155000 to invest

jem16

gadgetmind wrote: »

Another suggestion is an Investment Bond, which I understand is also the first thing that most advisers turn to.

The first thing any decent IFA should turn to is the S&S ISA. An Investment Bond before that would be grounds for a missale.

These can have tax advantages but you need to really understand both the product and (importantly) the charges.

I can't see anything in what the OP says that would indicate the use of an Investment Bond, except the loss of the age related allowance which I think would still apply given the OP's father is 64 just now. However this is only likely to apply for about 2 years until the personal allowance catches up, at which point I would doubt there would be any need for the threshold. It also looks near enough gone anyway with a £25k pension plus state pension.

I'd certainly suggest seeing an IFA who can look at all aspects.

Totton

His age is 64, yearly pension of 25k, plus state pension, mortgage free, not looking for a great deal in return, he is a safe type of character, not sure if he would like the risk of shares.

I reckon 25k is a decent sum to live on in retirement and that to fund extras such as a holiday, new car etc, the best thing to do is to find the best savings rates you can, preferably in an ISA but that can be done x2 each year with one each for husband and wife.

To get some extra out of the sum, you could opt for a % in equities and/or bonds. I would take a look at something such as the Vanguard Life Strategy fund, perhaps the 40% Equity would be suitable or even one of th e more riskier ones should the % for this warrant it.

An alternative is to look at the income bearing investment trust arena, something such as City of London, Tory Income & Growth, Perpetual Income & Growth etc, you can see a list of these at AIC Stats although for myself I have also gone for Global and Far East income bearers.

Overall, if they are wary of the stock market (and they should be), then I'd suggest considering 1/3rd each into saving accounts, vanguard strategy fund and income bearing investment trusts. You'll probably find that the equity side of it will disappoint in the short term but longer term could outperform and provide some help when they are in the 80's and their pension has become worth less (should it).

doubleJackD

jem16 wrote: »

I'd certainly suggest seeing an IFA who can look at all aspects.

I always thought the advice from an IFA was limited to collective investments?

Limiting yourself to collective investments is a bit like going into a restaurant and ordering the first thing on the menu..... of course some may do that but most people prefer to see what else is available.....

doubleJackD

dave4343 wrote: »

Hi,
I also suggested property and also investing a little in shares eg 20000, but I am given to understand in shares you need to look at the bigger picture and not be too alarmed if they dip below your initial investment.

if you look at the bigger picture shares and property tend to perform well over time. i think with shares it's better to look at the annual dividends (which tend to be quite stable) rather than the value (which does fluctuate)

gadgetmind recommended some asset classes which looked good to me. with a pension of 25k plus state i think your dad can take some risk with his 155k.

jem16

doubleJackD wrote: »

I always thought the advice from an IFA was limited to collective investments?

Collective investments, yes but many are now authorised to look at ETFs, ITs etc but not direct into shares. See a stockbroker for that.

However what the IFA should be looking at is the financial planning aspects and that is what it sounds like the OP's father needs.

doubleJackD

jem16 wrote: »

Collective investments, yes but many are now authorised to look at ETFs, ITs etc but not direct into shares. See a stockbroker for that.

However what the IFA should be looking at is the financial planning aspects and that is what it sounds like the OP's father needs.

excuse my ignorance, but why did IFAs not recommend ETFs and ITs before?

jem16

doubleJackD wrote: »

excuse my ignorance, but why did IFAs not recommend ETFs and ITs before?

Authorisations and expectations changing in line with RDR I expect.

However don't expect a sudden rush into ITs. With the explicit charging structure changes with the Platform review there is not going to be much difference in costs between funds and ITs.

doubleJackD

jem16 wrote: »

Authorisations and expectations changing in line with RDR I expect.

However don't expect a sudden rush into ITs. With the explicit charging structure changes with the Platform review there is not going to be much difference in costs between funds and ITs.

perhaps i'm being a little obtuse, but i still don't understand why ITs were not recommended previously but now are?

I understand this RDR milarkey is about ending commissions, perhaps previously ITs didn't pay commission to the IFA. And with RDR there is no longer commission bias towards products that pay commission?

dunstonh

Another suggestion is an Investment Bond, which I understand is also the first thing that most advisers turn to.

Investment bond volume is low and certainly not the first thing most advisers turn to. The figures to not back that statement up. However, tied agents are notorious for using it in isolation and that is usually bad advice.

I understand this RDR milarkey is about ending commissions, perhaps previously ITs didn't pay commission to the IFA. And with RDR there is no longer commission bias towards products that pay commission?

Most IFA investments have been explicitly charged for many years now. Commission hasnt been a factor. Indeed, commission was already on it way out before the RDR was even mentioned.

ITs are not expected to take over from OEICs as the average consumer is generally considered to be of low knowledge and cautious in risk. ITs tend to be higher risk than their equivalent OEIC and have issues that the average consumer would not be interested in learning.

excuse my ignorance, but why did IFAs not recommend ETFs and ITs before?

They were outside the remit of most advisers as they fell under stockbroker remit. However, the FSA has changed that position.

doubleJackD

dunstonh wrote: »

ITs are not expected to take over from OEICs as the average consumer is generally considered to be of low knowledge and cautious in risk. ITs tend to be higher risk than their equivalent OEIC and have issues that the average consumer would not be interested in learning.

why do you say ITs are higher risk? from what I understand of ITs/UTs i would consider UTs to be higher risk, during a mass selling of units the fund managers will have to sell holdings.... a firesale isn't the best way to raise cash.... Some of these ITs have been on the go for a hundred year, tbh I would consider them safe but dull investments.

Is there not evidence that shows ITs outperform the equivalent UT... something to do with lower fees.

I'm not sure if I would be happy going to an IFA if he thought i had "low knowledge".