Help A Son Trying To Help His Dad!

dancingfairy

With that amount of money he probably also needs to consult an IFA with regards to estate planning. Presumably he wishes to pass it to your mum, then on to you? I don't want to sound morbid but he is 71 and he/you need to have a plan in place in case the worst does happen to make sure his money goes where he wants it to go and you can minimise the amount of tax etc you have to pay and also you would want to know it was all sorted and not have any additional worries at what would be a very stressful time.

dunstonh

Thanks for the link cheerfulcat. I wouldn't mind going to an IFA, but I think my dad might be a bit wary of them if they are charging some sort of management fee, charges et cetera.

The charges are likely to be lower than what the Woolwich are charging.

Is there any other alternatives you guys suggest?

Loads but there needs to be some more filtering of options and personal info which you wont be able to post here.

Once again, although it's a bit contradictive, my dad wants around £70k to be safe but generate a good return, he woudln't mind putting £20k into a risker product, but it must have the ability to produce decent returns, and he wants the rest of the odd £15k to be there incase of emergencies. Also, if it makes a difference he has just turned 71!

At the moment you are picking 1 and 10 as risk options. Lowest and highest. Your father needs to include the options in between even if the overall spread comes out at 3 or 4 on that scale.

Most modern investments have no tie in so accessbility in emergency shouldnt be a problem. Also, why does he need guarantee? Is it to protect an inheritance? If so, then just a guarnatee on death may be required and thats far cheaper than a full guarantee.

dancingfairy

Have a read of this thread which does mention attitude to risk and choosing sectors etc:
http://forums.moneysavingexpert.com/showthread.html?t=416337
or this one might provide a bit more useful info:
http://forums.moneysavingexpert.com/showthread.html?t=457799&page=3

Dunston - perhaps you can give the OP an idea of how much you'd charge to put together a protfolio of 90k matched to his risk profile so he has a rough idea so he can say to his dad it will cost roughly x amount which is for professional advice ie it's not much if you think the advice will make you back y times that.

Rhino666

Emerging markets of which China is a large component are particularly risky at the moment and it's a one way risk - how much can you lose !!

Strangely the UK may well be the safest place to invest :-)

Use Hargreaves Lansdown vantage service to pick a UK based fund from their wealth 150 or whatever they call it - you could do far worse and will save lots of commission.

I'm sure that Dunstonh would agree that the UK market appears fairly stable with potential for a 10 - 15% upside over the next 12 months ?

dunstonh

Dunston - perhaps you can give the OP an idea of how much you'd charge to put together a protfolio of 90k matched to his risk profile so he has a rough idea so he can say to his dad it will cost roughly x amount which is for professional advice ie it's not much if you think the advice will make you back y times that.

I'm not sure I am the best example as I work to NMA basis of 1% of amount invested. The typical maximum is 3% but current average (as published by FSA) is 1.8%.

The remuneration the Woolwich adviser is getting (or being credited for) is going to be similar to an IFA workig on commission terms. Indeed, if I was to arrange those same Woolwich products as an IFA, I can do them cheaper than the Woolwich can. The Woolwich FTSE GEB pays 3% commission so thats 2% rebated in my case or 1.2% if you take the FSA average. Or zero if you go to Woolwich.

It's not just cost though. It's quality. You can build a decent risk based, sector allocated portfolio with 90k and putting the bulk of it in a FTSE GEB almost makes you cry with how bad that is.

Also, after 4 years of more or less steady growth, I am not sure a FTSE GEB is a sensible move at all as it has no downside protection as far as the tracking goes and you dont benefit from any dividends or other forms of income you would expect in lower risk areas.

Use Hargreaves Lansdown vantage service to pick a UK based fund from their wealth 150 or whatever they call it - you could do far worse and will save lots of commission.

Although the poster and his father have no knowledge of investing and the HL wealth 150 has a poor reputation historically.

I'm sure that Dunstonh would agree that the UK market appears fairly stable with potential for a 10 - 15% upside over the next 12 months ?

I don't now. I'm focusing on income more at present. Still including other sectors as rebalancing takes care of risk/reward over time. Light on US but starting to increase Japan. UK does look attractive but it will not escape a global dip. It could be quicker to recover though and the dip wouldnt be much. There is no bubble with the UK stockmarket unlike China.

jamesd

First, don't buy any investment products from Woolwich or any high street bank. They are never good value.

Using ISA tax wrappers is good but the important bit is what the money is invested in. It's invested in a very poor product type. If you have a cooling off period, I suggest using it to cancel the investment but keep the ISA wrapper, if that's possible.

Same for the 49k in a similar product.

Asking for the advice of an IFA who can select an appropriate range of funds seems like a good idea.

If he does just want something with some risk but not much, there's always the option of using Zopa's C market, up to 25,000 worth, unless he gets a consumer credit license, which they would help with. That can deliver 10%+ a year through lending to lots of individual consumers. Some will default but the money is spread over so many that it's not going to be able to significantly threaten the capital. The capital is tied up for the duration of the loan though, returning gradually over the term. The 10% is gross, the interest is taxable.

Singh87_2

Dunston, what does NMA basis mean?

Right, I guess investing in a fund is probably not the best idea at the moment!

To be honest, ICICI and Icesave offer some decent savings accounts of around 6.05%, and then there is no risk to the money and also it is instant access aswell. So, I will probably put the bulk of the money in here.

I am also looking into NS&I Direct ISA's of 6.05% which are £3000 each for my mum, dad and myself. I have one question though, my mum has a halifax ISA from 2 years ago, and she has not invested another £3000 last year or this financial year, is she eligble to open the NS&I ISA aswell as her Halifax one?

Also, I heard the maximum you can invest in ISA's are £7000, can you open two of these NS&I direct ISA's or can the £7000 only be in invested in the share ISA's? And if so, are these 'risky'?

You have been great so far guys, I really really really appreciate it!!

meanmachine_2

Don't forget premium bonds.

No risk, likelihood of poor returns c3%, but with that fleeting moment of excitement at the beginning of each month. "Have I won the million? Oh no, £50 quid again" etc

30K is the maximum holding there.

meanmachine_2

Singh87 wrote: »

I am also looking into NS&I Direct ISA's of 6.05% which are £3000 each for my mum, dad and myself. I have one question though, my mum has a halifax ISA from 2 years ago, and she has not invested another £3000 last year or this financial year, is she eligble to open the NS&I ISA aswell as her Halifax one?
)

The Halifax ISA will now be "closed" to new money. Best idea is for your mum to open up another ISA, one that allows transfers in, Abbey say, (NS&I doesn't allow transfers) whack 3K in that, then transfer from the closed Halifax ISA.

jem16

Singh87 wrote: »

Dunston, what does NMA basis mean?

NMA = New Model Adviser. Basically it means that the adviser is taking a low initial charge and relies more on the ongoing annual(trail) commission to keep the business. The better the investment does, the more the adviser is paid yearly. So the incentive is there to provide good advice. Usually works out at around 1% initial commission and 0.5% trail commission.

Right, I guess investing in a fund is probably not the best idea at the moment!

Nothing wrong with funds. However the advice is not to put everything in ONE fund but a spread of funds to match your father's risk profile.

To be honest, ICICI and Icesave offer some decent savings accounts of around 6.05%, and then there is no risk to the money and also it is instant access aswell. So, I will probably put the bulk of the money in here.

There is a risk of inflation eroding the capital over time. It's a good staring place whilst you think more carefully but not necessarily for long term. If your dad is a tax payer the interest rate is 4.84% net - just ahead of inflation and no more.

I am also looking into NS&I Direct ISA's of 6.05% which are £3000 each for my mum, dad and myself. I have one question though, my mum has a halifax ISA from 2 years ago, and she has not invested another £3000 last year or this financial year, is she eligble to open the NS&I ISA aswell as her Halifax one?

No problem with this apart from point below about Maxi ISA.

Also, I heard the maximum you can invest in ISA's are £7000, can you open two of these NS&I direct ISA's or can the £7000 only be in invested in the share ISA's? And if so, are these 'risky'?

Did you not say you have already taken out £7k ISA for everybody? If this tax year then you already have used your allowance and cannot open the cash ISAs.

The S&S ISA is more risky than cash ISAs but can be tailored to your risk profile.

You have been great so far guys, I really really really appreciate it!!

I would really advise seeing an IFA and making a good job of it.