Want 5% on £300k

uk1

jamesd wrote: »

That's sad but the sadness isn't providing examples, it's the people who resurrect three year old posts for sniping.

But at least you said what you said. You are incapable of representing what people said in the current thread accurately purely for sniping. That is much much sadder. Keep up the bad work!:D

jamesd

uk1, I've given the performance numbers for the FTSE that I didn't suggest but you used, implying it was comparable to what I mentioned and his IFA advised. Perhaps you'd care to do the same for what you suggested yourself?

I even managed to come up with decent numbers for posts I made three years ago, surely you can do so for one you made this week?

darkpool

uk1 wrote: »

One presumption seems to overtake all discussions in these threads, and that presumption is that everyone needs to make a return that is greater than inflation .

this is the "savings and investment" board. i think it reasonable that most people here would want their savings to match inflation. is that such a bad thing?

how much of your life savings are you happy to lose each year to inflation? 1%? 2%? 10%? what rate of inflation did you assume in your spreadsheet?

Aegis

darkpool wrote: »

yes your right i don't understand some of your posts. so the difference in charges between a tracker and AM is only 0.25%? you think it reasonable to compare funds before the fees applied?

I have to ask, are you being deliberately difficult here? I was talking about initial charges because you wanted to discuss why the bid prices were used to calculate returns, now you seem to want to discuss annual charges again. Could you please make up your mind on this one and let me know which you'd like to discuss, as it's very difficult for me to provide answers to your comments if you don't pick a subject and stick to it for a while.

with cars people know that you get what you pay for. ie a range rover is better than a fiesta.

I disagree. A Range Rover is better than a Fiesta for some people, but worse for others. I would personally not benefit at all from having a Range Rover, but a Fiesta would probably suit me because it has lower running costs, lower insurance costs and it would fit better into the available parking spaces around where I live. I'd still prefer my current car over either of these, but the point is that it's almost never clear cut that one vehicle is better than another.

Much the same applies in finance: some people like active portfolios, other prefer passive. Some people prefer equities, others like forex derivatives. Some people adopt a fundamental analysis strategy, others prefer technical analysis. Some adhere to the Efficient Markets Hypothesis, others don't. In short, there are loads of opinions as to what's right within finance, and because of the complexity of investment management it is very difficult to simply say "this is the one correct strategy, all others are wrong".

however with fund management it's not really clear that the fees are benefiting the consumer. you also don't know if you have had a good deal from your IFA until 20 years later.

Of course you do. Fund performance is available over timescales ranging from days to decades. You can always check up on how the fund manager is doing independently if you want, so there's no need whatsoever to wait until 20 years down the line. You can monitor performance of active funds almost as easily as for a direct holding of equities, and as an added advantage all active managed funds show performance against their benchmark or sector average.

If you have an IFA advising you, you can also ask them for their views on the funds, particularly if they're taking some of the AMC to cover the ongoing servicing of your portfolio. They'll have access to some fund research and are required to justify recommendations quite thoroughly, so they should easily be able to accommodate such a request.

if i walked into an IFA and said i wanted to invest a £1m and the IFA said the TER plus other charges were 3% a year i would want to know what i was getting for that £30k a year. so far the reasons given for AM seem to be "well if you ignore all the dog funds AM is quite good". but unless you have a crystal ball you don't know what the dogs will be.

Actually the idea is that if you ignore the ones which present the characteristics of long-term dog funds (i.e. most retail bank funds and all managed funds with a passive mandate) you'll likely get a decent return.

darkpool

Aegis wrote: »

Actually the idea is that if you ignore the ones which present the characteristics of long-term dog funds (i.e. most retail bank funds and all managed funds with a passive mandate) you'll likely get a decent return.

but that's similar to saying "you can make an absolute fortune gambling as long as you don't put money on horses that don't win". I think if all the fund managers like IP could prove that they could outperform the bank UTs they would do it? It would be such a strong selling point. The fact that fund managers don't advetise such fact suggests they don't actually do that much for the consumer. They only advertise the odd fund that does well.

Aegis

darkpool wrote: »

but that's similar to saying "you can make an absolute fortune gambling as long as you don't put money on horses that don't win". I think if all the fund managers like IP could prove that they could outperform the bank UTs they would do it? It would be such a strong selling point. The fact that fund managers don't advetise such fact suggests they don't actually do that much for the consumer. They only advertise the odd fund that does well.

They can't advertise that because the FSA won't let them. Even if bank funds are at the bottom of the sector list year in year out, the FSA-mandated phrase "past performance is no guarantee of future performance" means no company is able to say "we will do better than retail bank funds".

darkpool

Aegis wrote: »

They can't advertise that because the FSA won't let them. Even if bank funds are at the bottom of the sector list year in year out, the FSA-mandated phrase "past performance is no guarantee of future performance" means no company is able to say "we will do better than retail bank funds".

surely there must be academic research on the issue? the historical prices of unit trusts is well known. the charges paid by investors is also well known.

if i was a fund manager like IP and i had some solid research that AM beat trackers i would think of ways to get the message out.

In all honesty if you managed to point me in the direction of solid evidence that AM was worth the money I would sell my shares and invest in Unit Trusts.

The main reason for Active Managment is to outperform the wider stockmarket, yet there is no evidence to confirm that managed funds outperform the market? That really is unbelievable. It seems to me that the advisers make more from the clients money than the clients do.

Aegis

darkpool wrote: »

surely there must be academic research on the issue? the historical prices of unit trusts is well known. the charges paid by investors is also well known.

if i was a fund manager like IP and i had some solid research that AM beat trackers i would think of ways to get the message out.

In all honesty if you managed to point me in the direction of solid evidence that AM was worth the money I would sell my shares and invest in Unit Trusts.

The main reason for Active Managment is to outperform the wider stockmarket, yet there is no evidence to confirm that managed funds outperform the market? That really is unbelievable. It seems to me that the advisers make more from the clients money than the clients do.

I think we're done here.

uk1

darkpool wrote: »

this is the "savings and investment" board. i think it reasonable that most people here would want their savings to match inflation. is that such a bad thing?

My point exactly most not all. People playing with their retirement fund after they have retired should consider carefully how much they need to risk. All a couple of us are pointing out is that this option also exists. We are talking in this thread about someone who has retired not about someone saving for retirement.

It is a sensible option for those that have enough to consider the idea that they may not need to be greedy.

darkpool wrote: »

how much of your life savings are you happy to lose each year to inflation? 1%? 2%? 10%? what rate of inflation did you assume in your spreadsheet?

I'm not losing any at the moment thanks, - quite the reverse.

You still do not get it. Inflation is only one factor. It is how long your fund will last considering just two factors - (a) the return you can get bearing in mind the risk you will take (b) compared to how much you will deplete the fund each year. How much you deplete will vary - for example many people spend less as they get older. Sometimes they retire before state pension kicks in which will therefore reduce their spending from their pot. It is the rate of return compared to the rate of depletion - inflation is only one factor in the calculation.

I'm currently achieving 4.95% - down from 6.1% average 6 months ago. My cash portfolio will not be below 4.5% over the next 24 months if I do nothing at all. As it happens I'm spending quite extravagently at the moment and dpeleting the fund by around 4% per year. The fund will probably not run out. When the last high interest account matures, I'm happy to have a return lower than inflation until rates go up again.


The problem is - yet again - the level of uninformed presumption that some have here that their fit-all prescriptions fit all patients.

darkpool

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Most academic studies of active management versus passive show the average active manager underperforms, and there is no persistency among the top performers over the longer term.