Investing £70k tomorrow!!!

investment_newbie

Hello,

I'm about to walk into a high street bank in the morning and give away £70k of my hard earned cash to be invested for me.

I've had two discussions with the financial advisor in the bank and have so far decided to split it:

25k in a Global Equity Portfolio (1.8% fees, no initial charge)
10k in a Cautious Portfolio (1.51% fees, no initial charge)
7.5k in super ISAs (5.5%)
22.5k in a 1 year bond (4.5%)
5k in cash, filtering off into a 6% savings account.

I have no debt, and am saving for a house deposit that I'll be looking to put down in 2/3 years.

I haven't gone to too many sources for advice on my investment. Any ideas/insight/market predictions would be gratefully received!!

Are there any disadvantages to using a major high street bank to manage the fund managers?
Is it sensible to keep so much of my money in 'cash' type savings?

Cheers :beer:

dunstonh

Are there any disadvantages to using a major high street bank to manage the fund managers?

Yes. Banks are typically the most expensive option. They offer the lowest quality funds and the sales reps are usually not allowed to portfolio plan so you end up either poorly invested single sector funds or low quality portfolio funds. You mention super ISA so that would indicate Santander. So, pretty much as poor as you can get. You should use an IFA, not a tied sales rep.

Is it sensible to keep so much of my money in 'cash' type savings?

depends on objectives, risk profile etc.

jem16

investment_newbie wrote: »

I have no debt, and am saving for a house deposit that I'll be looking to put down in 2/3 years.

Really too short a timescale to be investing over. What would you do if there was a major crash just before you needed the money for your house deposit?

investment_newbie

dunstonh wrote: »

Yes. Banks are typically the most expensive option. They offer the lowest quality funds and the sales reps are usually not allowed to portfolio plan so you end up either poorly invested single sector funds or low quality portfolio funds. You mention super ISA so that would indicate Santander. So, pretty much as poor as you can get. You should use an IFA, not a tied sales rep.


depends on objectives, risk profile etc.

Thanks dunstonh.

What are the typical fees charged by IFAs?

My objectives is: to make as much as I can on my savings before putting down a house deposit. As I don't 'need' the money for anything- I have quite an easy attitude to risk- which is why I went for the global equity portfolio...

The 'super' products offered by the bank- some really decent cash savings rates if I invest with them, and no initital investment fees, made it seem quite attractive... but I am extremely inexperienced with investments so I really appreciate your advice! How much would the sales rep make from my investment? He obviously seemed quite happy when I walked in the door!

investment_newbie

jem16 wrote: »

Really too short a timescale to be investing over. What would you do if there was a major crash just before you needed the money for your house deposit?

I guess i'd hold off on the house!

I've had 50k sitting in an account for the last year paying out 0.8% so I decided to do something about it! Investment funds looked the most attractive but totally open to other ideas! :-)

mike88

No sensible advisor would persuade you to invest in equities over a 3 year period. Its madness and you could lose a lot. Commission based investment with a bank which are tied to particular products is a very dangerous thing to do. This is not financial planning; its gambling. If your time horizon is 3 years you would be advised to play safe.

If you are intent on buying equities/rolling the dice on unit trusts you can do so at no initial charge and no commission with a discount broker such as Hargreaves Lansdown or Best Invest.

There is no need for you to be tied to accounts paying 0.8%. Look at moneysupermarket.com for best buy savings accounts.

jem16

investment_newbie wrote: »

I guess i'd hold off on the house!

Depends on how long you are prepared to wait. If you lost 40% it would take a bit of time to make it back.

I've had 50k sitting in an account for the last year paying out 0.8% so I decided to do something about it! Investment funds looked the most attractive but totally open to other ideas! :-)

Personally over 2/3 years I'd be looking for a savings account - it's possible to at least get around 3% - not great but better than a possible 40% loss.

Cautious_Investor_3

Hi

A couple of observations:

1. A term of 2 - 3 years is too short for the global equity and cautious portfolio

2. Given the fact that you want access to the money in 2 - 3 years I'd be inclined to simply consider cash / deposit based investments. If you don't you could be at risk of a dip in a particular asset class value just when you want the cash

3. Always always always see an IFA, a bank adviser will most likely be tied to the banks own investment products and savings accounts. Take a look at www.unbiased.co.uk to help you find an IFA

I'd take a sickie tomorrow and think things through a bit more.

Keep us posted and let us know how you get on.

The Cautious Investor

investment_newbie

mike88 wrote: »

No sensible advisor would persuade you to invest in equities over a 3 year period. Its madness and you could lose a lot. Commission based investment with a bank which are tied to particular products is a very dangerous thing to do. This is not financial planning; its gambling. If your time horizon is 3 years you would be advised to play safe.

If you are intent on buying equities/rolling the dice on unit trusts you can do so at no initial charge and no commission with a discount broker such as Hargreaves Lansdown or Best Invest.

There is no need for you to be tied to accounts paying 0.8%. Look at moneysupermarket.com for best buy savings accounts.

By 'playing safe' are you talking about keeping the money in cash? bonds? guaranteed returns?
Maybe I could take a safer split on the money and invest a smaller percentage?

HappyMJ

The problem with the global equity portfolio is that your pounds won't buy much foreign currency it's at a low and the returns are also very low. It's a gamble that you will probably lose on you may win. I wouldn't bet on it.

The returns on the cautious portfolio will be eaten up by fees.

I would put as much as possibe into fixed interest bonds over 1,2 and 3 years. Put a third over each time period. 4.5% is a pretty good rate. When the 1 year bond matures put the proceeds into the ISA.

jimjames

investment_newbie wrote: »

Hello,
Is it sensible to keep so much of my money in 'cash' type savings?

Cheers :beer:

Absolutely - if it is needed in 2-3 years then you have pretty much no other options if you want to be sure that you have the amount of money in that time frame.

Beyond that if you can invest for the longer term ie 5-10 years plus then stock market investments would be worth looking at but definitely not products sold by Santander. Previous posts on their ISA bonds have shown how poor they are with some very onerous conditions. If you want to get money out early you will suffer a loss of capital for example.