£160,000 to invest

BMWrider

Hey all im looking to invest the above cash, dont really want to go cold into a IFA not knowing what he's talking about so would like any good ideas of what to do with it, e.g ISA's, tax free overseas, property, gold :cool: . I have 2 daughters 16, 20 who I might like to give money to in the near future so want quickish access, and dont want to gamble it away on high risk stuff.

Not really had anything to invest before so a virgin at this.

Bisoy

Hi BMWrider and welcome to MSE and in behalf of the ever growing community of moneysavers you come to the right place to seek help and information.

I am no expert and I know somebody will come to my rescue that saving and investing are 2 different things. Saving is short term and Investing is long term.

If you have that amount of spare money my gut feeling is that it would be best to see an IFA.;)

Madiba_2

I've a similar amount of savings, and I've just chucked it into a few savings accounts. I may put some into more high risk ventures in the future, but I like to keep my money safe.

Let us know what the IFA advises if you do go see one!

dunstonh

No one solution would be used and what options would depend on where you want to invest and your personal circumstances.

An offshore investment may be valid for some but it could equally be no use to someone else and prove to be an expensive folly. IFAs are authorised to discuss and recommend packaged products only. So, things like direct property (i.e. you buying a property to rent out) and gold would be outside the scope of advice.

The term IFA covers a very wide range of advisers. Some will specialise in mortgages, some in corporate, some in investment/pensions, some in tax planning. Others will be general practitioners (jack of all trades, master of none). You need one that specialises in investment. Often though its hard to tell so a few questions from you can help narrow your options. For example, ask them if they do mortgages as well, if so how often (you don't want one that does mostly mortgages). Ask them about what type of investment strategy they use. Asset/Sector allocation (investments spread wide and diversified across the different areas) is the response you are looking for. If they cant explain their strategy then that probably means that they are not experienced enough and you will end up in a managed fund (balanced managed, cautious managed or distribution fund - yuk).

Charges vary with advisers as well. You have old model advisers that will take maximum commission up front with no ongoing servicing commission. You have those that will take some up front and some for servicing. You will have some that will discount (FSA published figures do show that on average you would expect some discounting of between 50 and 75%).

Investment specialist IFAs are increasingly (but still a minority) working to New Model basis which is a fixed initial charge of 1% (sometimes up-to 2% depending on work/amount involved) which can be paid by fee or deducted from commission (ie if commission is 3%, they take 1% and rebate the 2% surplus). The natural trail commission of 0.5% p.a. is kept to pay for ongoing servicing and reports. This is seen as the ideal charging structure for investments as its cheap for the consumer, used mostly by investment specialists (and not policy floggers) and includes ongoing servicing. It is also used by firms with good cash flow as they are not reliant on initial commission. So, you can be fairly sure they will be there in the future.

EdInvestor

Then again you will save masses amounts of money in charges if you buy investments through discount brokers such as

https://www.h-l.co.uk
https://www.chelseafs.co.uk
https://www.cavendishonline.co.uk
https://www.selftrade.co.uk

...rather thaqn pay fees to IFAs.


Many of these companies have a lot of useful investment information on their websites provided free.

dunstonh

...rather thaqn pay fees to IFAs.

3 of the firms you listed are IFAs. You are paying to buy the product and not the advice. In at least one of those examples there is very little discounting and in another, I have found I can beat them and still take commission as they dont get the best commission rates.

You dont pay commission. You pay charges. The provider pays commission and the same product can pay 4% to one IFA and 7% to another with exactly the same charges to the individual. If you get an IFA that rebates, then the one with the highest commission can rebate more than the one that doesnt.

If you dont know what you are doing then going DIY can easily end up far more expensive than getting advice.

Cook_County

I see you haven't mentioned TCF (Treating Customers Fairly) and Open Architecture.

Do you get offered true open architecture from:

a) all investment IFAs
b) those on the New Model?

My guess (and it is only a guess) is that there are very few IFAs who truly know the entire marketplace and so wherever you go you will get a biased choice which may not be what you wanted in the first place...

dunstonh

I see you haven't mentioned TCF (Treating Customers Fairly) and Open Architecture.

TCF isnt a differential and applies to every individual dealing with regulated financial services products. Whether they be IFAs, tied salesmen, mortgage advisers, product providers or insurance company call centre staff.

As for open architecture, I would say the majority do. Indeed, the FSA recently confirmed that those exceeding the KFI limits could see their independent status removed. That issue is more to do with multi-tie than IFA. Plus there really isnt a decent wrap in the UK yet and I see little point using one either as it just duplicates what you have already on your back office software. So why pay more for it.

My guess (and it is only a guess) is that there are very few IFAs who truly know the entire marketplace

Anyone who admits to knowing everything is a fool. It is impossible to know the entire marketplace. There are tens of thousands of options available.

so wherever you go you will get a biased choice which may not be what you wanted in the first place...

I dont follow that conclusion. You may get bias due to service and features. For example, I wont usually choose investment providers that dont integrate with my back office software. However, I can do that because all the best providers and fund supermarkets do. If it came to it where a provider that didnt offered the best product, then you go with the best product. If there were two providers with identical offerings and one did integrate and one didnt, then I would go with the one with integration. Is that bias or is that filtering of features and options to end up with the best option?

NMA has no cost bias so you cant mean that.