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Starting out in Investments. Paying an Independent Financial Advisor?

13

Comments

  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
    Sixth Anniversary 1,000 Posts Name Dropper
    edited 23 May 2021 at 9:10PM
    kidmugsy said:
    - active investing is probably a bad idea; it tends to be costly and, averaged over the population of active investors, it will return less than passive investing.


    This is the thing that surprises me the most in all that I have read. I have read it in a few places. I had thought that paying the costs/fees of all the relevant parties, including the IFA, would get you better returns?

    One average I think the retail investor should keep fees as low as possible and have a portfolio that is designed to reproduce the performance of broad equity and bond indexes. There will always be active funds that outperform those indexes, but there will also be funds that lag the indexes. 
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • dunstonh
    dunstonh Posts: 120,164 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    kidmugsy said:
    - active investing is probably a bad idea; it tends to be costly and, averaged over the population of active investors, it will return less than passive investing.


    This is the thing that surprises me the most in all that I have read. I have read it in a few places. I had thought that paying the costs/fees of all the relevant parties, including the IFA, would get you better returns?

    It can do but it may not do. Also, IFAs will use passives as well as actives.   The primary purpose of an IFA is suitability.  
    I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    kidmugsy said:
    - active investing is probably a bad idea; it tends to be costly and, averaged over the population of active investors, it will return less than passive investing.


    This is the thing that surprises me the most in all that I have read. I have read it in a few places. I had thought that paying the costs/fees of all the relevant parties, including the IFA, would get you better returns?

    Are you comfortable in making your investment decisions?  Stock markets don't effortlessly rise in perpetuity. Even though it may seem that way. 
  • grumble_100
    grumble_100 Posts: 38 Forumite
    Tenth Anniversary 10 Posts Combo Breaker
    Does some of your pension transfer to your wife should you die first? If so, and as you say your wifes provisions are not as robust as your own, could it would be worth looking at how much she would still recieve if you didn't take such a large lump sum? 

    If I die before my wife she would be entitled to half my annual pension, regardless of if/how much I commute. So on current figures she would get £18243 pa
  • grumble_100
    grumble_100 Posts: 38 Forumite
    Tenth Anniversary 10 Posts Combo Breaker

    Are you comfortable in making your investment decisions?  Stock markets don't effortlessly rise in perpetuity. Even though it may seem that way. 

    Not at all, that's why I think I was attracted to the Vanguard Lifestrategy funds/Target retirement funds
  • Thrugelmir
    Thrugelmir Posts: 89,546 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic

    Are you comfortable in making your investment decisions?  Stock markets don't effortlessly rise in perpetuity. Even though it may seem that way. 

    Not at all, that's why I think I was attracted to the Vanguard Lifestrategy funds/Target retirement funds
    Then you'll be paying for investment management. The fees being cheaper due to the scale of the assets under management. Along with the limited range of products on offer. 
  • kidmugsy
    kidmugsy Posts: 12,709 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    I would turn to an IFA if I thought I needed tax advice or advice on, say, insurance policies.  I expect I'd do so if I were the trustee of a discretionary trust.  (I was a trustee when I was younger: we didn't hire an IFA because another trustee was an investment manager by trade.)  

    But if you feel you'd like help for a couple of years until your confidence has built up, why not?  The point of having money is to save you from anxiety.  If an IFA can help with that he may well be worth his fee.
    Free the dunston one next time too.
  • bostonerimus
    bostonerimus Posts: 5,617 Forumite
    Sixth Anniversary 1,000 Posts Name Dropper
    edited 24 May 2021 at 1:01AM

    Are you comfortable in making your investment decisions?  Stock markets don't effortlessly rise in perpetuity. Even though it may seem that way. 

    Not at all, that's why I think I was attracted to the Vanguard Lifestrategy funds/Target retirement funds
    Very sensible. You will pay a little more than if you constructed your own portfolio from index trackers, but it will only cost you 0.22% in ongoing charges which I think is ok as you get automatic rebalancing and a broadly diversified portfolio. You would only own Vanguard funds inside the VLS umbrella, but that's ample diversity. Having more choice than necessary is often a hinderance rather than an asset. There are probably even less expensive suitable multi-asset funds out there so do your research, but don't get your head turned by all the shinny actively managed focussed funds out there.
    “So we beat on, boats against the current, borne back ceaselessly into the past.”
  • Albermarle
    Albermarle Posts: 28,907 Forumite
    10,000 Posts Seventh Anniversary Name Dropper
     I had thought that paying the costs/fees of all the relevant parties, including the IFA, would get you better returns?

    Not everybody is after 'better returns' whether they use an IFA or not .

    For example someone who is retired , is often looking for stability and some protection against market drops, rather than big growth .

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