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Best Option for Cash Lump Sum
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DoneWorking said:So much to think aboutThe IFAs I was speaking to charged 1% paPlus platform fees etc on top of around 1% pa
So options so far look like£20 k pa in an ISAPart of cash in bond ladderRemainder in investment tracker
The ISA and bond ladder seems simpleI would need help with investment decisionDo 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 issuesMake £2023 in 2023 (#36) £3479.30/£2023
Make £2024 in 2024...1 -
I would need help with investment decisionDo I therefore need an IFAOr can I get tracker provider to helpThe plus point of an IFA is they can also advise on tax and inheritance issues
Any investment provider, tracker or otherwise , will not offer you specific advice , only general guidance. Probably you have the following options
DIY - Means you take full responsibility for choosing and managing investments , tax and inheritance issues etc . It probably sounds harder than it is in practice . However you will need to do some reading/research and checking in with this forum on a regular basis can also help. Many on this forum do this, but it is not suitable for everybody.
Robo advisor - These are investment platforms that ask you a few questions, and then steer you towards suitable investment funds . Obviously they are pretty limited and normally aimed at smaller investors.
IFA - Will look at your situation/attitudes/objectives etc in detail and advise on a suitable strategy, for investments/savings/tax/inheritance etc . The costs you have been quoted for initial work of £4K looks about right, but the ongoing costs are on the high side . 0.75% for the advisor and 0.75% for everything else should be a Maximum, and hopefully less
IFA then DIY - Pay for the initial review and advice and then DIY on an ongoing basis .
Use a low cost FA/IFA service - Will charge less, but probably only contact by phone/zoom and more focused on just the investment side than other issues.6 -
DoneWorking said:I would need help with investment decisionDo 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
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.0 -
GeoffTF said:DoneWorking said:I would need help with investment decisionDo 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
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.1 -
AlanP_2 said:GeoffTF said:DoneWorking said:I would need help with investment decisionDo 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
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.
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.2 -
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.
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DoneWorking said:Thanks GeoffI like your general ideaSome cash in an ISAInvest in a basic trackerPlus possibly set up a bond ladderNeither of the IFAs mentioned these ideasPlus they want over £4k to set up a plan then nearly 2% pa to oversee same plan
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.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.9 -
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.Remember the saying: if it looks too good to be true it almost certainly is.2 -
dunstonh said:DoneWorking said:Thanks GeoffI like your general ideaSome cash in an ISAInvest in a basic trackerPlus possibly set up a bond ladderNeither of the IFAs mentioned these ideasPlus they want over £4k to set up a plan then nearly 2% pa to oversee same plan
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.
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).
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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.0
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