Views on advisors

DiggerUK

OK, dunstonh, we're all waiting for your links to the scores, or even hundreds, of threads that begin  "how silly I was to think I could DIY, why didn't I go and pay silly amounts of money to financial advisors"
No rush..._

AlanP_2

DiggerUK said:

OK, dunstonh, we're all waiting for your links to the scores, or even hundreds, of threads that begin  "how silly I was to think I could DIY, why didn't I go and pay silly amounts of money to financial advisors"
No rush..._

Do you think people are going to make the effort to sign up for MSE forums and make a post like that? 

The majority of posters on here are a self selecting group that are interested enough to explore options and consider DIY or will ask jst 1 or 2 specific questions about 1 or 2 specific topics.

If you were a DIY investor that felt you needed an IFA why would you come on here?

When I want an electrician or plumber to sort out the bodge job I've done that means I have no power / water I don't post on a DIY site. 

ChilliBob

Linton said:

Many people who suggest not using an IFA  have steadily built up their portfolio from scratch gaining experience over many years and learning from mistakes made early on when the money involved was not significant.

Your case appears very different, you dont have the experience and you are getting a large lump sum.  I would suggest a good IFA is essential.  The advice you will need is how to manage your money to maximise your long term security and minimise tax.

Which particular funds are chosen is pretty unimportant.  Another factor that is often raised but is relatively unimportant in my view is maximising returns as opposed to getting sufficent returns to meet your needs.  Appropriate sacrifice of returns to ensure security is good investment management.  Establishing what is appropriate is something a good IFA will help you achieve.

Once you have a long term framework established and have some years experience of how investments behave you may reasonably consider managing things yourself

Apologies for my silence recently, I'm not actually redundant yet and need to focus on some other tasks first. I'm detecting some recurring themes from this thread thou, Linton, especially a thanks goes out to you for the above response. 

My thoughts now:
* It would be foolish to not even consult a small handful of recommended advisers, fortunately I have good sources to get three or four via recommendations, so I shall have intro calls and see what happens

* Tax - seems to be quite a thing for me right now, whether I qualify for entrepreneurs relief on some of my gains for example, HMRC changing my tax code etc. I think an accountant as opposed to an ifa is required here, perhaps just for this year if not after.

* Once I have consulted an adviser I'll see what I think, and what they would charge. 

* Meantime I will educate myself further once I have the money safe, I will use lots of the links previously posted (thank you!) and take it from there (expect some questions guys!) 

* Whether I end up using one might depend on what else is happening in my life, if I end up going back to full time employment for example I may have to (full time employment plus family life doesn't equal much time for research) 

ChilliBob

Another_Saver said:

ChilliBob said:

Thank you guys, that's very helpful. As regards my situation.. 
1. Just been made redundant, a, condition of which is selling the equity I held in the company. I'm 37, I wasn't planning on leaving or having to do anything with this equity for a few years!
would need more info about your other savings and invesments and how much this equity sale is, it may also be sensible to see an IFA one off for advice about capital gains and other tax implications, if you need somewhere to park it while you decide what to with it you can keep £4,050,000 in NS&I, fully backed by the Treasury
2. I'd quite like the cash I receive to provide a steady stream of income I can live off (potentially forever!)

You would need 25x your annual expenses as a bare minimum, many on the forum would suggest 3% as a safe withdrawal rate these days. Also check your national insurance record (set up a government gateway acocunt if you haven't already) to see how many qualifying years towards the 35 you need to claim to get the max state pension when you get to state pension age (which I think is 68 for you). More info about your other pensions would be useful

3. I'll use what I get to clear off any debts (just a small mortgage) before any kind of investing.
If you have a very good/low mortgage rate maybe keep the minimum amount on and just pay the interest. That way you have access to a cheap credit facility.
4. My background is in Data Engineering within the Alternative Assets space. So I'm comfortable with Excel, SQL and other associated technologies, and have some knowledge of finance from work and some broader concepts from my Economics degree (quite a while ago!) 
probably helpful
5. I'm naturally a *very* cautious person which I think I will find tricky in this situation!
er....
6. I love researching stuff tonnes, and I love data!
oh good
7. I'm not restricting investments to stocks/shares/bonds but sense that's a good starting point.
yep
8. I will have some time to devote to this, alongside keeping up with my industry etc for when I want to jump back into work
ah ok, well I've suggested a few resources below to get you started
Sorry, I thought that was going to be about 3 points!

Cheers if you've read this far!

Monevator, Lars Kroijer, Jack Bogle (youtube interviews and The Little Book of Common Sense Investing, I'm also reading The Battle for the Soul of Capitalism), Benjamin Graham's Securities Analysis and The Intelligent Investor, and Robert Shiller's Irrational Exuberance are all good resources. Also see the pages on this site about investing, stocks and shares ISAs, SIPPs, platforms etc.

You really don't need any great deal of financial mathematics, but since you need something to do why not try and come up with a time series model of capital supply over the next 30 years as the 60s baby boomers divest into retirement and us Millennails start accumulating capital for retiring sometime in the 2050s (you were born after 1980, you're a Millennial).

If you can understand that if a stock market goes up by an average 4% a year for 30 years, and has an average dividend yield of 4%, an inflation was 2%, then the nominal total return was 8% and the real total return was 6%; and that if interest rates rise bond prices fall - that's all the maths you need.

Good cheap index funds and multi-asset funds are your friend.

Other general interest research:

Thomas Piketty's Capital in the 21 Century

The Great Demographic Reversal - though the authors also published a paper you can find for free and David Willett's lecture at the Royal Society earlier this year explains some of the same things (https://www.youtube.com/watch?v=ZuXzvjBYW8A)

For historical context, Peter Zeihan (any of his videos, presentations or bookswill do) offers an American-centric perspective, while Kraut's delightful dissection of Trump's Biggest Failure offers a Sino-centric perspective (https://www.youtube.com/watch?v=hhMAt3BluAU - politics trigger warning)

starcapital.de for questionably reliable market valuations data

multpl.com and St Louis FRED for more accurate, US specific data

UK Government Actuary's Department and Bank of England research and statistics

US treasury yields can be found here: https://www.treasury.gov/resource-center/data-chart-center/interest-rates/pages/textview.aspx?data=yield (this is important because the US has the highest yielding developed government bonds right now, and in the UK you can access them via hedged funds and ETFs)

Pensioncraft

Barclays Equity Gilts Study (if you google it you can find free versions)

Credit Suisse Global Equity Returns Yearbook summary edition (google it)

https://www.researchaffiliates.com/documents/FAJ-2003-Two-Percent-Dilution.pdf

https://www.wiley.com/college/miles/0471988456/sample_chapters/ch07.pdf

http://citeseerx.ist.psu.edu/viewdoc/download;jsessionid=E7B84C94CEEF8A318EE6060FFC172302?doi=10.1.1.183.1514&rep=rep1&type=pdf

https://globalfinancialdata.com/finance-and-transports-in-britain-in-the-1800s-from-countercyclical-to-benchmark

https://topforeignstocks.com/2017/03/08/ftse-100-exposure-by-geographic-revenue-vs-domicile/

https://www.ukvalueinvestor.com/category/market-valuations-and-forecasts/

https://scholarlycommons.law.hofstra.edu/cgi/viewcontent.cgi?article=1205&context=jibl

https://site.warrington.ufl.edu/ritter/files/2015/04/Economic-growth-and-equity-returns-2005.pdf

AJ Bell Dividend Dashboard (https://www.youinvest.co.uk/our-services/free-dividend-dashboard)

Warren Buffett's letters, past and present, to Berkshire Hathaway shareholders (https://www.berkshirehathaway.com/letters/letters.html)

http://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.959.5232&rep=rep1&type=pdf

https://www.ons.gov.uk/economy/investmentspensionsandtrusts/bulletins/ownershipofukquotedshares/2018

For precise UK equity index data go to the "all factsheets" page of ftserussell.com

And a few from the Financials Analyst's Journal: https://www.tandfonline.com/doi/abs/10.2469/faj.v66.n1.5, https://www.tandfonline.com/doi/abs/10.2469/faj.v62.n3.4157?src=recsys, https://www.tandfonline.com/doi/abs/10.2469/faj.v59.n1.2504?src=recsys

Now for some don'ts:

DO NOT "TRADE"

don't gamble

don't do anything that feels like investing but is actually gambling

don't "play" the markets

don't try to time the markets

if you think you know better than the markets you have to be wrong, first, cheating, or actually very clever

don't buy bitcoin

don't buy gold (ok some people may suggest buying some gold and our resident gold hobbyists would suggest swapping all your fiat money for gold)

don't make an investment decision because of the news

don't panic

don't panic sell

don't try and time when you get back in the market once you have panis sold, just get back in

don't look at charts

past performance is the worst indicator of future performance

this year's rainfall is more correllated with how the market will do next year than "analyst forecasts"

everything reverts to the mean

nothing lasts forever

don't buy something because "it's been doing well recently"

don't buy something because "my mate said it was a good idea"

don't buy something because "it's gone down so it looks cheap"

don't overcomplicate

don't buy something because a talking head on a screen said it was a good idea

stay the course

And remember the golden rule: if you can't find it mentioned on MSE, assume it's a scam.

Just another thanks there for all of the above, I'm not in a position to go through right now but I certainly will. To answer some of your questions:
* other savings basically = isa I have been paying into for ages, its a healthy size  
* I'll pay off mortgage as I'm moving house at the moment too (in theory!) and can't port it as that triggers re-application, and I don't have a job!
* Been paying into a pension with work for about 12 years (usually 10% salary to maximise contributions from employer) will need to find out what happens to this now I'm leaving. (it's this sort of stuff which is my focus now really). 

Alexland

ChilliBob said:

* It would be foolish to not even consult a small handful of recommended advisers, fortunately I have good sources to get three or four via recommendations, so I shall have intro calls and see what happens

How many are properly independent? Don't bother with the others.

People like to recommend things to feed their confirmation bias rather than if the service is really any good.

ChilliBob

Fair play, I think that's why I'm going to speak to a few and see really. I guess all I meant is I have something to go on as opposed just searching Google and hitting some people up!

I'd be interested to know of any obvious questions to weed out !!!!!! people?

Alexland

Rather than weeding out from a massive set of sales people try adviserbook.co.uk search for your postcode and filter the results on "confirmed independent" just over half way down on the left hand side to get an instant shortlist.

ChilliBob

 Cheers, I'll give that a look  

MaxiRobriguez

dunstonh said:

 but no moans from those who DIY'd, saved a fortune and made their own way.

Some may be too embarrassed.  I have taken on DIY investors who realised they couldn't do it or didn't want to do it and fairly consistently, you find what they have is above their risk profile and/or fashion invested and/or investing in DIY platform own brand funds that are more expensive than adviser arranged portfolios.

DIY does not mean you will save money if you DIY badly.

Indeed, and the most frequent posters on here tend to either work in the industry or if not, are at least very engaged with it. We are not a good cohort to determine whether DIY investing is right for everyone, this is not a diverse community. 

Prism

DiggerUK said:

OK, dunstonh, we're all waiting for your links to the scores, or even hundreds, of threads that begin  "how silly I was to think I could DIY, why didn't I go and pay silly amounts of money to financial advisors"
No rush..._

Maybe they don't start in that fashion but I would say that the continual threads that start 'I am thinking of selling everything' or 'I am waiting for a crash before investing' or something similar fall into the category of 'could do much better' Lots of people get it completely wrong when DIYing. They don't all even realise until its too late.