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  • FIRST POST
    • fiisch
    • By fiisch 3rd May 17, 9:03 PM
    • 92Posts
    • 21Thanks
    fiisch
    Robo Investing - too good to be true?
    • #1
    • 3rd May 17, 9:03 PM
    Robo Investing - too good to be true? 3rd May 17 at 9:03 PM
    I'm 30, a new dad, and hate my job/career. I'm a contractor and extremely well paid, to the point where a career change would represent a significant drop in salary.

    I've been investigating ways of putting my income to good use, after I've paid off a couple of smallish debts by the end of the year. I've opened a Moneyfarm account to see how it works with a modest sum, and am getting the investor buzz.

    However, it seems too good to be true. 20-28% returns depending on your risk profile, which by my calculations could replace my income after 10 or so years if I continue to deposit £250/month. Obviously there is the risk of a drop in the stock market, and ultimately I'd look to diversify with a P2P and second S&S ISA in my wife's name but.....

    What am I missing? Surely those returns aren't consistently possible, and if it's that easy why does anyone invest themselves?

    I may have got carried away after my first £1.24 in interest and drooling over the possibilities with the help of a compound interest calculator , but before I get carried away - what these robot investors are offering simply doesn't seem feasible, yet reviews I've read seem to support 20%+ returns...?!

    What are your thoughts on these new boys? Would I be better off placing my money in P2P (Bond Mason).

    Plan to save around £750/month in addition to overpaying mortgage and being otherwise debt free (except car payments, my one vice...!!)
Page 4
    • vigman
    • By vigman 18th May 17, 4:17 PM
    • 1,087 Posts
    • 261 Thanks
    vigman
    [QUOTE=
    For sensible people, there is no point to invest in capital at risk product for the return of lower than 3% where you could still relatively easy to get 2%+ risk free.[/QUOTE]

    Please tell me where I can get 2% risk free? There are no ISAs offering this, even 5 year fixes

    TIA

    Vigman
    Any information given in my posts or replies is intended to be of interest and/or help to members of the forum. I cannot guarantee that this is accurate or up to date.
    • badger09
    • By badger09 18th May 17, 4:39 PM
    • 5,066 Posts
    • 4,263 Thanks
    badger09
    Please tell me where I can get 2% risk free? There are no ISAs offering this, even 5 year fixes

    TIA

    Vigman
    Originally posted by vigman
    There are several current accounts paying up to 5%, and a number of regular savers also paying up to 5%.
    • JohnRo
    • By JohnRo 18th May 17, 4:40 PM
    • 2,354 Posts
    • 2,086 Thanks
    JohnRo
    I may be being incredibly naïve here, but 0.6% annual charge on £10k equates to £60 / year... right?!


    As I'm well under that mark, it's not something I'll need to worry about for a while - might be worthwhile stopping my monthly payments as I draw near, then blasting through the £10k limit when I have a decent amount saved up... or indeed pulling my investment and finding another advisor, but if they're returning 20%, what's 0.6% between friends?!
    Originally posted by fiisch
    They're not returning 20%, they're taking 0.6% (above £10K) of whatever return those selected investments deliver. That return is not dependent on where they're held.

    So you or anyone else can hold that same basket of investments for a lot less elsewhere.

    You can be sure of one thing, as sure as anyone can be of anything, their headline ~20% returns number that's enticed you in will almost certainly be heading a lot lower over the course of your investment time frame, if that's years.
    'We can't solve problems by using the same kind of thinking we used when we created them.' ― Albert Einstein
    'Facts do not cease to exist because they are ignored.' ― Aldous Huxley
    • Linton
    • By Linton 18th May 17, 4:45 PM
    • 7,952 Posts
    • 7,754 Thanks
    Linton
    20% returns in foreign or larger UK company based investments was easy to achieve in the past year simply because of the BREXIT fall in the value of the £. Such returns arent normal.
    • fiisch
    • By fiisch 18th May 17, 4:51 PM
    • 92 Posts
    • 21 Thanks
    fiisch
    They're not returning 20%, they're taking 0.6% (above £10K) of whatever return those selected investments deliver. That return is not dependent on where they're held.

    So you or anyone else can hold that same basket of investments for a lot less elsewhere.

    You can be sure of one thing, as sure as anyone can be of anything, their headline ~20% returns number that's enticed you in will almost certainly be heading a lot lower over the course of your investment time frame, if that's years.
    Originally posted by JohnRo

    I'm not sure I'm following...


    So, for argument's sake, if I was to invest £50,000 and my investment returns 5%, Moneyfarm will take 0.6% of the returns of £40,000... i.e.:


    5% return on £40,000 (£50,000-£1000) = £2,000


    0.6% of £2,000 = £12 annual fee


    Surely not? That seems cheap to me!


    Take the point re.: probable returns. From what I understand, over a long-term (i.e.: decades), I'd be doing well to achieve regular 6% YOY ROI. But, reviews on Moneyfarm (e.g.: ThisisMoney) do support the 20%, so I can dream, right?!
    • Linton
    • By Linton 18th May 17, 5:04 PM
    • 7,952 Posts
    • 7,754 Thanks
    Linton
    I'm not sure I'm following...


    So, for argument's sake, if I was to invest £50,000 and my investment returns 5%, Moneyfarm will take 0.6% of the returns of £40,000... i.e.:


    5% return on £40,000 (£50,000-£1000) = £2,000


    0.6% of £2,000 = £12 annual fee


    Surely not? That seems cheap to me!


    ......
    Originally posted by fiisch
    I am afraid not. It's clear on the website. The 0.6% is on the total invested-£10K, not on the gains. So your £50K investment would cost £40K X 0.6%=£240. See here
    • adindas
    • By adindas 18th May 17, 5:38 PM
    • 3,170 Posts
    • 1,519 Thanks
    adindas
    Correct. I was within the 500 as I signed up during the evening after it was announced. The following morning the offer was gone.
    Originally posted by DragonQ
    Indeed, it was sold like like a hot cake for obvious reason.
    But I missed the boat because I was not aware of this offer earlier.
    Last edited by adindas; 18-05-2017 at 10:17 PM.
    • vigman
    • By vigman 19th May 17, 10:18 AM
    • 1,087 Posts
    • 261 Thanks
    vigman
    There are several current accounts paying up to 5%, and a number of regular savers also paying up to 5%.
    Originally posted by badger09
    But only for very small amounts of money surely?

    My wife and I each have a Santander 123 account and a joint but these are only paying 1.5% on £20K

    Is there anywhere paying a safe 2% on £40K?

    TIA

    Vigman
    Any information given in my posts or replies is intended to be of interest and/or help to members of the forum. I cannot guarantee that this is accurate or up to date.
    • adindas
    • By adindas 19th May 17, 4:42 PM
    • 3,170 Posts
    • 1,519 Thanks
    adindas
    But only for very small amounts of money surely?

    My wife and I each have a Santander 123 account and a joint but these are only paying 1.5% on £20K

    Is there anywhere paying a safe 2% on £40K?

    TIA

    Vigman
    Originally posted by vigman
    If you have maxed out all of current accounts paying 2%+ then you will need to supplement it with drip feeding to Regular saver accounts.

    The discussion about this is available here.
    http://forums.moneysavingexpert.com/showthread.php?t=966321&highli

    Besides higher interest current accounts, I have more than 20 regular savers paying 2%+, most notably 10x£250 Regular saving Account with virgin money @2.25%pa. I have been draining money to RSA at a rate of about £8000 pm paying at least 2% and I could keep running this iteration continuously while it last.

    For more flexibility of managing it, you will also need a temporary container, e.g instant access saving paying about 1% such as Ford Money Flexible Saver or Tesco Internet Saver where you could put a large sum of money. Your money might stay they for a short time while waiting allocation to a higher interest in the RSA.
    Last edited by adindas; 19-05-2017 at 6:33 PM.
    • elephantrosie
    • By elephantrosie 19th May 17, 7:38 PM
    • 329 Posts
    • 81 Thanks
    elephantrosie
    wealthify keeps losing money these days
    Getting bored of my 9 to 5 job.
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