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Best Option for Cash Lump Sum

Options
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  • So much to think about
    The IFAs I was speaking to charged 1% pa
    Plus platform fees etc on top of around 1% pa

    So options so far look like
    £20 k pa in an ISA
    Part of cash in bond ladder
    Remainder in investment tracker

    The ISA and bond ladder seems simple
    I would need help with investment decision
    Do I therefore need an IFA

    Or can I get tracker provider to help

    The plus point of an IFA is they can also advise on tax and inheritance issues

    If the money is mainly to go to your wife you could fill her ISA allowance too and a pension for your wife could be an option too.
    Make £2023 in 2023 (#36) £3479.30/£2023

    Make £2024 in 2024...
  • GeoffTF
    GeoffTF Posts: 2,059 Forumite
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    I would need help with investment decision
    Do I therefore need an IFA
    Or can I get tracker provider to help

    The plus point of an IFA is they can also advise on tax and inheritance issues
    You do not really need advice on the tracker. The income version of this one will do:

    https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-global-all-cap-index-fund-gbp-acc/overview

    There are other options, and that is not the cheapest one, but it is simple and much cheaper than using an IFA. You will have to learn how to open a stockbroking account, but that is not difficult. The provider can help with that, but they will not offer financial advice (actually some will, but only if you pay them lots of money). You can pay an IFA for a one off fee for a general assessment though. We know almost nothing about your financial circumstances.
  • AlanP_2
    AlanP_2 Posts: 3,520 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    GeoffTF said:
    I would need help with investment decision
    Do I therefore need an IFA
    Or can I get tracker provider to help

    The plus point of an IFA is they can also advise on tax and inheritance issues
    You do not really need advice on the tracker. The income version of this one will do:

    https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-global-all-cap-index-fund-gbp-acc/overview

    There are other options, and that is not the cheapest one, but it is simple and much cheaper than using an IFA. You will have to learn how to open a stockbroking account, but that is not difficult. The provider can help with that, but they will not offer financial advice (actually some will, but only if you pay them lots of money). You can pay an IFA for a one off fee for a general assessment though. We know almost nothing about your financial circumstances.
    Why does the OP want the income version? No mention of needing an income to be generated by the investment (unless I missed it).
  • GeoffTF
    GeoffTF Posts: 2,059 Forumite
    1,000 Posts Third Anniversary Photogenic Name Dropper
    AlanP_2 said:
    GeoffTF said:
    I would need help with investment decision
    Do I therefore need an IFA
    Or can I get tracker provider to help

    The plus point of an IFA is they can also advise on tax and inheritance issues
    You do not really need advice on the tracker. The income version of this one will do:

    https://www.vanguardinvestor.co.uk/investments/vanguard-ftse-global-all-cap-index-fund-gbp-acc/overview

    There are other options, and that is not the cheapest one, but it is simple and much cheaper than using an IFA. You will have to learn how to open a stockbroking account, but that is not difficult. The provider can help with that, but they will not offer financial advice (actually some will, but only if you pay them lots of money). You can pay an IFA for a one off fee for a general assessment though. We know almost nothing about your financial circumstances.
    Why does the OP want the income version? No mention of needing an income to be generated by the investment (unless I missed it).
    He can tax shelter only a small proportion of his tracker. The remainder must remain unsheltered and is liable to Capital Gains Tax (CGT). It is much easier to keep track of the CGT base cost if you use the income version of the fund. He could use the accumulation version just within his ISA, but having two versions of the fund is probably just going to complicate matters.

    The same applies if he uses and ETF rather than an OEIC to avoid paying a percentage platform fee. VWRL is a popular choice. There is an accumulating version of that fund, but it has the added disadvantage of a wider spread.
  • Have you looked at IFAs that have a fixed fee menu? They will charge you a lot less than £4k.

    ISA is a good start, but you're limited to £20k per person. My suggestion would be to put the rest in an investment bond which allows you take 5% each year without any tax liability. This 5% withdrawal allowance is also cumulative, so any unused part can be carried forward to future years. Any withdrawals above 5% are subject to income tax but due to internal taxation there is a basic rate tax credit. This means basic rate taxpayer would have 0% tax liability , higher rate taxpayer would have 20% tax liability and additional taxpayer 25%. However if you are a higher or additional tax rate payer you can avoid paying tax by assigning the whole or part of the bond to someone else that is a basic rate taxpayer.  

  • jimjames
    jimjames Posts: 18,711 Forumite
    Part of the Furniture 10,000 Posts Photogenic Name Dropper
    monikaewm said:
    Have you looked at IFAs that have a fixed fee menu? They will charge you a lot less than £4k.

    ISA is a good start, but you're limited to £20k per person. My suggestion would be to put the rest in an investment bond which allows you take 5% each year without any tax liability. 

    Why would you suggest an investment bond but not a pension? Especially when you mention higher rate tax payers.
    Remember the saying: if it looks too good to be true it almost certainly is.
  • tebbins
    tebbins Posts: 773 Forumite
    500 Posts Name Dropper
    dunstonh said:
    Thanks Geoff

    I like your general idea
    Some cash in an ISA
    Invest in a basic tracker

    Plus possibly set up a bond ladder

    Neither of the IFAs mentioned these ideas

    Plus they want over £4k to set up a plan then nearly 2% pa to oversee same plan
    You would not expect an IFA to mention those
    1 - initial contacts would only talk briefly about solutions.  You dont get the solutions until later in the stage when you have agreed to employ the IFA.
    2 - One of those is an irrelevant option and using a cash ISA is likely to be completely pointless.
    3 - investing in a single tracker would almost certainly be a very bad thing for you to do.

    Savings give you a interest rate after charges which are not disclosed (typically around 1.5-2.5%).     Investments give you a return and disclose the charges.  2% as a bottom line is not unreasonable (I am assuming a bottom line as no adviser takes 2% - bottom line being platform, adviser, OCF, TC & IC added together).  Yes you can get cheaper but cheaper does not mean better.  £400k on a hybrid portfolio would come in around 1.1% including IFA charge.  

    Some of the suggestions given so far on this thread are almost certainly inappropriate.   To even try to give you a solution based on very little information is careless and you should not act on it.



    Nb although I'm replying to you I'm writing this more for the OPs benefit.
    Whether 2% is or isn't reasonable is a matter of degree, IMHO with inflation expectations around 3-4% and dampened future return expectations and with 2% being firmly in SJP territory I think it's too much. It's not extortionate or a scam just higher than necessary and with investing, ceteris paribus you get what you don't pay for by definition.
    There's no inherent reason why a single (good, globally diversified) tracker isn't appropriate as long as it's appropriate to the OPs circumstances (which we know too little about). I know some people think a larger portfolio needs to have more funds - I fail to understand why, this never used to be the case. The main reason I can think of for using multiple (not necessarily different) funds are FSCS/fund house failure protection. Many IFAs end up recommending portfolios of a small number of index funds or multi-asset funds/funds-of-funds, so the value they add isn't so much to do with investment outperformance but technical/legal (tax & inheritance planning), emotional (having someone to talk to about money/knowing it's being looked after/avoiding silly, emotional mistakes) and practical (i.e. in the same way using a tradesperson is more convenient, reliable and insured/regulated than DIY).
  • jimjames said:
    monikaewm said:
    Have you looked at IFAs that have a fixed fee menu? They will charge you a lot less than £4k.

    ISA is a good start, but you're limited to £20k per person. My suggestion would be to put the rest in an investment bond which allows you take 5% each year without any tax liability. 

    Why would you suggest an investment bond but not a pension? Especially when you mention higher rate tax payers.
    It’s just because the original post suggests that he’s either got enough saved up in his pension pot and doesn’t want to put more in or is already taking income so may not be able to make any lump sum contributions 
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