Worth seeing an IFA?

darkpool

jamesd wrote: »

What I learned and did took me from about zero to reasonably expecting to be able to support myself for the rest of my life based on accumulated investments in about six years. Those interested in why each of us participates could usefully search our posting histories.

you went from zero assets to being able to retire in six years?

you never said where you get your 7 to 9% over inflation??

jamesd

darkpool wrote: »

you went from zero assets to being able to retire in six years?

To being able to support myself in the entirely acceptable manner in which I've been choosing to live, yes. Not to be ready to retire. My target for that is higher. But I no longer need to worry greatly about how I'd support myself if I encountered long term unemployment.

I had no significant experience of investing at the start. Just some interest in learning, using the knowledge, and commitment to using enough of my income to get to my objectives rapidly. For the period I've been tracking, my growth in savings, investments and assets after all living and spending costs exceeded 100% of my net income plus gross pension contributions from day one until the end of 2010-11 tax year.

What caused me to embark on that course was in part spending more than £40,000 in savings during a period of unemployment and full time voluntary work. I didn't want to repeat that, so I tried to quickly get to the point where I could live indefinitely without draining the capital again.

Not everyone will be doing this at such an interesting/profitable time for investments as I had to help me along between late 2008 and now, nor with the same level of income and commitment, of course. I've been fortunate with timing and done well and fortunately in my market timing.

darkpool wrote: »

you never said where you get your 7 to 9% over inflation??

Plenty of past discussions of that, including things like Figure C.9 on page 61 of the appendices to the 2004 First Report of the Turner Pensions Commission, titled "Distribution of Annualised Real Rates of Return on UK Equities over 5 Year Periods: 1899-2003" which shows mean 10.4% median 11.5% since 1977 and mean 5.7, median 6.5 for the whole period. As real returns, those are after inflation. Source given for them was the Barclays Equity Gilt Study 2004.

For twenty year periods the since 1977 mean was 10.7 and median 11.2. For the whole range, mean 5.5 and median 5.5, per Figure C.10.

You can decide whether you prefer the whole period or the since 1977 figures or some others. I use the since 1977 ones because I think they are more likely to be realistic for future planning. But I also allow significant safety margins.

That's UK equities only, of course, a wise investor would not be using solely UK equities in the wealth accumulation phase of their planning.

gadgetmind

datostar wrote: »

I think we're seeing something of this pattern now on the basis of a week or so's FTSE falls.

Yup, I'm seeing a lot of "Investors shunning the stock market" type reports. OK, you need to tread carefully, and find the pockets of value that are emerging, but "shun"? Why on earth would someone choose to pile in when markets were frothy and then want nothing to do with investing when they drop?

gadgetmind

Lokolo wrote: »

I wouldn't expect 1.5% AMC and 3.5% inflation though. These values are at the high end.

My projections currently use 6.25% for investment growth (7% - 0.75%), 3.5% for CPI and 5% for RPI. I use CPI to move allowances and tax bands (unrealistic given the 40% band is shrinking!) and an unscientific blend of CPI and RPI (4.25%) to adjust the value of money over the years.

Every April I update my projection with current pot values (and compare with projections) and then tweak rates and tax bands going forwards.

crittertog

fairleads wrote: »

Could you be a little more specific please

Examples:

Aberdeen Emerging Markets - annualised return over the last 10 years - 18.9%

M&G Global Basics - annualised return over the last 10 years - 13.1%

First State Asia Pacific Leaders - annualised return over the last 5 years - 18.29%

etc ...

Generally a negative return this calendar year due to the state of the markets, though.

Funds pulled "out of a hat" to serve as an illustration, figures from Morningstar.co.uk.

fairleads

crittertog wrote: »

Examples:

Aberdeen Emerging Markets - annualised return over the last 10 years - 18.9%

M&G Global Basics - annualised return over the last 10 years - 13.1%

First State Asia Pacific Leaders - annualised return over the last 5 years - 18.29%

etc ...

Generally a negative return this calendar year due to the state of the markets, though.

Funds pulled "out of a hat" to serve as an illustration, figures from Morningstar.co.uk.

So, according to Morning Star that is, one fund has produced a real return of 9 % + each year for the past 10 years and another one has, maybe, just made it.

Lokolo

gadgetmind wrote: »

My projections currently use 6.25% for investment growth (7% - 0.75%), 3.5% for CPI and 5% for RPI. I use CPI to move allowances and tax bands (unrealistic given the 40% band is shrinking!) and an unscientific blend of CPI and RPI (4.25%) to adjust the value of money over the years.

Every April I update my projection with current pot values (and compare with projections) and then tweak rates and tax bands going forwards.

OK yeh if you update it every year, I was thinking the inflation figure of 3.5% for on the high side for the average inflation. Obviously AMC at 1.5% would only occur if you were silly enough.

fairleads

Lokolo wrote: »

OK yeh if you update it every year, I was thinking the inflation figure of 3.5% for on the high side for the average inflation. Obviously AMC at 1.5% would only occur if you were silly enough.

Silly enough for what? To believe that because you're quoted a lower than average AMC that that is what you are getting. Please note, the AMC or TER of a fund is often not as low as that stated on the fund's brochures

Lokolo

fairleads wrote: »

Silly enough for what? To believe that because you're quoted a lower than average AMC that that is what you are getting. Please note, the AMC or TER of a fund is often not as low as that stated on the fund's brochures

I don't pay 1.5% AMC on any of my funds because of rebates, and I doubt a lot of people on here do.

darkpool

Lokolo wrote: »

I don't pay 1.5% AMC on any of my funds because of rebates, and I doubt a lot of people on here do.

i bet the total fee you pay is nearer 2.5%........