Suggestions: make up of a savings / investment portfolio?

EdInvestor

orangeshoes wrote: »

Ed - I have registered with Fidelity this afternoon, is that much the same as H&L?

More expensive I think.

Jake'sGran

HL is a good place to go for discounts. They usually discount the whole of the initial charge and a small amount of the commission they receive get annually. I was just looking at the M&G Global Bond on HL. There is no initial charge if bought from M&G or HL but the latter give back .15% of their annual commission so with that one there is not much to gain. This year I have a few fixed rate accounts maturing e.g. a YBS ISA covering a few years but in the letter they have sent they are offering only 2% for a new ISA which is why I am considering a few highly rated funds to put the money into, but still maintaining the ISA wrapper. Fidelity's Money Builder Income has no initial charge. Trustnet give as much info as you could need about Unit Trusts etc.

bendix

orangeshoes wrote: »

I would to keep the majority in cash, which I would see as risk free.

.

Cash is not risk free. It gets eaten by inflation. Keeping so much in cash when you are debt free and at your time of life is a very very risky strategy.

By all means keep your 50k in cash or cash based investments, but if you want to have a good future you should be much more adventurous with the remaining 15k and the 1250 per month.

I would be inclined to put the 15k in a uk share based investment such as invesco perpetual high income which invests primarily in defensive stocks, and then splitting the 1250 per month along the following lines:

500 UK share funds
250 corporate bonds (UK and international)
250 international share funds
150 emerging markets
100 .something more specialist like a resources fund, something like Blackrock Gold and General or the something more specialist.

You have 30 years to go to retirement. Now is the time to adopt some risk.

Lokolo

orangeshoes wrote: »

Thanks to the three people giving me advice on this - all really useful.

Ed - I have registered with Fidelity this afternoon, is that much the same as H&L?

I used Fidelity, Trustnet and Morningstar just to look at their perspective. But I always buy with HL because of the cost.

orangeshoes

bendix wrote: »

Cash is not risk free. It gets eaten by inflation. Keeping so much in cash when you are debt free and at your time of life is a very very risky strategy.

Interesting point. I hadn't thought of it that way.

bendix wrote: »

By all means keep your 50k in cash or cash based investments, but if you want to have a good future you should be much more adventurous with the remaining 15k and the 1250 per month.

I would be inclined to put the 15k in a uk share based investment such as invesco perpetual high income which invests primarily in defensive stocks, and then splitting the 1250 per month along the following lines:

500 UK share funds
250 corporate bonds (UK and international)
250 international share funds
150 emerging markets
100 .something more specialist like a resources fund, something like Blackrock Gold and General or the something more specialist.

You have 30 years to go to retirement. Now is the time to adopt some risk.

Some food for thought, thank you. I might be tempted to just invest 500 or so a month for the first year so I can 'dip my toe' and learn about different funds etc. and once I feel comfortable I may look to invest the £1,250 each month and keep the £50k saved in cash bonds.

Sorry, I'm probably being a bit chicken here, but it feels a big step moving from just having savings accounts for 15 years to doing something so different!

orangeshoes

Another question!

I'm aware that a lot of funds have charges: one normally when you invest and and an annual maintanence fee. If, for example, you invested £10,000 in a fund, then wanted to add another £300 a month in to the same fund, would you get charged a small fee each time, or just an initial charge for the £10k along with any annual charges?

Aegis

orangeshoes wrote: »

Another question!

I'm aware that a lot of funds have charges: one normally when you invest and and an annual maintanence fee. If, for example, you invested £10,000 in a fund, then wanted to add another £300 a month in to the same fund, would you get charged a small fee each time, or just an initial charge for the £10k along with any annual charges?

You'll be charged any applicable fee on investment regardless of the size. If the initial fee is 5%, then on £10k you will pay £500 and on £300 you will pay £15. The annual fee is then calculated as an ongoing deduction from the value of each unit or share that you hold rather than as a one off transaction yearly.

However, through Hargreaves Lansdown you are likely to see the initial charge reduced to 0% for most funds that people tend to invest in (along with many that are a little rarer!). Basically you should look to get into the investment for free and to pay a reduced annual charge on almost everything. Occasionally you might find a fund that you really like which still has a charge, but I would count that as the exception rather than the rule.

In terms of your plans, there's nothing wrong with starting out at £500 per month. A provider like HL will allow you to put as little as £50 a month into most funds, so you could be spreading that amount across up to 10 funds, which would be more than enough to give you a good spread across geographies, asset classes and sectors. Don't throw it all into one fund, but don't put it all into high risk stuff either, even if you think the diversification is going to mitigate the possible losses.

Oh, and if in doubt, go to an IFA and ask for some professional help.

orangeshoes

Aegis wrote: »

You'll be charged any applicable fee on investment regardless of the size. If the initial fee is 5%, then on £10k you will pay £500 and on £300 you will pay £15. The annual fee is then calculated as an ongoing deduction from the value of each unit or share that you hold rather than as a one off transaction yearly.

However, through Hargreaves Lansdown you are likely to see the initial charge reduced to 0% for most funds that people tend to invest in (along with many that are a little rarer!). Basically you should look to get into the investment for free and to pay a reduced annual charge on almost everything. Occasionally you might find a fund that you really like which still has a charge, but I would count that as the exception rather than the rule.

In terms of your plans, there's nothing wrong with starting out at £500 per month. A provider like HL will allow you to put as little as £50 a month into most funds, so you could be spreading that amount across up to 10 funds, which would be more than enough to give you a good spread across geographies, asset classes and sectors. Don't throw it all into one fund, but don't put it all into high risk stuff either, even if you think the diversification is going to mitigate the possible losses.

Oh, and if in doubt, go to an IFA and ask for some professional help.

Thanks Aegis. Just been looking on the H&L site and it seems a hell of a lot cheaper than Fieldelity, so will certainly use these guys instead.

Most of the funds seem to have a £1,000 or £2,000 minimum initial limit, with a £50 minimum monthly limit. Presume this will be pretty common across all funds? I will take the advice of here and elsewhere and diversify across bonds, equity (UK and otherwise), a bit in property funds etc. But the £1,000 minimum will probably mean I have a max of 15 or so funds with my initial investment, across the above sectors. Is this a sensible level of diversification?

Sorry, a lot of questions, but appreciate your help.

Edit: just re-read and you've pretty much answered those questions! Apologies. Once I've decided on what I'm doing fund % wise, I might come back on here for comments.

Lokolo

orangeshoes wrote: »

Thanks Aegis. Just been looking on the H&L site and it seems a hell of a lot cheaper than Fieldelity, so will certainly use these guys instead.

Most of the funds seem to have a £1,000 or £2,000 minimum initial limit, with a £50 minimum monthly limit. Presume this will be pretty common across all funds? I will take the advice of here and elsewhere and diversify across bonds, equity (UK and otherwise), a bit in property funds etc. But the £1,000 minimum will probably mean I have a max of 15 or so funds with my initial investment, across the above sectors. Is this a sensible level of diversification?

Sorry, a lot of questions, but appreciate your help.

Edit: just re-read and you've pretty much answered those questions! Apologies. Once I've decided on what I'm doing fund % wise, I might come back on here for comments.

It only requires £1000 minimum or whatever if you aren't doing a regular contribution...

Aegis

Lokolo wrote: »

It only requires £1000 minimum or whatever if you aren't doing a regular contribution...

Plus you can cheat. Find a low-volatility fund with no initial charge, put a lump sum of £1000 or more into it, then switch out of that fund into the others you want to invest in. HL has no minimum amount for switches into funds, so you can put as much as you like in as many funds as you want.