Educate Me

Surgeon

Hello everyone,
I am in my mid 30s with a family of 3 young kids. I have a paid off house; and guaranteed living costs for the next 3 years.
I have 50K in the bank that is doing nothing, and I would like it to work for me in a high risk/ high return fund for at least 5 years. I haven’t sweated that much to save this, so it wouldn’t hurt a lot if I lose some of it. And I would like to do this before 31st of October because whatever happen with our current political situation, the pound is likely to take an initial hit.

I am an absolute beginner when it comes to financial products/markets, and investment world.
I have read what Barclays and HSBC have on their websites about their ready to invest funds. Given that I don’t know any better, I am inclined to go with one of them.

I am looking for general advice here in order to avoid silly mistakes. Is it worth speaking to the high street financial adviser for a £300+ fee or should I just go with the bank adviser and pay their fees?

I appreciate your input.

AnotherJoe

Surgeon wrote: »

I am looking for general advice here in order to avoid silly mistakes. Is it worth speaking to the high street financial adviser for a £300+ fee or should I just go with the bank adviser and pay their fees?

Nooooooooo ! Banks are the worst places to get "advice". And an IFA is unnecessary.
Just buy a general global 100% equity Tracker fund (or ETF) . (Tracker because they have low costs).
Put as much in an ISA this year as you can, the rest in a general account and then transfer £20k of that from general account to ISA next April 6th and rest following tax year. Note, this really should be on the basis of a ten year hold.

Look in the "World equity – developed world and emerging markets (total world)" section in this write up
https://monevator.com/low-cost-index-trackers/

You'll also have to find a platform to hold them. Cheapest price will depend on whether you buy a fund or an ETF because many platforms charge quite differently for these, different amounts and different max charges.

P.s if you are marrie, then with two isa allowances you can get it all in over this tax year and next, eg next 6 months

SonOf

I have read what Barclays and HSBC have on their websites about their ready to invest funds. Given that I don’t know any better, I am inclined to go with one of them.

Banks generally have poor quality investments at high costs. Most pulled out of full advice in 2012/13 but they have started to return with guided services. This is not advice but flow chart style guidence that leads you to an outcome.

Is it worth speaking to the high street financial adviser for a £300+ fee or should I just go with the bank adviser and pay their fees?

The choice should either be to DIY or use an IFA. Not an FA or a sales rep.

If you dont feel you can DIY then use an IFA. If you feel you are willing to spend the time to learn then you can DIY.

Be a little wary or internet recommendations. In general, new investors tend to invest above their risk profile as they read articles in the papers that promote higher risk/specialist funds or internet boards where experienced, higher risk investors tell them what to do. New investors should also stick with simple investments until they understand more. Usually this means avoiding things like ETFs and Investment Trusts but sticking to Unit Trusts/OEIC funds.

Afraid_of_Kittens

Stock and Shares ISA with a few good funds in them. Look for low platform fees. Some funds have returned over 100% in 5 years (not guaranteed past performance etc).

I have a Legal and General Stock and Share ISA these are my funds and returns so far this year:-

20% UK Index Trust (FTSE all share) - 13.9% ytd
20% All stocks Gilt Index (UK Government Bonds) - 11% ytd
20% International Index Trust (International shares ex UK) - 22% ytd
10% Global Emerging Markets Index Trust - 11.9% ytd
10% Global Tech Index Trust - 32% ytd
10% US Index Trust - 25.4% ytd
10% Global Emerging Markets Local Currency Governmrnt Bond. - 11.8% ytd

Remind me how much interest the bank gives you?

Although come the next recession 50%+ of the value of my ISA could be wiped out. But that is the risk you take for higher returns.

Albermarle

and I would like it to work for me in a high risk/ high return fund for at least 5 years

Assuming by high risk you mean in conventional/regulated investments ( like shares/stock market ) and you would be sensible enough to avoid very high risk/scam type products , like storage pods, car park spaces , products with 'guaranteed' high returns.
Even for conventional investments, five years is a short period , especially for the higher risk/more volatile products . Should be 10 year timeframe.

xylophone

Have you and your spouse used up your ISA allowances for this year?


Consider a stocks and shares ISA each?


https://www.iweb-sharedealing.co.uk/share-dealing-home.asp

https://monevator.com/using-vanguard-lifestrategy-funds-life/

https://monevator.com/low-cost-index-trackers/

With regard to the remaining £10,000, if you have never had a Nationwide Flexdirect account, you might each open a sole account and a joint account and deposit £2500 in each - each open a TSB Classic Plus account and deposit £1500 each - set up matching same day SOs from TSB to NW and back again to cover the monthly deposit requirement for interest.

At the end of the year, take out the money from the current account and add to the ISAs.

If the above is not possible, open an Al Rayan for a year and then move the money to the ISAs?

chrisgg

A few points:

- There is no such thing as a high risk high reward fund for a 5 year time horizon. If you aren't looking at 10 years plus, you would want healthy weightings in non-equity, lower risk securities, like bonds and so called 'alternatives' (commercial property, infrastructure)
- Investment propositions of banks are pretty dire in terms of both performance and fees
- If you want advice, and feel this is needed, speak to an adviser local to you. But you will have to be willing a pay a couple of % of your pot for the upfront advice and probably half a percent per annum if ongoing advice is needed
- You can do it yourself with relative ease, but remember to always use your ISA where possible. There are plenty of online resources explaining the pros and cons and options within the multi-asset fund universe.
- DIYing will ultimately be cheaper - but, nothing destroys value like panic selling in a market downturn. If you think this is even a remote possibility, pay for advice, as it will be well worth it in the long run.

colsten

Instead of taking 'advice' from complete strangers on the internet, why not spend a few hundred pounds with an actual professional? As long as the professional is an independent financial adviser, you are unlikely to do any better yourself. You almost went off on the wrong track by choosing a bank for your investment, and to pay a salesman in a bank for selling you from the limited range they have on offer. An IFA or a Chartered Financial Adviser will establish your goals (incl. those of your family) and your risk tolerance, and then propose the most suitable way forward, selecting relevant products from the whole of the market, and ensuring your investments are tax efficient.

xylophone

To find an IFA you might try

https://adviserbook.co.uk/

Tick "confirmed independent" and such other specialisms as required.

DrSyn

Surgeon wrote: »

I am an absolute beginner when it comes to financial products/markets, and investment world.

I am looking for general advice here in order to avoid silly mistakes. Is it worth speaking to the high street financial adviser for a £300+ fee or should I just go with the bank adviser and pay their fees?

I appreciate your input.

1. Watch both of these before you decide what to do:-

https://www.kroijer.com/

https://www.ifa.com/indexfundsthemovie/


2. If you want financial advice, see an Independent Financial Adviser (IFA). Just make sure they are Independent.

https://www.citizensadvice.org.uk/debt-and-money/getting-financial-advice/

https://www.which.co.uk/money/investing/financial-advice

danm

Watch the Kroijer video as suggested and don’t overcomplicate.

Deposit money (in ISA if possible)
Pick a low cost multi-asset fund
Leave it for 10 years

I have a significant amount broadly split as follows

85% HBSC multi asset strategy fund
10% Vanguard global small cap equity
5% Henderson property.

Before this had > 20 funds but have since adopted a much simpler (and cheaper) approach.