Investment Advice

KonkyWonky

We would appreciate any advice on how to invest our current savings pot of approx £125k, currently all held in cash accounts. Due to falling interest rates we feel now would be a good time to look at investing for an improved rate of return but neither of us knows the first thing about investments.

We had an initial meeting with an advisor who is with St James's Place, we didn't really discuss products other than he felt we would get a far better return from investing rather than depositing in a bank. I've done a little research on them and it appears that they are very expensive, but they do appear to perform well?

I'd like some advice on how to invest some of our savings based on our lack of knowledge. Would a stocks and shares ISA with the likes of Virgin be a gentler introduction? Would that likely perform significantly better than cash?

A little about us, we are in our late thirties/early forties and earn a combined wage of approx £50k net per year, we currently save in the region of £10k to £15k of that per year. We owe £75k @ 1.24% interest on our mortgage so don't see any point in putting any of our savings into the mortgage. We are happy to tie up £25k to £40k for the medium to longer term and being new to investing we are likely looking for something low to med risk.

Thank you in advance

ColdIron

St James's Place are very expensive and their products are the same as the ones the fund managers they use run in their day jobs

You could do worse than have a read around Moneyvator

Edit: Virgin are on the 'quite expensive' end of the scale as well

bigfreddiel

Follow coldirons assessment, read monevator for passive investing, keep costs to an absolute minimum. When you see ongoing costs of say 1.5% per year it doesn't seem much, but when accumulated over the years it can result in thousands of pounds out of your pocket into the pockets of the salesman advising you, sorry, I meant IFA!

Good luck, cheers fj

dunstonh

it can result in thousands of pounds out of your pocket into the pockets of the salesman advising you, sorry, I meant IFA!

SJP are not IFAs. They are tied sales reps of SJP

Would a stocks and shares ISA with the likes of Virgin be a gentler introduction?

No. Expensive and poor selection.

Your choice should really be either to use an IFA or DIY. Not use an FA or sales rep and if you are going to DIY instead then you need to do better than Virgin as that is a pretty awful choice.

bigfreddiel

Dunstonh, absolutely correct SJP are not IFAs, sorry to have grouped them all as sales people. Obviously they are completely different with different objectives.

Once again my apologies.

Cheers fj

enthusiasticsaver

I read up for about two months on lots of different articles in moneyvator, trustnet and threads on here before starting my own stocks and shares isa. You can pay an IFA obviously but that will cost. One thing I did learn is diversification is everything if you are like me, cautious to medium risk. Read about how to gauge what risk profile you are (would you panic if your portfolio went down 10,20 or 50%?)and have a read up on the various different funds there are and decide whether to go for active managed or passive tracker. Funds are a safer bet than individual stocks.

Personally I prefer multi asset funds (bonds, gilts and equities). There is a lot of information out there and it does take a while to absorb so I would not rush with the amount you are talking about. You wont be able to put it all in isas though. Have you already taken out isas this year?

enthusiasticsaver

Needless to say you should not invest all £125k on the stock market if that is all your savings. Remember you may need to access funds and the very last thing you want to do is sell when the market is in a dip.

tacpot12

The assets you can buy as investments and hold in a Stocks & Shares ISA are more complex and vary much more widely than Savings accounts, so before you invest anything you need to understand the risks inherent in the investments you are considering. You also need to understand the charging structures, both of the investments and those advising you to select particular investments.

Are you using St. James' Place only to advise on suitable investments for your current savings pot? And are they doing so on a fixed price basis?

The investment industry is gradually moving towards providing products that are easier to understand and purchase, but there is a long way to go, so having a financial adviser to help navigate the market is a good idea. But I would tend to favour a cheap, local IFA, ideally recommended by a friend, over a nation chain of Wealth Managers such a St. James's Place. You might be paying for a Rolls-Royce Service when a Mondeo service is all you need.

But you asked for recommendations, so here goes:
1) Yes, a Stocks and Shares ISA is a good place to hold the assets, but you will only be able to move £30,480 into ISAs per annum - I would say that as you are starting out, this is all you should move into 'investment' from 'savings' in one year.
2) To reduce risk, you need a 'collective investment' rather than purchasing shares in individual trading companies. This means you are looking for Funds or shares in Investment Trust Companies (An Investment Trust Company is a company that buys the shares of trading companies, and other investments, specifically to increase the value of itself or of the dividends it can pay)
3) You need very low charges.
4) You need to purchase a range of asset classes, to provide the correct amount of risk to meet your investment objective. (Don't take risks you don't need to take)

Based on what you have said so far, I would recommend the accumulation units of the Vanguard LifeStyle 20% Equity Fund and purchase them within an ISA provided by AJ Bell YouInvest. Investing £30,480 with AJ Bell will cost £160 pa vs. £305 pa with Virgin. Virgin's funds are not well suited to your needed of low risk and better growth than Cash ISA rates.But you need to understand why this advice might be any good before purchasing.

BTW: The LifeStyle funds are generally Multi Asset funds (obviously the 100% Equity fund is not)

Pincher

I have been waiting for this Vanguard launch:

https://www.fundstrategy.co.uk/issues/october-2015-online/vanguard-to-launch-uk-d2c-platform/

They sound like the Costco of fund management., i.e. cost conscientious and good value for money.

I wish they would do a Universal Spring Roll fund, for the "I don't really want to know" crowd.

A Chinese spring roll doesn't really have a fixed recipe, it's just whatever is handy before you start getting fresh vegetables in Spring, which is why beansprout is used a lot, because you can make it any time. So, throw in some equity, some bonds, some property, and some money market lending for liquidity, and you have a fund. Provided it's reasonably diversified, I don't think people really care what's in it.

Like a spring roll, it should come with a wrapper, typically an ISA, or a pension wrapper if they can deal with the rules jungle, and it doesn't drive the cost up.

I suppose if you throw some cheesy stuff in there, you can call it a burrito fund.

bigfreddiel

Just use the KISS method.

The advice you pay for will be based on a very simple strategy.
It will be based on a mix of four things

Equities - global and uk tracker
Gilts and bonds - corporate bonds and government gilts
Property - global and uk
Cash - cash - 6 months income

And that's it.

Decide the proportions of each the higher the equities the higher the risk, but the higher are the gains or losses.

Stick it into an ISA

That's it, read monevator for info on passive investing.

That simple plan will be sold to you by any investment professional, who may charge you anything from 1% to 5% of your initial sum.

So if you invest say your total ISA allowance via an advisor they will take anything from £100 to £500 from your £15k (that's this years ISA allowance give or take a few hundred pounds, next year it's £20k)

You may think this is a god way of spending your well earned money, but wouldn't you rather have that £500 in your portfolio?

Good luck, fj

KonkyWonky

Thanks for the advice everyone, to be honest I was hoping I'd get more simplistic options, it looks like I have a bit of research to do to figure out how to progress.

Would I be correct in assuming that if I DIY it rather than use a company like SJP that I will need to set up an ISA wrapper somewhere (for which I will be charged annually) and then decide on what funds to hold within the ISA? (which I will then pay an annual % of my investment based on the fund charges)

I currently bank with Santander and noticed that they offer a free financial planning service for investments provided you have at least £50k in Santander (which we do). Would it likely be worth speaking to them? I appreciate they will try and push their product to hold the funds but I might get an idea of funds that would fit my risk profile without having to search through thousands myself not really knowing what I am looking for.