Stocks and shares ISA

Hardlife91

Hi all,

I currently have 8.5k ready to invest, I have an IFA but wanted a second opinion. I will also be putting £100 a month into this fund.

I am 22, have a 50k mortgage, no debts etc. Job with some disposable income.

I don't really need the money but at the same time, I don't really have an emergency fund and would probably use this if i lost my job.

I want to know what some of you would do with the money in my position? and how much risk you would take?

Thanks,

Matt

jimjames

Hardlife91 wrote: »

I want to know what some of you would do with the money in my position? and how much risk you would take?

None.

I'd keep that as your emergency fund and then start a S&S ISA with the £100 per month.

If you felt like taking a bit more risk I might put £3500 into the ISA too leaving emergency fund of £5k

What investment does your IFA advise you on?

Hardlife91

My IFA has 3 portfolios dependant on level of risk. He wants to go for a medium risk portfolio.

steelbru

You should definitely have an emergency fund first to cover being made redundant, car breaking down, white goods failing, etc
Put your emergency fund in high interest current accounts, eg TSB, Nationwide, Lloyds, Santander, etc

Only once you have an emergency fund, then look to invest in stocks and shares as this is money that can be lost, so you need to be comfortable locking it away for up to 10 years to ride out any stock market peaks and troughs.

bowlhead99

I would usually go with whatever the IFA gave you as the first opinion. IFA costs on a tiny portfolio will be very high on percentage terms. So if you aren't even going to take the advice, that's a crazy waste of money...

However, the IFA would probably tell you to get an emergency fund before you consider investing, if he is any good, because if you tell him that one of the purposes of the investment is to provide emergency funds if you lose your job, he would only be able to invest it in hyper cautious assets in order to attempt to cater for that "goal". Perhaps you haven't told him that you have no emergency savings?

If you have told him that, and he is still telling you to get a medium risk portfolio instead of having any rainy day fund - and he is actually supposed to be an Independent financial adviser, considering options from the whole investment spectrum rather than a tied adviser just selling three portfolios - you should dump him.

I suppose IFAs can only work with what data they have got so if you specifically ask him for a medium risk portfolio for this £8.5k, maybe he assumes you have other assets elsewhere that you just don't want him to manage.

In your position I would keep the 8.5k in high interest current accounts (at 4% a year in Lloyds on the first £5k, and 5% in TSB and/or Nationwide on the rest). This is an exceptional return for zero risk.

Then I would put the £100pm into a stocks and shares ISA in a general mixed asset fund which held mostly equities and maybe 20-30% non-equities.

jimjames

Hardlife91 wrote: »

My IFA has 3 portfolios dependant on level of risk. He wants to go for a medium risk portfolio.

What does your IFA recommend? Is he suggesting to invest all your £8.5k, if not how much?