Investing 620K

Neenie01

I have recently inherited some money and its causing me sleepless nights working out the best thing to do. I have always been a very cautious investor, only putting my savings in fixed bonds. I have appx 620k to invest and was originally going to buy a flat but I have decided against that after months of research and after lots of advise it seems that the best thing for me to do is put it in a cautious portfolio. I understand that I can loose money but in the long term it should (hopefully) perform better than a bond. I have seen a few FA and IFA and banks and the one I seem to prefer is a FA fees 1% one off fee and 0,5% yearly management fees, plus obviously the platform fees etc, I have been advised to put 200k in Zurich portfolio and 420k into Prudential PruFund Growth Fund. Investment Plan Mark 3, current return is 5.1%. This is reviewed quarterly. I liked the idea of splitting the investments and possibly getting an income from the PruFund in a year or two. As this is such a lot of money, I'd appreciate if anyone knows of these funds. I am also nervous about moving such large sums of money and how do I know I can trust the FA, they are registered on the FCA website. and I have been recommended to them from a colleague.
P.S. I am very paranoid

masonic

It would be worth getting some figures for the platform and management fees as these will likely be the more significant ongoing fees.

From the Key Features Document of the Zurich portfolio investment account, the platform charge would appear to be 0.4%, which is on the high side, but not excessively high. The charges you incur will depend on what investment funds your adviser picks to hold in the portfolio. Hopefully none of the portfolio will be held in cash, because you can do better using fixed rate savings accounts.

PruFund is a with-profits investment, so it seeks to smooth returns by holding back some of the returns in good years to pay out during bad years. It is not a cheap way of investing, but it takes some of the risk out of investing in the stockmarket. PruFund is one of the better quality products of this type.

I don't think it is paranoid to be concerned about entrusting such a large sum of money to an individual. People have been targeted by fraudsters in these sort of situations and have been tricked into sending money to "new" bank details they were sent by someone they thought was the intended recipient. You will probably need to have a conversation with the FA and get information about how to make the transfer and what the receiving bank will require in terms of documentation for the source of funds. Avoid using email for any of this and always confirm written instructions by phone.

tacpot12

I'm not a fan of the Prudential With Profit funds because in the statements I have seen, the Pru don't tell you how much your final bonus is. This makes it very difficult to understand the performance of the With Profits fund and very difficult compare the performance of the fund with other funds.

Investment Trusts are also allowed to hold back some of the returns in good years to pay out during bad years, which makes them good options for people who need to derive a steady(ish) income from their investment. You might ask the FA to suggest an Investment Trust that would be comparable to the Pru fund.

masonic

tacpot12 wrote: »

Investment Trusts are also allowed to hold back some of the returns in good years to pay out during bad years, which makes them good options for people who need to derive a steady(ish) income from their investment. You might ask the FA to suggest an Investment Trust that would be comparable to the Pru fund.

They don't do it in the same way. You only need to look at the relative volatility to see the stark difference. Take Personal Assets Trust, about the lowest volatility trust I'm aware of, compared to the Pru fund is a volatile beast:
https://www2.trustnet.com/Tools/Charting.aspx?typeCode=FDBR4,FITPNL

Coincidentally performance over 10 years is quite similar.