indecisive investor advice needed invest lump sum!

dennismenace

My husband has been made redundant at 55 and have kept quite a lot of money liquid but after spending a lot o f time with a very nice ifa have decided to invest 140k through him in a variety of bonds, uk equity, global equity and property as well as ensuring use up each years ISA allowance within these investments. Having looked at the IFAs charges and annual management charge we are very tempted to follow his advice but go it alone and actively manage the funds. My husband has time on his hands and I have a reasonable financial brain as well as being a qualified solicitor so why not, we have gone for a medium risk strategy and feel that if we could buy directly even if our choices were not always as good as his we would retain more of our money to invest - help just having 2nd, 3rd and 4th thoughts as well as v cold feet about handing over 140k to a CertPFS qualified IFA when we could pay him his fee for what he has done so far (we will be paying him commission only) and go it alone.

Stavros_3

Good luck if you go it alone, but you do need to know this minefield inside out. Both myself and a mate went into investing 12 months ago with 6 figure sums as the country was going into this financial crisis thingy. I went with a well known wealth management company using a discretionary fund manager, my mate went into it on his own. He is far more savvy than me and did his homework extremely well.
At the end of the year (2009), my portfolio value has grown by 15.9% his by 11%.
All I would say is make sure you have a well diversified portfolio, keep a close eye on what's happening and adjust/re-balance as things change, good luck to you

opinions4u

Could you not pay the IFA a fee for his time and have the commission rebated to your investments?

For the sums that you are talking about I would have thought this would be a far more cost efficient way for you to invest.

amcluesent

Yep, a medium-risk investment portfolio will only have medium returns, so the set %tage fees will take a disproportionate slice.

TBH, at 55 and unwaged, then a high-yield portfolio of blue-chips with good divis suggests the usual miners, oilers, baccy, pharma plus some lo-cost trackers and exchange-traded trusts purchased through an execution-only broker.

That said, there are macro-economic reasons why equities could be a complete bust, after all in the last decade the market has been awful and after decades Japan remains 75% down. Note that ex-head of Blackrock's gold fund chucked it in to be a diary farmer.

After the recent run-up of 60% fuelled by QE, this isn't IMHO the time to putting lump-sums in equities. Start off within your share ISA, then again in 2010-11 tax-year but keep most of the cash in 2-3 year fixed deals for now and allocate a few £10K into index-linked NS&I in case inflation picks-up big-time.

In the next 3 decades, post peak oil and the West declines, then taxation will sky-rocket so you're investment strategy should be focussed on minimising tax-liability than chasing returns.

Rollinghome

Stavros wrote: »

I went with a well known wealth management company using a discretionary fund manager, my mate went into it on his own.
He is far more savvy than me and did his homework extremely well.
At the end of the year (2009), my portfolio value has grown by 15.9% his by 11%. At the end of the year (2009), my portfolio value has grown by 15.9% his by 11%.

In which case you should ask him why you did so badly. How much did he charge? Had you just put the lot in a simple UK all-share index tracker for the YTD (15/1/09-15/1/10) you would have had a return of 38%.

In reality, it makes no sense to compare your return with your friend's or with an index without knowing what you were invested in and the risk involved. For such a relatively poor return I'd assume he must have been ultra-cautious which may have been what you required.

Stavros_3

Its a cautious invested portfolio, If I'd been down by that percentage, then I would have been concerned, there-fore I don't consider a 15.9% return poor. I would never consider having all my eggs in one basket either.

Rollinghome

Stavros wrote: »

Its a cautious invested portfolio, If I'd been down by that percentage, then I would have been concerned, there-fore I don't consider a 15.9% return poor. I would never consider having all my eggs in one basket either.

Which is why it's near impossible to know if his "wealth management" was worth anything or not.

Stavros_3

They are acting in MY interests, based on MY attitude to risk which is cautious (low). I'm happy with the return, and thats all that matters, not some pie in the sky "Ah but if you'd have plonked all your capital in 1 fund you'd be up 38%" Thats a fools way to invest

Rollinghome

You've totally misunderstood. No one was suggesting anyone should put their capital into a single fund. What was being pointed out was that your investments have hugely underperformed the FTSE and for that matter almost every other equity index.

For that reason it's complete nonsense to assume that your manager was more competent than your friend or less competent than many other investors who will have done considerably better. Without knowing what investments were made, how much was retained in cash for example, the level of risk, and the reason for underperforming the FTSE, then there is no way of assessing the performance.

And that unfortunately is why it is so difficult to know whether you are getting any value for what you pay a "wealth manager" or if your cat could have done better.