£250,000 to invest

IronWolf

I would be disappointed with a 5-6% return over the long term put it that way

But it depends on your tolerance to 'risk' or short term capital loss, and how much time you want to spend first learning how to invest, and then actually researching investments.

dunstonh

Glen_Clark wrote: »

Tim Hale writes books, giving good advice. (Others sell them for him)

In the regulatory sense, he does not give advice. He gives opinion. Investing is all about opinion. There are many different ways, each has merits. There are also a lot of wrong ways.

I've invested £150K in shares without taking professional advice. I'm getting an income of 5.25% net (im a BR tax payer), I've had capital growth of 20% in the last year, and I'm beating the FTSE 100, 250, and all share.

Without context what you say is meaningless in such a short period. To achieve that would suggest you are not using low risk or even medium risk assets.

I've trusted managed funds in the past (a property linked insurance fund, and an endowment) and seen disappointing returns.

Property funds, for example, gave 15 years of double digit annual returns before they turned sour in the lead up to the credit crunch. The external events caused the returns (both positive and negative). Bricks and mortar funds are also typically less volatile and lower risk than the benchmarks you are referring to.

Endowments typically used cautious to medium risk multi-asset funds. Although some would allow a wider range of managed and passive investments.

Perhaps, the issue is that you dont want to be as cautious as those investments and prefer a higher risk approach.

Glen_Clark

Yes you could pay £100 - £200 an hour to sit with a IFA compiling his idiot quiz to profile your risk tolerance.:rotfl:
Or you could read the chapter on risk tolerance in Tim Hales book and make a better job of it yourself
Neither of them can tell you what you really want to know - like which shares are going to rise or fall. Your guess is as good as theirs. But at least the book will cost you a lot less. And reducing costs is a very substantial part of investment performance

dunstonh

Or you could read the chapter on risk tolerance in Tim Hales book and make a better job of it yourself

Or you could make a worse job. Reading a book does not automatically make you an expert. One of the most common mistakes by new investors is to invest above their risk profile and get caught up with fashion investing.

And reducing costs is a very substantial part of investment performance

Making mistakes can be far more damaging.

Not everyone is cut out for DIY. Some can do it and do it well. Others cant and will make a pigs ear of it and cost themselves a lot of money. Some could DIY but dont want to as they have better things to do with their time. That is the same as any area of business.

Its a bit like rebuilding the engine in your car. All the information you need is probably available on the web for free, but would take you months sorting through lots of spam and wrong information to find it - which could well lead to costly mistakes.

Using your example, how many people would rebuild an engine? Who says the information on the web is accurate and up to date for that particular car. The internet has very useful information if you look in the right places. It also had obsolete/out of date information and it also has downright damaging information.

There is nothing wrong with going DIY or getting advice if it is the right thing for the individual.

Tancred

berbatov10 wrote: »

In a similar thread to another on here. With £250,000 to invest is it possible to achieve a 5-6 % return without employing a financial advisor. I did see someone suggested an IFA could achieve 8% on such a sum but that sounds very high and must include a lot of risk??

Simple: buy a house and rent it out.

jamesd

berbatov10 wrote: »

In a similar thread to another on here. With £250,000 to invest is it possible to achieve a 5-6 % return without employing a financial advisor. I did see someone suggested an IFA could achieve 8% on such a sum but that sounds very high and must include a lot of risk??

The historic return of the UK's main stock market over the last 118 years or so has been a bit over 5.1% plus inflation, about 8-9% total. To get that takes nothing more fancy than a FTSE All Share Index tracker of some sort. A few times every ten years there will be a drop of about 20%. Once or twice every ten years there will be a drop of 40-50%. In between it'll go up. Think of a rollercoaster in reverse, an upwards trend but lots of ups and downs along the way. This index is likely to be described as medium-high or high risk, meaning volatility rather than risk, unless you're forced to sell.

The historic data in the 2011 version of the Barclays Equity Gilt Study , the 56th annual edition, gave these statistics for the different holding periods:

18 years: 99% chance of beating cash
10 years: 90% chance of beating cash
5 years: 75% chance of beating cash
4 years: 72% chance of beating cash
3 years: 69% chance of beating cash
2 years: 66% chance of beating cash

Looking back since 1899 there were 95 18 year periods. In 94 of those if a lump sum was invested once at the start investing beat cash (page 69 of 2012 Equity Gilt Study). Over 23 years there were no periods where the equity investing produced less than a positive result after inflation (page 68 Figure 7).

With regular investing even if one of the years was that exceptional one the rest wouldn't have been so the overall result would be positive compared to cash.

Now, that's what a basic UK stock market tracker might do, less costs. If you don't like the ups and downs it's possible to mix in other investments to reduce that. A good mixture should also not be just the UK.

Wilkins

berbatov10 wrote: »

In a similar thread to another on here. With £250,000 to invest is it possible to achieve a 5-6 % return without employing a financial advisor. I did see someone suggested an IFA could achieve 8% on such a sum but that sounds very high and must include a lot of risk??

8% is not a demanding figure in the long term, especially if you include inflation. I've achieved comfortably over this in the past 25 years despite starting from complete ignorance and making a lot of mistakes.

The main issues for any investor are to what extent do you want to DIY and what is your risk tolerance? I don't believe any questionnaire can elicit this: you have to see one of your investments disappear before your eyes to find this out. As Warren Buffet says, you do not need great intelligence to be a reasonably good investor but you do need a willingness to study and strength of character.

If you have these qualities and are prepared to review some of the sound investment advice that has been published over the years you will almost certainly do as well as most (but not all) professionals, even if you take the comparatively lazy way of just using tracker funds.

If you can't muster this level of enthusiasm for looking after your own assets then an IFA is probably the way to go. You may get a very good one or you may not. Sadly, the risks associated with choosing an IFA are not going to figure in the risk assessment he or she makes.

Glen_Clark

dunstonh wrote: »

The internet has very useful information if you look in the right places. It also had obsolete/out of date information and it also has downright damaging information.

Yes, thats my point.
Its best to buy a good book on investing.
Just as its best to buy a good book on your car if you want to maintain it.
Reading Tim Hales book has advantages over visiting an IFA
The IFA is unlikely to be as good as Tim Hale
The IFA is unlikely to be as independent as Tim Hale
The IFA is unlikely to be as inexpensive as Tim Hale

dunstonh

The IFA is unlikely to be as good as Tim Hale

Why?

The IFA is unlikely to be as independent as Tim Hale

Tim Hale is biased.

The IFA is unlikely to be as inexpensive as Tim Hale

Tim Hale doesnt offer the consumer protection that an IFA is required to offer.

ColdIron

Glen_Clark wrote: »

The IFA is unlikely to be as independent as Tim Hale

That'll be Tim 'Passive Good, Active Bad' Hale?