Cash/S&S Isa's, SIPPs, IFA's and H-L..arrrgh!

Budesurfer

Hi.
Total newbie on here so go gently on me.

I'm 36 and have so far had an amazing life spent studying, travelling and working all over the place whilst having an absolute ball. Suddenly I find myself at a point where I'm settling down and have a (very affordable) mortgage on a great place in a fantastic location which has performed very well despite the recent climate but absolutely ZERO investments, emergency fund or retirement arrangements.

My brother is the opposite of me and has always been the studious investor, squirrelling any spare cash away in ISA's, SIPPs etc. He's just kicked me in the pants over the last few days and made me realise that I need to get things sorted....NOW without further delay.

So, you can guess my predicament. WHERE DO I START!?!?

I went to see an IFA (so-called, although my brother calls them all "salesmen") as well as my bank. Big mistake I think as all either of them did was go on about a few select investments which they'd charge me heaps of commission on etc.

So my brother told me about Hargeaves Lansdown and showed me his online account with them, talking me through how it all works whilst extolling the virtues of them being a discount broker with access to thousands of funds. But are they any better or worse to use than an IFA or my bank?

I'm in the position whereby I can put away a few hundred quid a month and I want to get going immediately as I've got a lot of lost "savings" time to catch up on.

My immediate thoughts are:

1. Pay off all credit card debt

2. Save an emergency fund

3. Start paying into a cash ISA, a S&S ISA and a SIPP.


Am I on the right track here?
Any thoughts / comments welcome!

(Can't resist posting a Matin smiley....legend.):money:

Kohoutek

Yeah, you're definitely on the right track.

Pay off credit card debt first – the interest rate on credit card debt far outweighs the return you could expect to make on most investments, let alone a savings account.

Then put some money into a emergency fund to help you in the case of redundancy etc. An instant access cash ISA is probably a good idea – you pay no tax on your savings, but you can still withdraw the money if you really need it.

I would do a lot of research before you invest in a pension, especially a self-invested one (SIPP) or investment funds. Think what your objectives are (e.g. capital preservation, to provide an income, long term capital growth) and find the products that are appropriate.

Beware that despite the discount or waiver that you get on initial charges on investment funds by using a broker like Hargreaves Lansdown, the annual charges are still very high and take out a very significant part of your return. The best long term investments are probably types of investments called "trackers" which simply follow an index (such as the FTSE 100 share index or the Rogers International Commodity Index) because the charges are much lower than actively managed funds. Many fund managers consistently fail to beat the return you would get by simply investing in a tracker, despite very high charges.

cashbackproblems

Once uv filled up an ISA id also look at a stocks and shares ISA which you can fill up (up to 10k) with safe ftse 100 shares paying good dividends and iii.co.uk only charge £1.50 the cheapest out there.

I have been looking at funds and a SIPP which gives you tax relief but equally taxes the income when you retire, this is why id just open an S+S ISA which also allows you to invest in fund as well as shares, charges for iii and HL are similar for funds. Many safe ones out there with Invesco and Neil Woodford who is highly regarded.

ALso depends on what you income is and if you have any company pension (or have had in past), as if you dont you are well behind with the pension contributions.

Also see what others think about Personal Pensions with the insurance companies, i like them but cant work out how good they are compared to a SIPP, dont seem to be popular on here even tho i have many friends paying into one along side their side company pensions.

dunstonh

So my brother told me about Hargeaves Lansdown and showed me his online account with them, talking me through how it all works whilst extolling the virtues of them being a discount broker with access to thousands of funds. But are they any better or worse to use than an IFA or my bank?

HL's pension is typically more expensive than the pensions offered by the bank let alone an IFA. So, if you going to complain about what the FA or IFA earns from it, then HL will be earning a lot more for doing a lot less.

went to see an IFA (so-called, although my brother calls them all "salesmen") as well as my bank. Big mistake I think as all either of them did was go on about a few select investments which they'd charge me heaps of commission on etc.

If you go to an adviser to ask about pensions then what do you expect them to talk to you about. Pensions are tax wrappers for investments. Of course they are going to talk about the investments. How much are they going to charge you? You say heaps but you dont give a figure.

Using a bank is not a good idea. There is no reason to. They are typically the most expensive distribution channel (although they can still beat HL) and they operate in a sales environment. Using an IFA is fine (as long as its not a salesforce IFA. Make sure its an independent IFA). The IFA can wipe the floor with the bank.

Also see what others think about Personal Pensions with the insurance companies, i like them but cant work out how good they are compared to a SIPP, dont seem to be popular on here even tho i have many friends paying into one along side their side company pensions.

The insurance company versions tend to be a half way house. Less fund range (typically around 300 funds) but can come in with low charges. (remember that pension funds are priced using the TER).