Small Sum Long Term Investment

muddyfox470

Hi all,

On many occasions i have been tempted by stocks and shares, and after reading some superb articles in newspaper articles about spectacular growth across the globe, i wouldn't mind a part of the action.

I am after a balanced fund, so not to risk all in one market.

However i do not have a great sum to invest; i would probably be willing to invest 1 - 5k; however i would be willing to leave this for up to 25 years, if not a bit longer.

Is there somewhere i can leave the money, let the company do the rest, and 25 years down the line pick up what remains?

I want a pretty much hassle free, but very low maintenance (and low cost) option. I know this sounds oh so ideal; but can anyone give me some directiosn on where to start and where to look?

Cheers

Ian

I understand that the markets are doing well; and that you shouldn't buy high but so many people describe great potential for growth; especially in asia and south america...

dunstonh

I am after a balanced fund, so not to risk all in one market.

These tend to be quite poor value for money and generally poor performers.

However i do not have a great sum to invest; i would probably be willing to invest 1 - 5k; however i would be willing to leave this for up to 25 years, if not a bit longer.

Build your own "balanced" risk portfolio by putting percentages into the various sectors to average out to your risk profile.

Avoid fashion investing as its usually too late by the time it becomes fashionable. However, with the timescale you have, you shouldnt be too concerned.

Is there somewhere i can leave the money, let the company do the rest, and 25 years down the line pick up what remains?

I want a pretty much hassle free, but very low maintenance (and low cost) option. I know this sounds oh so ideal; but can anyone give me some directiosn on where to start and where to look?

These two things dont tend to go hand in hand. If you are a lazy investor, then using an IFA to handle the investment in a "funds under management" style agreement would be better. You may pay fractionally more than doing it yourself but it seems you have limited knowledge in this area and dont tend to review it yourself. It may not even cost you much as many IFAs are now taking just the usual 0.5% with perhaps 1% upfront only and still giving full advice. That would make it only 1% as a one off (£50) more expensive than doing it yourself through the funds supermarket (such as fidelity) directly. Indeed, you may find that using an IFA only platform, such as Selestia, would be a better option long term for a "lazy" investor as they will rebalance annually and allow such a diverse portfolio, that the risk would be reduced. i.e. their minimum per fund is £100 and have no limit on the number you can have. Most others have a minimum of £1000, although a few allow £500.

codetown

Ian,
I am considering myself some funds, but I think there are also some better options which balance much better the risks and help guaranteeing your capital.
See Martin's article:
http://www.moneysavingexpert.com/cgi-bin/viewnews.cgi?newsid1115805361,4479,

This is the product from the Post Office there mentioned:
http://www.postoffice.co.uk/portal/po/jump2?catId=19300232&mediaId=19300234

There are similar guaranteed bonds which track UK, european or Asian markets and they help you cut down the risks of going seriously down !
Also with these funds you do not need to do anything, as they go on their own!

ReportInvestor

You do need to do something when the Fixed Term expires. These investments do not match the OP's stated investment term.

What if the markets soar in between investments? It's a form of sod's law.

And they also limit the potential for growth by excluding the compounding effect of dividend reinvestment.

Click on these four links to see earlier discussion on protected investment plans

Growth investment or GEB?

Guaranteed Equity Bonds - dh in particularly dismissive form

cheerfulcat is very rude about them, Ed agrees and blinko says if you want rewards you have to take on some risk

Over a 25 year schedule there is less risk - but timing can make a big difference.

If you wanted to reduced risk you could invest gradually over, say, a four year period either by regular savings or opening one fund each year with, say £1K. You would gain from this if the markets fell some time soon and took a while to recover - e.g. like the period from Jan 2001 to Jan 2006.

But there is always risk - in this case the risk that you would lose out on any growth that does occur in the next couple of years.

P.S. I would also endorse dh's view that balanced funds have not tended to perform well.

muddyfox470

So how do i go about finding the best IFA for me in my area. Shrewsbury, Shropshire?

Or are there some suitable IFA's i can call up, or do most require face to face explanation and advising?

Thank you all very much for your replies, and especially dunstonh for your indepth explaination and advice. I shall have a look into this selestia platform. The auto rebalancing sounds good. With this however whenever they do 'rebalance' do i have to pay them transaction fees or anything like that?

Cheers

Ian Ruscoe

al_yrpal

If you invest with companies like INVESCO, Fidelity, Neptune etc, they have ISA's where you can allocate sums to several of their funds within one ISA. that way you can put some in 'nanny' UK funds and some in more adventurous funds. You can review the mix from time to time and swop as you fancy. A fund swop is usually charged at 1% or so.

dunstonh

With this however whenever they do 'rebalance' do i have to pay them transaction fees or anything like that?

Selestia and Cofunds do not charge for rebalancing. Fidelity woudl require you to do it manually. I believe Skandia can do it as well but I don't personally use them for ISAs and as its late I don't have the means to check now.

I am considering myself some funds, but I think there are also some better options which balance much better the risks and help guaranteeing your capital.

read the links Reportinvestor has posted. Awful products but cash cows for the providers. These are products with no implicit charges but heavy explicit charges (i.e. all hidden and unknown).

If you want an IFA to advise you, check https://www.unbiased.co.uk and do a postcode search for your local advisors. Ask them what they charge for recommending funds and placing business on an ISA fund supermarket. Any more than 1% plus 0.5% fund based then tell them you can get it at 1% plus 0.5% and see if they are still interested. If not, walk away and phone the next one.