Return on £40k

ianlls

Hi all,

My employer provided me with one free 90-minute session with an IFA at LEBC. During the session we separated out what I needed to keep for various things and what I could invest.

We determined that I have £40,000 to invest for at least five years. The IFA got me to fill in a short questionnaire to assess my attitude to risk etc. (which is low-to-medium) and he suggested we split up the £40k to invest in various ways.

To actually do this for me he will charge £1,200, with "Annual reviews - hourly rate offset by any trail commission/fee".

This is probably a perfectly reasonable charge for a large and well established company like LEBC, but will obviously dig right into what I'm likely to make in the first year. He suggested it is quite possible to make 8% net, which to me seems rather optimistic.

Does all this sound reasonable? Is there anything I should ask him before I go ahead - if I do.

Regards,

Ian

Loughton_Monkey

Looks to me that you are being charged a 'fee' and they also get commission. Looks expensive to me, but I don't use an IFA much and so don't know.

Yes, it's possible to get 8% net. Just as it's possible to get just about every figure between -30% and +30%. So that statement is about as useful as saying 'put it in premium bonds and it's possible you could get £1 million'.

jay_girlsgirlsgirls

1200 is 3% of your total investment amount. Leaving 38,800 to be invested. So to get an 8% net return on the 40k, you would need to get a return of 4,400 per annum to end the year 8% wealthier (which is 11.3% gross).

Therefore, I'd personally stay away. That initial fee is taking away 3% of your lump sum. But I'm tight like that. To make up for that fee he needs to be making you 11.3%. If he just makes you 8% on the 38,800, then your net sum at year end is 41,904, which is less than a 5% return....and that excludes commissions.

This is just my opinion, and I admittedly know NOTHING about IFA's etc, I'm just crunching numbers in my head.

pawlala

I agree with the above post, I would be inclined to hide the money away in a high interest fixed term saver for 5 years.