IFA meeting next week. Will my IFA do this for me...?

roves1

£100/month could come in very useful once you buy or when interest rates start to climb.

If the euro or world economy collapses, option 1 may be the best course of action for the time being. My advice would be to take any financial advice with a pinch of salt, be it from an IFA, a forum, a fund manger, the press, all investments are a gamble, more so if you are actually paying for the advice or management, because your money has to work harder just to keep still - IFA cut, fund manager or institution cut, market maker cut, inflation, duty, all adds up, and there is no guarantee any of them will make a penny for you however much you try and spread it about.

Options 2/5 and 3 are not that different.

There are few jobs that are totally safe in a downturn or reorganisation.

Nine_Lives

roves1 wrote: »

£100/month could come in very useful once you buy or when interest rates start to climb.

If the euro collapses, option 1 may be the best course of action for the time being. My advice would be to take any financial advice with a pinch of salt, be it from an IFA, a forum, a fund manger, the press, all investments are a gamble, more so if you are actually paying for the advice or management, because your money has to work harder just to keep still - IFA cut, fund manager cut, market maker cut, inflation, all adds up, and their is no guarantee any of them will make a penny for you.

There are few jobs that are totally safe in a downturn.

I agree, but then there's obviously a risk if you're giving your money to someone. Even if you keep your money yourself & away from the banks, there's still a risk. There's risk in just about everything we do, so that much is obvious.

The way i see it is i have no time to wait. I'm 28. I've been in full time employment for 8 years now so i've wasted that much in my opinion.

So doing nothing is not an option in my eyes. If i pay instantly (today) i'm looking to struggle with my contribs, which would really need to increase, but "owt is better than nowt".
If i have a punt myself, it's better than nothing, but i feel an IFA is worth the risk.


Anyway, hopefully i will get sound advice. Fingers crossed.

roves1

Stock markets aren't much up from 8 years ago, FTSE is up 24% - a savings account would have beaten a tracker, and many funds can't beat the index, so worrying about wasted time is not the only criteria to base an investment decision on - presumably you've been saving for a house deposit in that time, and living a bit, and building up state pension contributions.

atush

Stock markets (UK anyway) are up once you take into acct dividends/income.

No one doing what you just did bothers to look at income in additon to price rises- they just look up the index price. You are telling only half the story. Don't feel too bad, as hack journalists do this all the time lol.

Linton

roves1 wrote: »

Stock markets aren't much up from 8 years ago, FTSE is up 24% - a savings account would have beaten a tracker, and many funds can't beat the index, so worrying about wasted time is not the only criteria to base an investment decision on - presumably you've been saving for a house deposit in that time, and living a bit, and building up state pension contributions.

Some stock markets arent up by much over the past 10 years, others are up a lot. Its a common misconception to see the FTSE100 as the index when in reality it is just one among many.

In any case in your example a savings account wouldnt have beaten a tracker. You should get 3% annual dividend from a tracker, add in the 24% over 8 years and then dont forget that both dividends and capital gains are tax free for most people, unlike bank interest.

roves1

That would depend on the terms of the tracker/investment, and all the cuts the middlemen take - the IFA is proposing to take 3%.

Or, if you invest directly, your trading costs, spread, stamp duty and your investment timing can all eat away at dividend yield. A market or individual share drop can wipe out many years of dividend income, whether held directly or in a fund. The point was, treading water isn't always a bad thing or something to overly worry about, timing can make the difference between a profit and a loss, and the OP has been building up a house deposit in the meantime.

I'm well aware of different indices, it was an example, not a comprehensive "hack" article.

Linton

roves1 wrote: »

That would depend on the terms of the tracker/investment, and all the cuts the middlemen take - the IFA is proposing to take 3%.

Or, if you invest directly, your trading costs, spread, stamp duty and your investment timing can all eat away at dividend yield. A market or individual share drop can wipe out many years of dividend income, whether held directly or in a fund. The point was, treading water isn't always a bad thing or something to overly worry about, timing can make all the difference between a profit and a loss.

I'm well aware of different indices, it was an example, not a book or a comprehensive "hack" article.

If you chose a sensible mix of investments to start off with, the need to trade is minimal - perhaps an annual tweak. And with that mix an individual share drop is of little consequence. It is here that an IFA should provide most benefit, not in using a pin over a list of n000 funds.

I would be very surprised if an IFA proposes to take 3% annually except in the case where the total money involved is very small and so it would not otherwise be worth his while. This could be the situation for the OP, but then he doesnt need to ask for, or pay for, ongoing support.

The problem with treading water is that it's far from clear when to stop treading and start swimming. The chances are that you will leave it far too late, thus ensuring you are worse off than if you had just ridden the storm (if that's not mixing metaphors).

There is a phrase I have seen quoted - "its time in the market that counts, not timing of the market". Very true IMHO.

roves1

There are many examples of funds/investments that are worth significantly less now than 10-15 years ago, so the validity of that phrase depends very much on which period you choose to compare, timing of investment, choice of investment, management, costs, lump sum or drip feed. Buy before a drop, buy a bad one, and it may never recover.

It can also be interpreted as, the active fund managers can't or rarely beat the market.

xylophone

Why not just suck it and see for a couple of years- say £50 a month into a stakeholder pension ( a young person of my acquaintance uses the Pru but there are a number of other providers) and £50 a month into an S&S Isa (same young person does this)- Invesco Perpetual Distribution Accum as a first fund maybe? Hargreaves Lansdown for one offers internet access and you can learn as you go along?

Linton

roves1 wrote: »

There are many examples of funds/investments that are worth significantly less now than 10-15 years ago, so the validity of that phrase depends very much on which period you choose to compare, timing of investment, choice of investment, management, costs, lump sum or drip feed. Buy before a drop, buy a bad one, and it may never recover.
.....

All your risks, barring I suppose the global collapse of the world as we know it, can be ameliorated by buying a diverse range of investments - dont put all your eggs in one basket,

There are many more examples of funds and investments worth a lot more now than 10-15 years ago. Its a matter of chosing those areas in which you want to invest.

The obvious examples are emerging markets and far east - not a lucky random guess, more going with the flow of the world economy. Far east funds have averaged more than 10% annually over the past 10 years.

Even if you had used the proverbial pin over all the funds on trustnet you would have expected to return about 4% annually over the past 10 years, which include some of the worst conditions for investing within most peoples memory.

Note that these returns are after any fund fees.