IFA charges-

jamesd

What investment companies did you have bad experiences with? I'm wondering whether they were really anything like the range of fund investing which has been discussed here.

EdInvestor

tsherar wrote:

Re Edinvestor:
The money is presently in a deposit account of a private bank. Our actuary is part of the bank.

Oh I see.

The problem I have.... is that as I am getting 5% pa,so I only need £3K out of the £400K pot to pay my £23K pension......I will also have another £350K available as a cash lump sum in 2008, and if I get 5% pa on that and take an annual sum of £20K, then that pot will last at least 30 years.
So with an income of £43K pa, do i need to take a risk of investing money.

Great non-problem to have, I agree

I'd be inclined to invest 100k of the 400k to see if I can get that 3k covered and also provide a bit of growth to cover inflation.Leave the rest in cash.

Half into equity income funds, I would suggest (have a look at Invesco Perpetual High Income and F&C Stewardship Income - both of these have long histories of outperformance and are defensive in market downturns) and half into commercial property funds of the bricks and mortar variety. Various options here.

How would your SSAS go about investing in funds so as to get charges rebated? Would it just open an account with a discount broker? I ask this as it might also influence what you invested in [ eg investment trusts - cheaper and more liquid- rather than unit trusts, shares rather than funds of shares.] Many of the better,cheaper ways to invest are not available via IFAs.

cheerfulcat

tsherar wrote:

The problem I have is that as I am getting 5% pa,so I only need £3K out of the £400K pot to pay my £23K pension.
TAking £3K out each year is not going to diminish the pot very much, and it should last quite a few years.
I will also have another £350K available as a cash lump sum in 2008, and if I get 5% pa on that and take an annual sum of £20K, then that pot will last at least 30 years.
So with an income of £43K pa, do i need to take a risk of investing money.

Are you aware of the risks you are taking by not investing it?

For a start, taking £3,000 out of the pot each year means that either you have to accept a gradually reducing income ( because you are taking 5% of a smaller amount ) or you have to take bigger and bigger bites out of the capital, which has the looks of a vicious circle about it.

Another thing is that you are entirely at the mercy of interest rates; if they drop, you'll again either have to take a reduced ( perhaps greatly so ) income or erode the capital.

And speaking of capital erosion; you have made no allowance for inflation. Given the ages of you and your wife ( 60 and 51 respectively, according to your other post ), inflation is going to have a pretty devastating effect on your capital under your plan. I don't think that your calculation that your capital could last 30 years has taken this into account ( nor, I think, have you allowed for all that capital eaten up in making up the income shortfalls...)