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  • FIRST POST
    • Jon_W
    • By Jon_W 6th Mar 17, 10:57 PM
    • 108Posts
    • 17Thanks
    Jon_W
    What will a financial adviser do for me?
    • #1
    • 6th Mar 17, 10:57 PM
    What will a financial adviser do for me? 6th Mar 17 at 10:57 PM
    I am reading Smarter Investing by Tim Hale. I coped up until chapter 7 where I found it difficult. 8 was harder and 9 doesn't make any sense at all to me (I am in NO way blaming the book here!!).

    The book makes a rational case for spreading your investments between (high quality, shorter term) bonds and equity (including emerging markets and lower value and risky companies) depending on what you want your holdings to do.

    I don't know where to start. If you said to me 'Go and buy a UK Governmenr bond' I wouldn't know what to do. If you said to me 'Invest in a fund that replicates the FTSE All Share Index', likewise.

    Would I be able to sit down with an adviser and say something like:

    1. I am nearing 40
    2. I have no pension or other assets
    3. I want to invest a fair-sized 5 figure sum so that it grows steadily to provide for when I'm retired
    4. But it needs to be liquid in case I ever need cash for an emergency
    5. This should be split between around 20% in bonds and 80% equities spread like this according to this book( the table 7.9 for anyone who has the book)

    Can you use my money to buy funds to represent this mix?

    Also would those fund managers reinvest the income from the fund back into or does my adviser decide where to invest it?

    What sort of fees will the adviser charge, a flat fee or a percentage of any gains?

    I can imagine some jaws hitting the floor with some of the basic Qs I've asked here!
Page 5
    • AlanP
    • By AlanP 9th Mar 17, 9:39 PM
    • 813 Posts
    • 561 Thanks
    AlanP
    Thanks, dunstonh. Would you still have the same alarm bells if only my EQUITY stake is to be in a single tracker, the rest in a bonds fund? About 80/20 split? I wish you were local, I'd pay to see you!
    Originally posted by Jon_W
    If you believe Dunstonh can "add value" for you why don't you think a local IFA could?

    Whilst his comments on here are worth reading and have helped many I doubt he would claim to be the Number-1 IFA and better than all the rest.

    Finding a local one that you feel comfortable with might mean you need to make a few phone calls and meet face/face with your shortlist but if you feel that a "trusted adviser & guide" will help you then the effort would be worth it surely?
    • aj9648
    • By aj9648 9th Mar 17, 9:52 PM
    • 1,062 Posts
    • 95 Thanks
    aj9648
    I must admit I am liking the sound of the Vanguard LS80. It matches the 8020 mix and as an OEIC rather than an ETF I could just put money in and leave it and not have to worry about reinvesting any proceeds.
    Originally posted by Jon_W
    Whats with the vanguard 8020 - is it being trolled on this site - every post I read someone mentions it !!!!
    • bowlhead99
    • By bowlhead99 9th Mar 17, 11:22 PM
    • 6,502 Posts
    • 11,500 Thanks
    bowlhead99
    Whats with the vanguard 8020 - is it being trolled on this site - every post I read someone mentions it !!!!
    Originally posted by aj9648
    It's a cheap and easy "off the shelf" portfolio fund built out of trackers. If you know you want 80% global equities and 20% a bond tracker mix and nothing else, and three quarters of the equities to be international built off cap weighted trackers and one quarter to be the UK All share index, then basically you need go no further; it is cheap and available on most mainstream platforms and has only existed during a bull market so all the charts that you can get look pretty nice.

    If you're daunted by researching the world of investments and someone suggests a solution that "if you agree with x, y, and z you need go no further", it is certainly very tempting to start reading around the subject to see whether you can convince yourself with limited research that you do indeed agree that you want x, y, and z. And hey, maybe you give up that reading early because you see lots of other people saying they use it so it must be alright... so maybe you'll sign up too.

    So the person does that and buys it as their ISA or personal pension and sticks around on the forum community. The next month a question comes up from someone daunted by investment choices. "Ah, I can help with that", they think, " hey fellow newbie I was in your shoes last month, have a look at VLS range, I was pleasantly surprised how easy it was, apparently it's all you need, it has certainly been fine for me so far".

    And then someone else chips in with research that says trackers beat active and mostly global equities is fine if you're going to be invested long term and have some global bond index to take a bit of the edge off huge crashes. And another person says they heard vanguard were cheap and reliable so they bought it too. End of thread, no further discussion needed, boom, another convert.

    Not necessarily the best solution for the individual who's been converted, and maybe a really bad one if the investor didn't really want that risk profile - but it saved them hours of research that they didn't feel qualified to do, so they will likely be content with it. Until maybe (for some proportion of the investors) it turns out they should have spent longer learning about investments and considering every option, because they get a really bad result that scares them into selling at a loss.

    Basically it has gone viral and is unstoppable, with exponential increases in the number of people who will comment that they have it on any thread that mentions any type of multi asset portfolio in a SIPP or ISA or unwrapped. If it works, why not mention you have it and is working and it was cheap and easy and investing is not so hard after all.

    While markets are doing well, vanguard are getting a huge amount of free publicity here. What we really need is a 50-60% equities crash to see whether all the casuals who thought it was best to just follow the herd without doing more than a cursory bit of research, are still happy with it and actually add to it at the bottom of the market collapse... or will they humbly walk off with their tails between their legs realising they have lost a packet and it wasn't too good to be true after all so they'll stop talking about how great it is.

    FWIW, it's not at all a bad product and bringing accessible multi asset investing to the masses cheaply is undoubtedly a good thing. But you can't walk into many investment threads without having it rammed down your throat. A bit like high interest current accounts and regular saver accounts for anyone who has a few pounds to save and dares to use premium bonds or cash ISAs
    Last edited by bowlhead99; 10-03-2017 at 9:24 AM.
    • Jon_W
    • By Jon_W 10th Mar 17, 9:12 AM
    • 108 Posts
    • 17 Thanks
    Jon_W
    At the risk of overloading you with even more information, have you seen this website?

    https://www.moneyadviceservice.org.uk/en/articles/stocks-and-shares-isas

    I've linked to the S&S ISA pages, but it covers many other financial topics in straightforward language.

    Please don't go to your local bank for information on investments. They will not be able to give you impartial advice, because they are not allowed to, so they will will only tell you about their own or group products. These are likely to be very expensive
    Originally posted by badger09
    Thanks, simple links are always appreciated!
    • Jon_W
    • By Jon_W 10th Mar 17, 10:01 AM
    • 108 Posts
    • 17 Thanks
    Jon_W
    It's a cheap and easy "off the shelf" portfolio fund built out of trackers. If you know you want 80% global equities and 20% a bond tracker mix and nothing else, and three quarters of the equities to be international built off cap weighted trackers and one quarter to be the UK All share index, then basically you need go no further; it is cheap and available on most mainstream platforms and has only existed during a bull market so all the charts that you can get look pretty nice.

    If you're daunted by researching the world of investments and someone suggests a solution that "if you agree with x, y, and z you need go no further", it is certainly very tempting to start reading around the subject to see whether you can convince yourself with limited research that you do indeed agree that you want x, y, and z. And hey, maybe you give up that reading early because you see lots of other people saying they use it so it must be alright... so maybe you'll sign up too.

    So the person does that and buys it as their ISA or personal pension and sticks around on the forum community. The next month a question comes up from someone daunted by investment choices. "Ah, I can help with that", they think, " hey fellow newbie I was in your shoes last month, have a look at VLS range, I was pleasantly surprised how easy it was, apparently it's all you need, it has certainly been fine for me so far".

    And then someone else chips in with research that says trackers beat active and mostly global equities is fine if you're going to be invested long term and have some global bond index to take a bit of the edge off huge crashes. And another person says they heard vanguard were cheap and reliable so they bought it too. End of thread, no further discussion needed, boom, another convert.

    Not necessarily the best solution for the individual who's been converted, and maybe a really bad one if the investor didn't really want that risk profile - but it saved them hours of research that they didn't feel qualified to do, so they will likely be content with it. Until maybe (for some proportion of the investors) it turns out they should have spent longer learning about investments and considering every option, because they get a really bad result that scares them into selling at a loss.

    Basically it has gone viral and is unstoppable, with exponential increases in the number of people who will comment that they have it on any thread that mentions any type of multi asset portfolio in a SIPP or ISA or unwrapped. If it works, why not mention you have it and is working and it was cheap and easy and investing is not so hard after all.

    While markets are doing well, vanguard are getting a huge amount of free publicity here. What we really need is a 50-60% equities crash to see whether all the casuals who thought it was best to just follow the herd without doing more than a cursory bit of research, are still happy with it and actually add to it at the bottom of the market collapse... or will they humbly walk off with their tails between their legs realising they have lost a packet and it wasn't too good to be true after all so they'll stop talking about how great it is.

    FWIW, it's not at all a bad product and bringing accessible multi asset investing to the masses cheaply is undoubtedly a good thing. But you can't walk into many investment threads without having it rammed down your throat. A bit like high interest current accounts and regular saver accounts for anyone who has a few pounds to save and dares to use premium bonds or cash ISAs
    Originally posted by bowlhead99
    I hear you. But I know I will get the crashes and I am honestly prepared for the very long haul. I expect another Eurozone crisis, at least, and other states may well end up leaving the EU over the next 10-15 years (Italy, for example). This is a very, very selfish point but I am hoping for a downturn before I buy-in.

    On another note if I have only £40k that I want to invest at this stage (rest being kept in cash) then it makes sense to hold whatever funds I buy into in the wrapper of an ISA over two years doesn't it so I'm completely shielded from tax in future?

    if so www.rplan.co.uk looks interesting. It seems they specialise a bit in funds only S & S ISAs. https://www.rplan.co.uk/home/tour

    Or maybe hold £10k in a stocks and shares LISA and £30k in a stocks and shares ISA in case I need cash.

    With a S & S LISA is the government's 'top-up' of it via the tax refund automatically invested into the funds held in the LISA? Can I designate how much is invested in each of the funds held in the LISA?
    Last edited by Jon_W; 10-03-2017 at 10:29 AM.
    • Malthusian
    • By Malthusian 10th Mar 17, 10:04 AM
    • 2,423 Posts
    • 3,383 Thanks
    Malthusian
    Don't worry - I will take everything he/she says with a grain of salt. I am literally just going to use it as a mining exercise to see how to go about even buying into funds, etc.
    Originally posted by Jon_W
    People with more financial knowledge than you have walked into banks "just for some information" and walked out having put their money in some god-awful structured product or investment bond. Just saying.

    Anyway, it's a complete waste of time. The best case scenario is that you will get some information you could have obtained much more efficiently from the web, an IFA or here. The worst case scenario is that they give you duff or out-of-date information due to poor training and/or their desire to flog junk and then you have to come here to untangle it.

    I struggle to think of a less efficient means of gaining knowledge than driving / walking to a bank and talking to a salesman.

    Whats with the vanguard 8020 - is it being trolled on this site - every post I read someone mentions it !!!!
    Originally posted by aj9648
    It's the MSE equivalent of Godwin's Law. As any discussion about savings and investments grows longer, the probability of someone recommending Vanguard Lifestrategy tends to 1. Maybe we could call it Bowlhead's Law ;-)
    • jdw2000
    • By jdw2000 10th Mar 17, 10:08 AM
    • 415 Posts
    • 108 Thanks
    jdw2000
    It's a cheap and easy "off the shelf" portfolio fund built out of trackers. If you know you want 80% global equities and 20% a bond tracker mix and nothing else, and three quarters of the equities to be international built off cap weighted trackers and one quarter to be the UK All share index, then basically you need go no further; it is cheap and available on most mainstream platforms and has only existed during a bull market so all the charts that you can get look pretty nice.

    If you're daunted by researching the world of investments and someone suggests a solution that "if you agree with x, y, and z you need go no further", it is certainly very tempting to start reading around the subject to see whether you can convince yourself with limited research that you do indeed agree that you want x, y, and z. And hey, maybe you give up that reading early because you see lots of other people saying they use it so it must be alright... so maybe you'll sign up too.

    So the person does that and buys it as their ISA or personal pension and sticks around on the forum community. The next month a question comes up from someone daunted by investment choices. "Ah, I can help with that", they think, " hey fellow newbie I was in your shoes last month, have a look at VLS range, I was pleasantly surprised how easy it was, apparently it's all you need, it has certainly been fine for me so far".

    And then someone else chips in with research that says trackers beat active and mostly global equities is fine if you're going to be invested long term and have some global bond index to take a bit of the edge off huge crashes. And another person says they heard vanguard were cheap and reliable so they bought it too. End of thread, no further discussion needed, boom, another convert.

    Not necessarily the best solution for the individual who's been converted, and maybe a really bad one if the investor didn't really want that risk profile - but it saved them hours of research that they didn't feel qualified to do, so they will likely be content with it. Until maybe (for some proportion of the investors) it turns out they should have spent longer learning about investments and considering every option, because they get a really bad result that scares them into selling at a loss.

    Basically it has gone viral and is unstoppable, with exponential increases in the number of people who will comment that they have it on any thread that mentions any type of multi asset portfolio in a SIPP or ISA or unwrapped. If it works, why not mention you have it and is working and it was cheap and easy and investing is not so hard after all.

    While markets are doing well, vanguard are getting a huge amount of free publicity here. What we really need is a 50-60% equities crash to see whether all the casuals who thought it was best to just follow the herd without doing more than a cursory bit of research, are still happy with it and actually add to it at the bottom of the market collapse... or will they humbly walk off with their tails between their legs realising they have lost a packet and it wasn't too good to be true after all so they'll stop talking about how great it is.

    FWIW, it's not at all a bad product and bringing accessible multi asset investing to the masses cheaply is undoubtedly a good thing. But you can't walk into many investment threads without having it rammed down your throat. A bit like high interest current accounts and regular saver accounts for anyone who has a few pounds to save and dares to use premium bonds or cash ISAs
    Originally posted by bowlhead99
    Monevator recommend VLS too, in fairness. Not just this site. (That's not say you aren't right about all of the above).
    • Jon_W
    • By Jon_W 10th Mar 17, 10:30 AM
    • 108 Posts
    • 17 Thanks
    Jon_W
    People with more financial knowledge than you have walked into banks "just for some information" and walked out having put their money in some god-awful structured product or investment bond. Just saying.

    Anyway, it's a complete waste of time. The best case scenario is that you will get some information you could have obtained much more efficiently from the web, an IFA or here. The worst case scenario is that they give you duff or out-of-date information due to poor training and/or their desire to flog junk and then you have to come here to untangle it.

    I struggle to think of a less efficient means of gaining knowledge than driving / walking to a bank and talking to a salesman.



    It's the MSE equivalent of Godwin's Law. As any discussion about savings and investments grows longer, the probability of someone recommending Vanguard Lifestrategy tends to 1. Maybe we could call it Bowlhead's Law ;-)
    Originally posted by Malthusian

    Cheers, I won't bother then. I'll try to find an IFA, somehow.

    I also now think Vanguard LifeStrategy 80: it has nearly 17% in bonds but 14% is in global bonds, not the UK Govt short term and inflation-linked ones which the books recommend. They are in my mix as a defensive/hedging strategy, not a growth provider.
    Last edited by Jon_W; 10-03-2017 at 10:37 AM.
    • dunstonh
    • By dunstonh 10th Mar 17, 10:56 AM
    • 88,375 Posts
    • 53,591 Thanks
    dunstonh
    I also now think Vanguard LifeStrategy 80: it has nearly 17% in bonds but 14% is in global bonds, not the UK Govt short term and inflation-linked ones which the books recommend.
    Forget what the book says. Fixed interest securities go through cycles and at different points in the cycle, different types will be more favourable (and the volatility levels change with them too which means the split between equities and bonds will be fluid with it). A book is written and published on a given date. It is out of date within 6-12 months.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • bowlhead99
    • By bowlhead99 10th Mar 17, 10:57 AM
    • 6,502 Posts
    • 11,500 Thanks
    bowlhead99
    Monevator recommend VLS too, in fairness. Not just this site. (That's not say you aren't right about all of the above).
    Originally posted by jdw2000
    Yes, plenty of people recommend it. Because it is a decent product and is an option that could be useful for many who wanted a product that does what it does.

    On a parallel, Monevator is another example of something that plenty of people here recommend. Because it is a decent blog and is an option that could be useful for many who wanted to be told what it tells people.

    I would be happy to say to anyone, take a look at VLS, take a look at Monevator, they are competent offerings. That is of course quite different from saying that VLS x% equities has the best likelihood of a good return for you, or that the general philosophy which Monevator puts forward is one that you must embrace.


    On another note if I have only £40k that I want to invest at this stage (rest being kept in cash) then it makes sense to hold whatever funds I buy into in the wrapper of an ISA over two years doesn't it so I'm completely shielded from tax in future?
    Originally posted by Jon_W
    Yes - in recent years we have seen changes on dividend tax rates and allowances for example and if you are investing a large chunk of money it makes sense to use the available wrappers that they give you. If you hadn't used your ISA allowance this year, you could do £15k into a S&S ISA before 5 April, £20k into an S&S ISA on 6 April '17, and another £20k on 6 April '18. That would be over £50k entirely protected from tax and available for investment, in the space of only 13 months. Pretty good.

    Unless you did not want so much investment risk and wanted to have more cash products in which case you might find higher rates for some of that £50k outside ISAs ( I haven't been following your whole thread)

    Or maybe hold £10k in a stocks and shares LISA and £30k in a stocks and shares ISA in case I need cash.
    LISA comes with a government top up, but the downside of that top up is a penalty of greater than the top up if you want to take it out for a non-qualifying reason (i.e. you are not buying a qualifying property and you are not age 60+). So having money in a 'normal' S&S ISA, forgoing the bonus, is sensible if you may want earlier access for an emergency or some opportunity which you had not forseen today.

    For example you might decide in ten years time that you wanted to make a large pension contribution and get 40% tax relief as a higher rate tax payer (turning £6000 into £10000 for a 67% 'bonus') rather than having taken the government 25% bonus in the LISA. So using the standard 'non LISA' S&S ISA product with penalty-free access would be quite useful for building towards that objective.

    You are not going to be able to get more than £4k (plus bonus) of new contributions into a LISA each year anyway, because of the annual limit.

    With a S & S LISA is the government's 'top-up' of it via the tax refund automatically invested into the funds held in the LISA? Can I designate how much is invested in each of the funds held in the LISA?
    Yes. The government (via the ISA manager) credits your account. It is up to you to decide what to do with the cash that arrives in your account.

    In the world of pensions, there are some provider's products where you are making monthly direct debit /standing order contributions into the pension and into underlying funds each month, and then when the pension provider claims the tax relief each month, they automatically invest it into the same funds in the same proportions that you had set up on your fixed monthly allocation of contributions. So, some providers might offer something similar to that, when they get their LISAs up and running and settled down.

    However, the admin is easier if they just throw all the claimed government bonus money into a 'cash pot' within your account and then you decide which fund(s) to spend it on. That would certainly be the case in the first year when the first government bonus is not going to be claimed by your provider until after the end of the tax year. The bonus claims will be able to happen in-year during year two onwards, but by that point the customer expectations will probably be that the bonuses will be available to do with as the customer wants, and so most/all managers will probably run the accounts that way.
    • Sean473
    • By Sean473 10th Mar 17, 11:16 AM
    • 65 Posts
    • 29 Thanks
    Sean473
    You say they are not adding to the process. However, that is an incorrect assumption. For example, after charges, our portfolio that matches closest to VLS60 in risk has outperformed VLS60. You should not assume that cheaper is better (or that more expensive will be either)



    Some will. Some wont. The term IFA covers many different business models.



    IFAs have to be independent. FAs do not.
    Originally posted by dunstonh
    Hi, If I may ask, how have you structured that portfolio which outperforms VLS60? Would like to know
    • dunstonh
    • By dunstonh 10th Mar 17, 12:10 PM
    • 88,375 Posts
    • 53,591 Thanks
    dunstonh
    Hi, If I may ask, how have you structured that portfolio which outperforms VLS60? Would like to know
    Originally posted by Sean473
    You do realise that outperforming VLS60 is not that difficult. VLS is not some spectacular option that is better than everything else out there.

    We buy our allocations in. The allocations are fluid and not fixed and the funds we use include managed and passive. We dont put a restriction on using passive only. So, that does not handicap the potential return.
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • Jon_W
    • By Jon_W 10th Mar 17, 2:25 PM
    • 108 Posts
    • 17 Thanks
    Jon_W
    Forget what the book says. Fixed interest securities go through cycles and at different points in the cycle, different types will be more favourable (and the volatility levels change with them too which means the split between equities and bonds will be fluid with it). A book is written and published on a given date. It is out of date within 6-12 months.
    Originally posted by dunstonh
    But it's the only thing I have to go on, that and Lars Kroijer's, when I've got through that. If it makes sense I'd rather follow a general recommendation by 'experts' than try to find my own mix. It's like this: would I rather ride a mass-produced Yamaha motorbike or a customised Harley Davidson that I've built myself!
    • Jon_W
    • By Jon_W 10th Mar 17, 3:00 PM
    • 108 Posts
    • 17 Thanks
    Jon_W

    Yes - in recent years we have seen changes on dividend tax rates and allowances for example and if you are investing a large chunk of money it makes sense to use the available wrappers that they give you. If you hadn't used your ISA allowance this year, you could do £15k into a S&S ISA before 5 April, £20k into an S&S ISA on 6 April '17, and another £20k on 6 April '18. That would be over £50k entirely protected from tax and available for investment, in the space of only 13 months. Pretty good.

    Unless you did not want so much investment risk and wanted to have more cash products in which case you might find higher rates for some of that £50k outside ISAs ( I haven't been following your whole thread)

    LISA comes with a government top up, but the downside of that top up is a penalty of greater than the top up if you want to take it out for a non-qualifying reason (i.e. you are not buying a qualifying property and you are not age 60+). So having money in a 'normal' S&S ISA, forgoing the bonus, is sensible if you may want earlier access for an emergency or some opportunity which you had not forseen today.

    For example you might decide in ten years time that you wanted to make a large pension contribution and get 40% tax relief as a higher rate tax payer (turning £6000 into £10000 for a 67% 'bonus') rather than having taken the government 25% bonus in the LISA. So using the standard 'non LISA' S&S ISA product with penalty-free access would be quite useful for building towards that objective.

    You are not going to be able to get more than £4k (plus bonus) of new contributions into a LISA each year anyway, because of the annual limit.

    Yes. The government (via the ISA manager) credits your account. It is up to you to decide what to do with the cash that arrives in your account.

    In the world of pensions, there are some provider's products where you are making monthly direct debit /standing order contributions into the pension and into underlying funds each month, and then when the pension provider claims the tax relief each month, they automatically invest it into the same funds in the same proportions that you had set up on your fixed monthly allocation of contributions. So, some providers might offer something similar to that, when they get their LISAs up and running and settled down.

    However, the admin is easier if they just throw all the claimed government bonus money into a 'cash pot' within your account and then you decide which fund(s) to spend it on. That would certainly be the case in the first year when the first government bonus is not going to be claimed by your provider until after the end of the tax year. The bonus claims will be able to happen in-year during year two onwards, but by that point the customer expectations will probably be that the bonuses will be available to do with as the customer wants, and so most/all managers will probably run the accounts that way.
    Originally posted by bowlhead99

    Thanks!

    1. As I still don't know what is what, could I bung the money into the S & S ISA (whether a LISA or not) now and after April 5 and leave it there until I have decided which funds I want to buy and in what proportion?

    2. If I said to you that I can't ever see myself earning a salary which hits the highest tax threshold, would your advice differ?

    Aha : I thought that LISAs had the same annual contribution limit as 'standard' ISAs - I didn't realise there was a £4k limit, so thanks for that. I don't think I would want to draw on it before I am 60. Though I am wondering whether it is worth tying money up like this for the sake of the £2500 extra that I would get from the government for using a LISA instead of a 'standard' S & S ISA.
    • dunstonh
    • By dunstonh 10th Mar 17, 3:11 PM
    • 88,375 Posts
    • 53,591 Thanks
    dunstonh
    But it's the only thing I have to go on, that and Lars Kroijer's, when I've got through that. If it makes sense I'd rather follow a general recommendation by 'experts' than try to find my own mix.
    A book author does not fit that criteria. A multi-asset solution or a portfolio via an IFA would.

    Multi-asset funds and model portfolios are live allocations. Not cast in stone and not restricted to the level a book author has made up their own allocation. And do note, that the allocations they have are just made up. They would not pass regulatory scrutiny. This does not make them bad. It just makes them basic and restricted and things like that tend to give lower returns. i.e. when the general consensus is that high yield bonds and global bonds are more favourable, your book tells you to use short term gilts. Since the book was last published, sterling has heavily fallen and a number of asset classes/markets are above their long term average. How has your book been updated to reflect those changes?
    I am an Independent Financial Adviser (IFA). Comments are for discussion purposes only. They are not financial advice. Different people have different needs and what is right for one person may not be for another. If you feel an area discussed may be relevant to you, then please seek advice from a Financial Adviser local to you.
    • badger09
    • By badger09 10th Mar 17, 4:42 PM
    • 5,090 Posts
    • 4,287 Thanks
    badger09
    Thanks!

    1. As I still don't know what is what, could I bung the money into the S & S ISA (whether a LISA or not) now and after April 5 and leave it there until I have decided which funds I want to buy and in what proportion?

    2. If I said to you that I can't ever see myself earning a salary which hits the highest tax threshold, would your advice differ?
    Originally posted by Jon_W
    1) Yes you can do that (not LISA as they're not available yet)

    In fact, rather than rush into opening an S&S ISA with a provider which might not suit your style of investing (lump sum/monthly drip feed/funds/ITs etc) and incur possible exit charges, you could simply open any instant access cash ISA now & pay in up to £15240. That assumes you haven't already subscribed to a cash ISA during this tax year.

    That way, you have not wasted this year's ISA allowance but also haven't been rushed into anything. After 6th April you can ask your chosen S&S ISA provider to transfer in your cash ISA balance and pay in next year's allowance.

    2) Its a use it or lose it annual allowance, why waste it? It also saves you having to keep records for HMRC
    • bowlhead99
    • By bowlhead99 10th Mar 17, 5:37 PM
    • 6,502 Posts
    • 11,500 Thanks
    bowlhead99
    1. As I still don't know what is what, could I bung the money into the S & S ISA (whether a LISA or not) now and after April 5 and leave it there until I have decided which funds I want to buy and in what proportion?
    Originally posted by Jon_W
    Yes, although if you have not made any decisions yet you could also put it in a Cash ISA now and after April 5 and leave it there until you have decided which fund you want to buy and in what proportion and with what S&S ISA provider, and then transfer to the provider you want to use who is good value for money for the fund you want to use. Instant access cash ISAs don't have exit fees and transfers from them to the provider of your choice are quite quick.

    Not every platform offers access to every fund. If you don't know what you want, don't rush, but in the meantime if you want to take advantage of the ISA allowance in 2016/7 you could just keep it in a cash ISA, or as uninvested cash within a S&S ISA.

    2. If I said to you that I can't ever see myself earning a salary which hits the highest tax threshold, would your advice differ?
    Well, I might say that shows a lack of ambition given you may be 27,28 years from state pension retirement age - presumably you are not going to be retiring particularly early as you don't have any pension provision of your own to speak of. Almost three decades is a long time to become an important person at work who gets paid enough to trigger high rate tax.

    Still, the comment was really just to agree with your point that it is useful to use S&S ISA rather than LISA because of penalty-free flexibility for whatever life throws at you. It could be an opportunity to get higher rate tax relief. It could be an opportunity to extend or improve or move your house. If it turns out you don't really see yourself using the S&S ISA money before retirement you could always just chuck it in a pension later as you could be doing anyway now. As mentioned you can't put all your money in a LISA anyway because of the annual limit so there isn't really a danger of locking 'everything' away in a LISA.

    Aha : I thought that LISAs had the same annual contribution limit as 'standard' ISAs - I didn't realise there was a £4k limit, so thanks for that. I don't think I would want to draw on it before I am 60. Though I am wondering whether it is worth tying money up like this for the sake of the £2500 extra that I would get from the government for using a LISA instead of a 'standard' S & S ISA.
    You would get £2500 bonus on £10k in a LISA. But once you have opened a LISA (which you can't open yet, because the product will not exist until next tax year), you can keep contributing £4k a year and getting bonuses until you are age 50. As you are not even 40 yet, that's at least a decade, which is at least £40k, which is a lot more than £2.5k bonus.

    If you don't plan to use the money until retirement or semi-retirement age, why wouldn't you want the bonus? 25% is a nice chunk of free money for someone who is behind the curve in terms of making plans for funding their retirement. Alternatively you could just use a traditional pension. No access (even by paying a penalty) but a nice 25% boost from tax relief.
    Last edited by bowlhead99; 10-03-2017 at 5:41 PM.
    • Jon_W
    • By Jon_W 10th Mar 17, 9:16 PM
    • 108 Posts
    • 17 Thanks
    Jon_W
    A book author does not fit that criteria. A multi-asset solution or a portfolio via an IFA would.

    Multi-asset funds and model portfolios are live allocations. Not cast in stone and not restricted to the level a book author has made up their own allocation. And do note, that the allocations they have are just made up. They would not pass regulatory scrutiny. This does not make them bad. It just makes them basic and restricted and things like that tend to give lower returns. i.e. when the general consensus is that high yield bonds and global bonds are more favourable, your book tells you to use short term gilts. Since the book was last published, sterling has heavily fallen and a number of asset classes/markets are above their long term average. How has your book been updated to reflect those changes?
    Originally posted by dunstonh
    Thanks, dunstonh (again!). Just out of interest why wouldn't they pass professional standards? Because they are 'off the peg' recommendations?

    I think the books were written in 2012 and 2013, in any case, quite some way before the Brexit vote pound plummet.

    So the higher yield bonds are better even if bonds are just the 'shoring up' part of the portfolio? What sort of bonds are you thinking of? BRICs? Poorer performing Eurozone countries (Spain, Italy)?

    Is this site kosher enough to find an IFA? https://advisor.financial-advisor.co.uk/fa-search/?&keyword=%2Bfind%20%2Bifa&matchtype=b&network=g&m kwid=soX97x3dg|pcrid|94677043233|pkw|%2Bfind%20%2B ifa|pmt|b|pdv|c|slid||&gclid=CM3doLHtzNICFVW7GwodP AUPWA
    • Jon_W
    • By Jon_W 10th Mar 17, 9:18 PM
    • 108 Posts
    • 17 Thanks
    Jon_W
    1) Yes you can do that (not LISA as they're not available yet)

    In fact, rather than rush into opening an S&S ISA with a provider which might not suit your style of investing (lump sum/monthly drip feed/funds/ITs etc) and incur possible exit charges, you could simply open any instant access cash ISA now & pay in up to £15240. That assumes you haven't already subscribed to a cash ISA during this tax year.

    That way, you have not wasted this year's ISA allowance but also haven't been rushed into anything. After 6th April you can ask your chosen S&S ISA provider to transfer in your cash ISA balance and pay in next year's allowance.

    2) Its a use it or lose it annual allowance, why waste it? It also saves you having to keep records for HMRC
    Originally posted by badger09
    Great, I'll get onto the bank Monday morning to get the cash ISA opened.

    As for choice of S & S ISA, Hargreaves Lansdown caught my eye, if only for the telephone advice which is available.
    • Jon_W
    • By Jon_W 10th Mar 17, 9:30 PM
    • 108 Posts
    • 17 Thanks
    Jon_W
    Yes, although if you have not made any decisions yet you could also put it in a Cash ISA now and after April 5 and leave it there until you have decided which fund you want to buy and in what proportion and with what S&S ISA provider, and then transfer to the provider you want to use who is good value for money for the fund you want to use. Instant access cash ISAs don't have exit fees and transfers from them to the provider of your choice are quite quick.

    Not every platform offers access to every fund. If you don't know what you want, don't rush, but in the meantime if you want to take advantage of the ISA allowance in 2016/7 you could just keep it in a cash ISA, or as uninvested cash within a S&S ISA.

    Well, I might say that shows a lack of ambition given you may be 27,28 years from state pension retirement age - presumably you are not going to be retiring particularly early as you don't have any pension provision of your own to speak of. Almost three decades is a long time to become an important person at work who gets paid enough to trigger high rate tax.

    Still, the comment was really just to agree with your point that it is useful to use S&S ISA rather than LISA because of penalty-free flexibility for whatever life throws at you. It could be an opportunity to get higher rate tax relief. It could be an opportunity to extend or improve or move your house. If it turns out you don't really see yourself using the S&S ISA money before retirement you could always just chuck it in a pension later as you could be doing anyway now. As mentioned you can't put all your money in a LISA anyway because of the annual limit so there isn't really a danger of locking 'everything' away in a LISA.

    You would get £2500 bonus on £10k in a LISA. But once you have opened a LISA (which you can't open yet, because the product will not exist until next tax year), you can keep contributing £4k a year and getting bonuses until you are age 50. As you are not even 40 yet, that's at least a decade, which is at least £40k, which is a lot more than £2.5k bonus.

    If you don't plan to use the money until retirement or semi-retirement age, why wouldn't you want the bonus? 25% is a nice chunk of free money for someone who is behind the curve in terms of making plans for funding their retirement. Alternatively you could just use a traditional pension. No access (even by paying a penalty) but a nice 25% boost from tax relief.
    Originally posted by bowlhead99
    Another great post, thanks. I should have explained better: the £4k government top-up for the LISA comes from me not really wanting to tie more than £10k up in it due to its long-term nature.

    Wouldn't the pension top-up from the Govt just be 20% if I am a basic rate taxpayer, though?
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