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I've saved £350,000 - should I see an IFA?

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Comments

  • Linton
    Linton Posts: 18,349 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Hung up my suit!
    The_Bleurk wrote: »
    Quite right Malthusian.

    The paper loss on the insurance bonds at the time of the crash was 23% which took 5 years to recover.

    I could not have tolerated a loss like that across the board.

    Perhaps I should have said total compound return of 3.61% after tax.

    Anyway my key points are everyone needs to decide for themselves as their circumstances will be unique to them and it is worth getting that independent advice.

    BTW when I first consulted I had two seperate IFA's consult initially and then chose one. Both of them said the same things in principle the only difference was the insurance bonds they recommended.


    A lot has changed in the past 10-15 years. Before the contribution limits on S&S ISAs were raised significantly I remember insurance/investment bonds were the standard way of reducing tax for moderate sums of money. The tax rules are complex and only seriously effective in particular circumstances, S&S ISAs have largely made them obsolete. So a review seems well overdue.
  • Malthusian
    Malthusian Posts: 11,055 Forumite
    Tenth Anniversary 10,000 Posts Name Dropper Photogenic
    It is a little bit before my time, but I think the main blow to insurance bonds was the change in the tax system to make capital gains taxed at a lower rate than income.

    The real battle is not ISAs vs insurance bonds because ISAs / PEPs have always won that hands down. The battle is unwrapped investments vs insurance bonds. When capital gains are taxed less harshly than income, a wrapper that makes you pay income tax on capital gains starts from a losing position. And if you have tax-free allowances (income, dividends and capital gains) then a wrapper where all income and gains are taxed with no allowances again starts from a losing position. An insurance bond can in theory still save tax but you need specific circumstances.
  • max...
    max... Posts: 67 Forumite
    Part of the Furniture 10 Posts Combo Breaker
    Learn from my lesson - IMHO get whatever you can out of the P2P *now*.

    As others have said you have what looks like a very unbalanced portfolio with inflation meaning the majority chunk is losing money while £50k is at huge risk in P2P.

    Things have changed a lot in terms of risk/reward with P2P in the last few months let alone last year.
  • Albermarle
    Albermarle Posts: 28,980 Forumite
    10,000 Posts Seventh Anniversary Name Dropper
    while £50k is at huge risk in P2P.
    The fact the OP's P2P is paying only 5% and is spread over four accounts , would indicate they are probably not in the 'huge risk' area and no need to panic as the P2P sector has a shake up and loses some of the dodgier operators
    However it is clearly too big a % of their total portfolio for an alternative investment and probably would be wise to reduce it by 50% at least.
  • OK, I've given this some thought and I've decided to tidy things up a bit prior to seeing an IFA in the new year. I'm pulling everything out of my P2P's. I've just checked and one of them has been losing money month-on-month for the entire of 2019.

    My S&S ISAs are with NatWest (NatWest Investment Funds ISA - Managed Growth Fund Class 1 Accumulation) and by what I can gather these aren't great so I probably need to address that too. Had them with NatWest for a LONG time and just one of the many thinks I haven't had time to look in to.

    I forgot to mention, the £85k in the 5 year bond is a cash ISA fixed at 2.2%. Sadly I can't add in to that. Someone asked about my wife's pension, she has what I gather is a decent 20+ year government pension.

    I actually have an Interactive Investor account for my small share portfolio. Do you think it would be worthwhile using them for my S&S ISAs too and transferring the NatWest ones to better funds? Thanks so much again!

    Duncan
  • Albermarle
    Albermarle Posts: 28,980 Forumite
    10,000 Posts Seventh Anniversary Name Dropper
    I actually have an Interactive Investor account for my small share portfolio. Do you think it would be worthwhile using them for my S&S ISAs too and transferring the NatWest ones to better funds?
    With II you will have the choice of thousands of investments whist the current one only offers Nat West funds . I had a look at this Nat West fund but as it as been relaunched there is no historical performance data. One obvious thing stood out though - an annual charge of 1.53% for what is basically a managed 75:25 multi asset fund - you can buy 'unmanaged ' multi asset funds via II ( r many other platforms ) for 0.25%
  • fred246
    fred246 Posts: 3,620 Forumite
    Sixth Anniversary 1,000 Posts Name Dropper
    cfw1994 wrote: »
    “Enjoyed” an *average* rate of 3.61% pa over the past 15 years?
    Maybe I’m wrong, but that feels wickedly low. “Suffered”, perhaps, but not enjoyed! What were the fees on that?

    My sister uses an IFA and I was talking to her recently. She has no idea about investments and doesn't want to learn. She sees her IFA once a year and as long as the balance is higher than last time she is happy. So an IFA invests to keep themselves happy ie massive fees and then keep the customer happy (relatively safe investments that should show a yearly increasing balance). If you look after your own investments and understand their characteristics you can decide you may take a hit on occassional years but make much more in the long run. The IFA has to manage the customer as well as the investments which is detrimental to overall performance.
  • arnoldy
    arnoldy Posts: 505 Forumite
    Part of the Furniture 500 Posts Name Dropper
    fred246 wrote: »
    So an IFA invests to keep themselves happy ie massive fees and then keep the customer happy (relatively safe investments that should show a yearly increasing balance). If you look after your own investments and understand their characteristics you can decide you may take a hit on occassional years but make much more in the long run. The IFA has to manage the customer as well as the investments which is detrimental to overall performance.

    Spot on. When I saw an IFA I thought its was 'colouring by numbers', the main objective being to do the paperwork & a risk profile and then invest in a bland mix of funds, bonds, property etc according to the 'look up table'.


    And then be charged IFA fees plus platform plus fund. And all the time it felt like I was an investment child being taught to read the Janet and John Ladybird book of investing.


    No thanks.
  • fred246 wrote: »
    My sister uses an IFA and I was talking to her recently. She has no idea about investments and doesn't want to learn. She sees her IFA once a year and as long as the balance is higher than last time she is happy. So an IFA invests to keep themselves happy ie massive fees and then keep the customer happy (relatively safe investments that should show a yearly increasing balance). If you look after your own investments and understand their characteristics you can decide you may take a hit on occassional years but make much more in the long run. The IFA has to manage the customer as well as the investments which is detrimental to overall performance.

    Similar thing with my mum.

    She doesn't pay the chap much to be fair and she is a "panicker" so maybe it's worth it for her peace of mind but he has her in a Standard Life Myfolio and sees here maybe a couple of times a year.

    I'm sure she'd be better off in pure financial terms with a LifeStrategy or similar multi-asset on a DIY platform but she isn't the type.

    Logic may say that but what price peace of mind if you're already the nervous sort?
  • arnoldy wrote: »
    And then be charged IFA fees plus platform plus fund. And all the time it felt like I was an investment child being taught to read the Janet and John Ladybird book of investing.

    Like that one.:T
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