Advice needed

phildamb

hi All,

This isnt for me but my parents. They have just sold their house so now have a good lump sum of money. I advised them to go and see a financial advisor (supposedly independant) but Im not to sure about the stuff he is suggesting. They wont ever see this amount of money again and I dont want them to lose it due to someone else wanting to earn commission. Basically he wants to take part of the money and spread it across numerous investments such as purchasing land to sell back to universities!! The fact that he used the phrase "I guarantee you a high return" has got me a little dubious about his advice. If anyone on here was in the same boat what would you advise your parents to do with that money, I would rather they put it in several savings accounts to get actual profit from with far less risk.

Any advice welcome..

dunstonh

They wont ever see this amount of money again and I don't want them to lose it due to someone else wanting to earn commission.

If you don't want anyone else to earn out of it then it needs to be kept in notes under the mattress. It doesn't matter where you put it, someone is making money out of it whether the charges are explicit or implicit.

Basically he wants to take part of the money and spread it across numerous investments such as purchasing land to sell back to universities!! The fact that he used the phrase "I guarantee you a high return" has got me a little dubious about his advice.

Doesn't sound like the sort of thing an IFA would recommend. IFAs are authorised to give advice on "packaged" investments. Such as ISAs, Unit trusts, bonds, pensions etc. Some will also be able to advise on VCTs, EIS etc but they are experienced investor products which wouldn't (shouldn't) be given to those without investment experience. Buying land is not something an IFA is authorised to give advice on. We also cannot make statements like "guarantee" unless it is contractually guaranteed.

Not all investment advisers are IFAs and this recommendation doesn't sound like a typical IFA recommendation and certainly doesn't sound like something an inexperienced investor would consider.

I would rather they put it in several savings accounts to get actual profit from with far less risk.

And possibly lose money in real terms by doing so.

Investing is not two levels of risk; on or off. Its a sliding scale and its about taking appropriate risk for the level of reward and taking into account your current and future financial position. RPI is 4.1% so unless your parents earn 4.1% net in interest they are losing money. If they are going to draw the interest to live on then it is going to erode quickly in a savings account.

Now, that doesn't mean they should not have anything in a savings account. Its a case of creating a spread based on their risk profile (not yours or mine).

As we don't know anything about your parents (age, income, tax position, risk profile etc) we cannot really comment on what is best.

Steve_xx

phildamb wrote: »

hi All,

This isnt for me but my parents. They have just sold their house so now have a good lump sum of money. I advised them to go and see a financial advisor (supposedly independant) but Im not to sure about the stuff he is suggesting. They wont ever see this amount of money again and I dont want them to lose it due to someone else wanting to earn commission. Basically he wants to take part of the money and spread it across numerous investments such as purchasing land to sell back to universities!! The fact that he used the phrase "I guarantee you a high return" has got me a little dubious about his advice. If anyone on here was in the same boat what would you advise your parents to do with that money, I would rather they put it in several savings accounts to get actual profit from with far less risk.

Any advice welcome..

I'd advise them to split it up into £30k lots and put it in several banks and let it earn between 6 and 7 percent.

Then they can sit back, take a long hard look at it and take advice from several quarters about what is best done with it to maximise their income.

They perhaps should not feel they have to commit all of it into something that they don't fully understand.

phildamb

dunstonh wrote: »

Investing is not two levels of risk; on or off. Its a sliding scale and its about taking appropriate risk for the level of reward and taking into account your current and future financial position. RPI is 4.1% so unless your parents earn 4.1% net in interest they are losing money. If they are going to draw the interest to live on then it is going to erode quickly in a savings account.

Now, that doesn't mean they should not have anything in a savings account. Its a case of creating a spread based on their risk profile (not yours or mine).

As we don't know anything about your parents (age, income, tax position, risk profile etc) we cannot really comment on what is best.

all good points. At the moment my mother is 64 and already retired, my father has just turned 60 and will be retiring in just under 5 years now. He earns presently approx. 15k a year as a welder (not likely to be going up).