you correct advice is not easy and can be hit and miss (you might do worse than using Dunstonh!) but there are alternatives with good stockbrokers who will advise and manage your investments for you given the amount you have. You may pay a little for this but their gains on your capital should outway that. Those that run ISAs could be best as you will then, over the years, build up the finance within the USA and protect to a degree against capital gains tax should your investments do really well.

    I would not rate much any of the IFA advice you have currently had but that advice e will also depend on the emphasis you have given regarding your objectives. Can seems closest but the original caution you posted later seems to be more relaxed a little when you talk of making some gain.

    Last, but not least, having mentioned quick access emergency funds, also consider the longer term and adding to any pension you may have. Again this will be a sort of diversification!
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