Confused and fearful of pensions!!

homersimpson_3

no problem. I had just come off another thread where someone had thanked 4 other contributers to the thread and but not me and had totally ignored what I had said. I was fearing a trend where people ignore what I say because I am an IFA and reacted to it.

for what it's worth I never totally ignore anything you have to say and have learnt alot from your postings- you can have another thank you if you wish but the former point is by far the most important.

EdInvestor

I do fear that sending investment novices (which is nothing to be ashamed of) to investigate expensive investment vehicles for experienced investors, like SIPPs, is a risky course of action. Its a bit like spending large sums on a car but not having a driving licence and no intention of driving.

You're such an elitist, DH. Running a Sipp is much easier than an ordinary pension, you don't have to deal with the frightful insurance companies and their awful call centres for a start - and thus you don't need someone like DH, who has the required skills to get these dinosaurs to move.

Low cost online brokers and Sipp providers make DIY investing cheap and easy, which is what basic rate taxpayers need.:)

Most IFAs like DH only deal with well-off higher rate types, so I fail to see why he is trying to turn lesser mortals away from DIY investing when they could benefit.

They are of no real interest as clients to most advisors after all.

dunstonh

Most IFAs like DH only deal with well-off higher rate types, so I fail to see why he is trying to turn lesser mortals away from DIY investing when they could benefit.

At what point have I turned anyone away from going DIY?

Your answer to everyone in this forum is to use a SIPP. A SIPP is more expensive and if you are not in a position of knowledge to take advantage of the features in a SIPP, then you shouldnt use it.

Low cost online brokers and Sipp providers make DIY investing cheap and easy, which is what basic rate taxpayers need.:)

Low cost stakeholder and personal pensions can do the same and make it even cheaper.

For example, why buy the Norwich Union property fund for 1.5%p.a. with HL's "cheap" SIPP when you can get it for 0.6%p.a. on their personal pension?

In this section, Ed tells everyone to use a SIPP regardless of whether it is suitable to them or not. SIPPs are a great product but if you dont use the features, which you are paying for, then you are wasting money going with a SIPP.

To quote Ed on her own forums: (9/9/06)

The only good advice is - don't trust advisors

So, please do note the bias.

Also quoting Ed on her forums: (14/06/06)

Make sure you monitor the charges which can quickly start eating into profits. A 1.5% annual charge will take 25% of a pension fund over 25 years.

As HLs "cheap" SIPP has most of the funds at 1.5%, why is she pushing more expensive investment options on this forum but cheaper options on her own?

EdInvestor

Back on Sipps again. :rolleyes:We've already discussed them on the other thread.This one is actually supposed to be about ISAs.

I've mentioned before the way to avoid these major charges is to cut out the middlemen completely and invest directly in shares.This is nothing like as complex - or as risky - as all those advisors who are not authorised to advise you on share investment will suggest.

Since the OP has already discovered the equity Income idea s/he may like to check out the High Yield Portfolio - it's the same concept but DIY, with effectively no charges eating away at the income.Set up, buy and forget.

dunstonh

This is nothing like as complex - or as risky - as all those advisors who are not authorised to advise you on share investment will suggest.

But contain more risk than investment funds but Ed, who is not authorised to advise on any investment, wont admit that.

A fund is a collection of 30-100 shares. A FTSE100 fund will invest across them all in that index. a single holding of shares is fine unless it does a Marconi or Polly Peck (or any other number of companies that have gone down the pan over the years).

If you hold a single company and it goes under, you lose the lot. If you hold 10 companies equally and you 1 company goes under you lose 10%. If your investment funds hold 1% in that company then you lose 1%. So, on that basis, funds are lower risk than single shares unless you buy a large collection of single shares. However, you wont do that unless you have a large amount to invest as you pay charges on buying and selling shares which can be prohibitive for smaller amounts.

EdInvestor

I recommend a portfolio of 15 sector-diversified large cap, blue chip, household name type shares to minimise risk.You get a bit more risk protectiuon up to 25 shares, but after that very little, there's no point in holding dozens.

Trading is not necessary,it wastes money.Use a discount broker with no annual fee. Halifax Sharehuilder is an excellent broker for starter investors, only 1.50 a trade, very cheap.

It's easier than fund investment actually and much more reliable, as nothing happens unless you personally do it, whereas that fund manager could be up to anything and you wouldn't have a clue .

wotsthat

Since the OP has already discovered the equity Income idea s/he may like to check out the High Yield Portfolio - it's the same concept but DIY, with effectively no charges eating away at the income.Set up, buy and forget.

Well we've covered all the bases now! A, presumably novice investor, comes to this board for a helping hand and hears about SIPP's, the evils of the pension industry and their wicked helpers, and now, would you believe a high yield portfolio. The OP's head was spinning at the start - I wonder what it's doing now?

You have a investment novice, very naive to this subject who goes an thanks you for your comments and suggestions (totally ignoring me, which I find highly rude to be honest).

Get a grip of yourself big fella - I for one value your contributions especially in ensuring some balance is added to the posts of the 'evangelical one'.

jem16

EdInvestor wrote:

Back on Sipps again. :rolleyes:We've already discussed them on the other thread.This one is actually supposed to be about ISAs.

The OP is obviously under the illusion that you brought it up in the first place.

wilroda wrote:

Thank you very much edinvestor! I can understand it now! Your help is appreciated
We went to see an IFA for an initial "free" chat but were rather put off by his fees!!
Does anyone have any advice on Maxi ISA'S and what we should look out for?

I shall look into SIPPS too....

Thanks again

Get a grip of yourself big fella - I for one value your contributions especially in ensuring some balance is added to the posts of the 'evangelical one'.

Totally concur although I can understand why he lost it. Three quarters of his time on this board seems to be spent trying to redress the anti-financial services bias and misinformation coming from Ed.

Just amazes me that he hasn't lost it before

EdInvestor

Actually she has another thread elsewhere about her PEP which dates from 1996 and has been invested in an Equity Income fund which has done quite well.:)

So not a novice investor - just a person who is confused about pensions.

The two are entirely compatible.

If you read my first answer to the OP you will see anyway that I didn't actually recommend SIPPs but suggested the ISA route.

dunstonh

Just amazes me that he hasn't lost it before

I've come close at times but I did today. Its no wonder that other advisers have stopped posting here.

Actually she has another thread elsewhere about her PEP which dates from 1996 and has been invested in an Equity Income fund which has done quite well.:)

So not a novice investor - just a person who is confused about pensions.

I read that thread and she didnt know that there were charges. Its all invested in one place 10 years ago and she thought it was performing badly. There was also an unwillingness to alter it even though it wasnt an ideal investment. In my eyes that makes her a novice/lazy investor. Wilroda, that isnt a bad thing. Most people are in exactly the same position. However, it does indicate that you are not suited for a SIPP. It also does suggest that the advice route would probably be more suitable for you.

For example, as an adviser, I wouldnt let you have all your PEP money in one fund. It would be spread across multiple funds to give greater diversification and growth protential. You mentioned cost of advice. However, you chose a provider that keeps all the commission for themselves. It would not have cost you a penny more to get advice from an IFA. Plus had the IFA back in 1996 chosen the fund that the majority of IFAs would have been using back then (so, based on number of sales made then and the probability of you being in that fund) a £6000 contribution would have grown to £26,076. That compares to £13,586 on the fund you say you are in. Although you say you only have £9000 now which suggests perhaps your fund isnt the one we think it is. Either way, the IFA would have given you a better option.

Its easy to knock advice as being a more expensive option than DIY but if your DIY gives you £9000 after charges and the IFA option gives you £26,000 after charges, then does it really matter that the IFA has earned from it?