Is now a good or bad time to invest?

rlfan82

Due to recieve money this friday and invest roughly 90k in a portfolio?

We have taken care of all other monies we need, including ISA's and mortgage overpayments. On the other hand, we cant really afford to lose this money, although jave been strongly advised that if we hold out for 5 years, our portfolio shouldn't need the 'safety net' option, in other words it will turn a profit.

Whats opinions on this: good time as market is low and set to rise at some point, or, low and getting lower?

dunstonh

First of all you need to clarify what you mean by invest. For example, if you are saying "is now the right time to put 90k all into the stockmarket" then you would be daft. Not just now but at any time.

How do you intend to structure this investment? What sort of diversification will it have? How much cash, fixed interest, property, equities will it have? With the equities and fixed interest, how will it be spread?

What if you have lost money after 5 years? How will that impact on your lifestyle?

rlfan82

dunstonh wrote: »

First of all you need to clarify what you mean by invest. For example, if you are saying "is now the right time to put 90k all into the stockmarket" then you would be daft. Not just now but at any time.

How do you intend to structure this investment? What sort of diversification will it have? How much cash, fixed interest, property, equities will it have? With the equities and fixed interest, how will it be spread?

What if you have lost money after 5 years? How will that impact on your lifestyle?

Thanks for reply, its a hartford product (which I no some people aren't keen on, but its what was suggested).

Its second on the 'risk' scale, Cant remeber exact percentages, think it was called 'rising income.'


here it is:
https://www.thehartford.co.uk/MungoBlobs/0/610/HG_Rising_Income_Portfolios_Factsheet.pdf

dunstonh

Hartford is an expensive gimmick. It's guarantee is really only of benefit on death. Its a good salesman product rather than a good adviser product. In other words, it has a few sound bites to make it sound good but when you look a bit deeper then you realise it isnt anywhere near as good as that.

rlfan82

dunstonh wrote: »

Hartford is an expensive gimmick. It's guarantee is really only of benefit on death. Its a good salesman product rather than a good adviser product. In other words, it has a few sound bites to make it sound good but when you look a bit deeper then you realise it isnt anywhere near as good as that.

hi, could you expand a bit?

to explain our situation, its inheritance money and the advice given was to look after other people and our own debts, then invest the rest, and continue paying mortgage out of own wage in order to not waste the money.

Basically, we want the money to make a little bit, but still be there in 5 years when we might need it. Would it be good for this?

Also, could you expand oon your opinions on this product, it sounds like you may have a bit more experience/knowledge than me

rlfan82

anyone else got any advice on this?

Thanks in advance

mrposhman

rlfan82 wrote: »

Basically, we want the money to make a little bit, but still be there in 5 years when we might need it. Would it be good for this?

Reading into this, it seems you have a low risk profile. You basically want the money to be there when you need it, and to gain a small amount. What sort of return are you hoping for?? 5% per annum? 25% / 50%

If your risk is low and you don't expect a huge return then you may be better taking out bonds with the bank or NS&I

rlfan82

mrposhman wrote: »

Reading into this, it seems you have a low risk profile. You basically want the money to be there when you need it, and to gain a small amount. What sort of return are you hoping for?? 5% per annum? 25% / 50%

If your risk is low and you don't expect a huge return then you may be better taking out bonds with the bank or NS&I

Your spot on to be fair. I consider myself a gambler but not when i'm dealing with many 000's.

In terms of return, I think I dont mind ricking a bit to gain a bit, this would me my thinking:

Worst-case: we lose £20k
Best Case: We make a decent amount to put towards upgrading to a new house (my mrs has dreams of house with small field for her horses, not happening anytime soon :rolleyes: )

dunstonh

Negatives of hartford.

1 - its not cheap
2 - its not tax efficient (ISAs are better and with the amount involved and assuming you are basic rate taxpayer then unit trusts are better)
3 - the guarantee is only paid on death or by means of a 5% p.a. withdrawal. By the time you get your money back the value would have recovered.

A number of fund supermarkets/providers will give death capital protection at little or no cost.

rlfan82

thanks again for reply dunstonh

Just worked out that at a figure of £87k, at 4.86% (post tax), after 5 years, would be £110k, is that right?

That seems like an ok ish figure to me, but 'could' investments do better?

and finally, would an investor just recommend a product for his own commission or is investing generally the best option?


PS. Thanks for all advice so far

dunstonh

Just worked out that at a figure of £87k, at 4.86% (post tax), after 5 years, would be £110k, is that right?

That seems like an ok ish figure to me, but 'could' investments do better?

The returns on the hartford product are unknown. The same fund spread (in that fund sheet you linked to earlier) in an ISA and unwrapped would give a higher return than hartford due to lower charges and lower taxation. Investment returns on any tax wrapper or provider are unknown. That is why investments carry a risk.

and finally, would an investor just recommend a product for his own commission or is investing generally the best option?

I assume you mean adviser and not investor where I have underlined....

There is nothing wrong with investing. Timing could turn out to be very good over the long term. However, quality of product and investments is important.

You need to be aware that there are advisers and there are salepeople. At the moment, salespeople can call themselves advisers as well which doesnt help matters much (but is something the FSA have announced they plan to address). A good way to identify what if your adviser is a salesperson or not is

a) a transaction of this size is better for you on fee basis and not commission. Have you been told fee is best or is commission being rebated to bring it down to a fee basis equivalent?
b) Has ISA been recommended? (ISAs should always be chosen before bonds)
c) Has a cost comparison between unit trusts and bond taken place? has this been shown to you?
d) Has research been shown to you that shows you why they think Hartford is better than the rest? (e.g. why not Norwich Union or AXA or whoever as the provider of the tax wrapper and where do Hartford sit in that?)

Remember that if you are investing an amount that you consider a lot of money then you need to take care. I must state that, providing an ISA is also recommended, that use of the Hartford would not be a mis-sale. Its not a bad product or anything like that. However, I am viewing this on the basis of looking at the whole of market and the other options available to you which are better. I called it an expensive gimmick earlier and that was perhaps a bit unfair as its not an awful product. Its just not the best in its class.