Lump sum vs 'drip feeding'

Lokolo

Rollinghome wrote: »

I understand Aegis that, although it isn't in your signature, you also work in investment sales for a bank, which may account for your position.

No he doesn't.

Rollinghome wrote: »

Understandable then that Jon Snow on Ch 4 news was gob-smacked when Martin Lewis, asked if he had acted irresponsibly, inaccurately claimed he had warned about the banks he had been recommending. In reality this forum was allowed to be flooded with posts insisting that nothing was amiss and that there was no additional risk to funds in a foreign bank without the same protection offered by UK institutions. No warnings were issued until afterwards.

Martin had stated this in his top accounts so there was no evidence to suggest he did anything wrong. Channel4 were trying to pin something on him when there was nothing to pin.

Telling users of this site how to save on a half-price pizza or get double points at Tesco is fine and dandy but Moneysavingexpert could serve users far better by taking greater responsibility for the financial advice given here by vested interests.

Nothing on this site should be taken as advice, as it is clearly stated everywhere on this damn site. If people want to take it as advice its their own problem.

Rollinghome

turbobob wrote: »

Out of interest did any of those studies include any really bad periods i.e. secular bear markets. For example in the US 1929-1949 and 1968-82?

I think it might help to define what "long-term" is.

Market timing may be anything but easy but for a small investor to be persuaded it makes no difference when he hands over his savings to buy into equity based unit trusts doesn't serve him well.

Whether by luck or judgement someone who bought into the FTSE 10 years ago will find he's still 15% down. Someone who bought 4 years later could be 35% up. So in my opinion it's worth a bit more effort to get the timing right than doing it with a pin and relying on luck.

Rollinghome

Lokolo wrote: »

Nothing on this site should be taken as advice

Young Mr Lokolo, some might think to say that when posters ask questions that the answer they get is never advice or that an article titled "Overhaul your finances; save £1,000s" should not be taken as advice is stretching things a little.

Lokolo

Rollinghome wrote: »

Young Mr Lokolo, some might think to say that when posters ask questions that the answer they get is never advice or that an article titled "Overhaul your finances; save £1,000s" should not be taken as advice is stretching things a little.

And no-one on here is forcing people to take it. As I said, if they take it as advice, its their problem.

Rollinghome

Lokolo wrote: »

And no-one on here is forcing people to take it. As I said, if they take it as advice, its their problem.

That's a relief. Being compelled to take financial advice from a student whose experience amounts to chatting on an internet forum wouldn't be ideal would it?

Thanks for clearing that up.

Lokolo

Rollinghome wrote: »

That's a relief. Being compelled to take financial advice from a student whose experience amounts to chatting on an internet forum wouldn't be ideal would it?

Thanks for clearing that up.

Exactly! Glad we're on the same wavelength.

purch

I've never understood the arguments for "drip-feeding"

Drip feeding arguments are just a selling tool for the 'Industry' to encourage people without lump sums to invest.

How better could you get people with only small amounts available monthly to invest, to get involved in the market, than by telling them that, actually it's the 'best' way to invest.

For these arguments to have any validity, you would have to assume that investors such as Warren Buffet and George Soros are complete and utter morons.

dreamonsu

Thank you everyone for your responses.
natman my 'windfall' was a bit more than the £2000 in question and I have indeed "spent a bit" and "spent a bit more" .
The various views have been interesting and i have decided that my small monthly investment will stays as it is in what I understand to be a fairly boring L&G Target Return Account (although I might think about increasing that small amount out of my 'sensible' income). I'm going to look at the L&G website and find something a bit riskier for my £2k and put the lot in (I believe it doesn't have to go into the same fund so long as it's the same provider?). After all as I have already said, it is money that I never expected to have.

Aegis

Rollinghome wrote: »

Hmm. Yes, Moneysaving.com have removed my entire post without the courtesy of any explanation, presumably because as you say it was deemed to be "anti-IFA" which of course isn't allowed here.

In general rampant bigotry against an entire group or profession is frowned upon wherever you go. If you had a valid problem with the profession in general and voiced it in a sensible manner, then you would be welcome to criticise away, but you constantly imply that IFAs are nothing more than idiots or conmen, which is quite frankly ridiculous.

You also seem to believe that IFAs should be able to predict the future and immediately service potentially hundreds or thousands of clients at the first sign of danger. That's simply not possible, and your idea that all IFAs should have been moving all their clients into cash during the market turmoil is something that would have been a logistical nightmare.

However, since you seem interested, my current employer (an IFA firm) managed to contact a large number of customers with a recommendation to switch more heavily into gilts and out of corporate bonds and equities in mid to late 2008 because they felt that the markets were getting even more precarious. They couldn't get hold of all of them, but the ones they managed to move the funds for avoided losing a lot of money.

Of course, not every IFA has enough staff to manage this effectively, nor do all IFAs have a good investment analyst team working solely for them year-round, so it's pretty unfair to expect that those IFAs would have been able to achieve even this.

There's a major problem with this site which appears to be firmly in the pockets of financial advisers and consequently censors any post it believes might be remotely critical of them. No doubt the Moneysaving.com censors will be back again.

It's your attitude and your bigotry that are unwelcome here. Stop bashing IFAs at every opportunity that presents itself and you will probably be welcome.

Seems the greatest sin on Moneysaving.com is to agree with the Financial Services Authority who believe there is a problem for savers and investors in the way IFAs are currently remunerated and who have therefore demanded the end of current practices by 2012. For a more objective view users need to read less craven sites such as Moneyweek. See "Need unbiased advice? You'll be lucky." article www.moneyweek.com/personal-finance/need-unbiased-advice-youll-be-lucky.aspx Such an article would never appear on the Moneysavingexpert.com site.

Commission has its place still. Protection products and small investments or pensions are simply not worth paying a fee for (e.g. someone wanting to start a pension at about £100 per month would be ill-advise in paying a fee of many hundreds of pounds to set up this product, as the growth rate would have to be enormous to recoup the losses even in several years). At this point it's worth trying to agree commission-only terms for the IFA until the pension pot grows.

As for protection, why would anyone pay several hundred pounds to be advised on what they need when the policies themselves can cost as little as £15 per month for fairly significant cover? Under these circumstances the up-front commission for the IFA makes it worth their while and can be discounted if the customer negotiates with them.

In either of these cases, the customer can ask for a fee and have some of the fee paid for from commission.

To summarise: there are plenty of choices available for remuneration, and some of them use commission to the client's advantage. Others rebate it altogether. Getting rid of the commission/hybrid option altogether will simply make independent advice too expensive for many people.

There is rightly a great deal of unease about the way IFA's commission system currently operate both from the FSA and even among IFAs themselves. This is a comment by Whiteflag, who I understand is himself a qualified adviser.

Commission has the potential to cause problems, but as dunstonh points out quite a bit, IFAs are responsible for 2% of the complaints about mis-selling despite being the largest delivery channel. It certainly doesn't sound like the problem is very widespread at the moment, not among IFAs anyway.

I understand Aegis that, although it isn't in your signature, you also work in investment sales for a bank, which may account for your position. It's a pity that this site lets it be used by those who have a vested interest without revealing that interest. Users deserve better. Perhaps more to the point, why do you regard what I said as being anti-IFA? Are you suggesting that all IFAs fail to warn clients when markets are unusually risky?

My exact interest is explained in full in my profile. Let's not go down the line of dishonesty accusations here, I've been more than open with the forum over the years about my aspirations to become an IFA by sitting my CeFA and Diploma exams, and my conversations here have helped me get closer to my goal. At present I'm a trainee in an IFA firm with no regulated status or client contact, so I felt it would be pointless to include that information in my signature, especially since it's already in my profile for anyone to read.

As for the bank comment, yes, I worked for HSBC. You'll also note that for the entire time I was working there I was telling people here to go to non-bank IFAs for their advice because I didn't feel the bank advisers were good value for anyone. So you certainly can't accuse me of having that much of a bias because of my employer: I will always tell it as I see it when I post here.

It wasn't as if the crash came entirely out of the blue. Following the fall of Northern Rock many objective commentators, not just in the more heavyweight publications but including Justin Urquhart on BBC Radio's Moneybox, were constantly warning against the high risk for equity investment at that point.

And many weren't. The nature of economics is that you will always find bulls and bears on every single subject. Every time something happens in the markets, some of them will turn out to have been right. If everyone always listened to the bears, no-one would invest.

While they may have been given on the BBC there was no suggestions for caution or hints by "The Money Saving Expert". Quite the reverse.

I suppose you haven't bothered looking back at that time? I know that I have been saying for most of my time here that investment carries with it the risk of falls. I've occasionally expressed my opinion that I think markets have been at the bottom, but I've only ever called it my opinion.

Throughout the early part of 2008 when it had been clear for many months that it was, if nothing else, a very risky time to invest, Moneysavingexpert.com allowed those on this board with a vested interest to remorselessly encourage unsophisticated readers to invest in equities with countless posts, including with borrowed money. Furthermore, there was a policy on Moneysavingexpert.com of removing all posts criticising financial advisers who encouraged savers with very limited assets to invest without cautioning of the increased risks at that time.

Link please, I'd like to read some of these posts for myself.

Ignoring the warning signs already recognised by others is bit of a habit at Moneysavingexpert.com. Wasn't long before when Martin Lewis was both listing Icesave and Kaupthing as his Best Buys and actually allowed an Icesave public relations person to post denying all the many risk warnings about the bank. Days later the Icelandic banks went under. There had been no intervention or balancing post by Moneysaving.com concerning such posts from PR officers. The few on this board who did advise caution were drowned out by those who had followed his best buys advice, still convinced nothing was wrong. The bill for re-embursing those who followed the best buy advice was picked up by the taxpayer.

Are you aware that there was a page explaining how Icesave's compensation scheme differed from others? Are you also aware that Martin has never rated banks by credit worthiness, and has always stated that for safety money in each institution should be limited to the compensation scheme max? And how many people actually lost money by putting money in these accounts?

Understandable then that Jon Snow on Ch 4 news was gob-smacked when Martin Lewis, asked if he had acted irresponsibly, inaccurately claimed he had warned about the banks he had been recommending. In reality this forum was allowed to be flooded with posts insisting that nothing was amiss and that there was no additional risk to funds in a foreign bank without the same protection offered by UK institutions. No warnings were issued until afterwards.

Actually the warnings were there before. And the general comments were that £50k at most (or less when the old limit applied) should be kept in one place per person.

I'll admit, I was wrong about the Icesave situation and thought that the problems were mostly scaremongering. I still think that the scaremongering had a very big role to play in the collapse of the Icelandic banks, but at least no depositors lost money.

Telling users of this site how to save on a half-price pizza or get double points at Tesco is fine and dandy but Moneysavingexpert could serve users far better by taking greater responsibility for the financial advice given here by vested interests. If there are conflicts of interest then investors need to take that into account but readers of this site won't be allowed to hear of them. Posts alluding to a possible conflict of interest will be removed as being anti-IFA.

Largely because you fling accusations without evidence. In legal terms that's defamation. You need to be able to demonstrate that what you believe is both reasonable and based on what you know as truth, and you don't do this. You point to the system and call IFAs conmen and idiots, but you don't actually demonstrate that they do anything wrong, apart from not having crystal balls so that their clients make money all the time no matter what markets do.

When the FSA reforms arrive in 2012 banning the currently unacceptable IFA commission systems will the Moneysavingexpert still maintain there was never a problem? Will they still pretend to have been the champion of savers without ever having supported the FSA reforms? Time for the Moneysavingexpert to get on the right side.

Unless you can demonstrate that a problem currently exists, you're rallying against nothing at all.

Paul_Herring

Aegis wrote: »

As for the bank comment, yes, I worked for HSBC. You'll also note that for the entire time I was working there I was telling people here to go to non-bank IFAs for their advice because I didn't feel the bank advisers were good value for anyone.

This is probably a petty question about phrasing (or I'm assuming it is,) but are there any IFAs working for banks? Or to rephrase that, do any banks have FAs that can recommend (whole or 'nearly whole' of market) products other than the bank in question operate?

I'm talking about the 'normal' banks here - HSBC, Barclays, Natwest, LTSB etc, the ones the general public normally go to for such things.