Wobbble COOLOING OFF PERIOD IS THERE 1 ?

chalky_75

hI

My other half and I have just sought advice about a medium risk portfolio. We clearly understood the need for it to run for 5 years plus. We signed all the documents but are now having a MAJOR WOBBLE !!!! Is there a cooling off period when you can withdraw from the agreement even if you signed willingly and with all the information in front of you .

dunstonh

There is a cooling off period of between 14-30 days depending on type of contract. However, you will not get all your money back. The cancellation rights only apply to charges being returned and not any movement in unit price.

You mention a major wobble. This is not a major wobble. Look to the early part of the millennium as an example of a major wobble where 45% is what the FTSE dropped. Currently its only just over 10% down. Even if you invested at the worst point before the last crash, a decent medium risk spread would have turned a surplus higher than cash after 5 years.

A lot of the drop happened over a month ago in some areas so it may not be as bad as you think.

chalky_75

Thanks for the reply I dont think I made myself clear. We sought advice and have not yet given any money to the advisor just signed to say we will. The major woblle is not about the current state of the market but me worrying we will lose money from our investment even though we understand we will need to leave it invested for 5 plus years.

So does anyone know if there is a cooling off period allowed after signing but before money is released by us to the financial institution involved

dunstonh

Unless you have written the cheque or instruction to pay there is no commitment as no investment has been bought. The provider will not invest without money (except on unit trusts and direct investments with some providers).

However, what a good time to invest. You will benefit from this drop as you are going in when the market is lower. Waiting for it to go back up again means you will miss out.

The are winners and losers in a drop. Those that invest before the drop lose out in the short term. Those that invest after the drop get their units cheaper and benefit from the recovery when it comes whilst those before are using the recovery to recover their loss.

What type of investments are you using as the rules vary with different types?

chalky_75

Thank you so much for your advice.

My husband has just retired and we had an inheritance a few years back. To be fair we are only in our early 50's so we were worried about the erosion of our very hard earned and unacostomed money. So hoping that we are lucky enough to keep our health (more important than cash) we need to think in the long term so that we hopefully have enough money to see us through to our dotage.

We, to be fair have had everything explained carefully by a Senior Wealth Planning Manager in Lloyds TSB and as I previously explained we are at the signed all the forms stage but not released any money from our internet accounts.

We have been advised after careful questioning about our approach to risk etc etc to have a "balanced" investment approach. This means a split of our money as follows
45% in UK equities
45% in bonds
5% in Overseas equities
5% in property.

To be honest we felt fine during the process-- no pressure was placed upon us in any way and things i.e set up and maintenance cosrts were clearly explained etc

Now I just feel like I am in a complete panic in case it all goes wrong and we lose a large chunck of our money. It is ruining my weekend and I just want to know if we can get out of the situation.

Obviously my logical head says "dont be so stupid because the real value of our money is being eroded by falling interet rates and higher inflation but I cant seem to stop wottying today

dunstonh

We, to be fair have had everything explained carefully by a Senior Wealth Planning Manager in Lloyds TSB and as I previously explained we are at the signed all the forms stage but not released any money from our internet accounts

Oh dear, getting advice from a bank is a good reason to cancel by itself.

Now I just feel like I am in a complete panic in case it all goes wrong and we lose a large chunck of our money.

Only 50% of the money is in the stockmarket and fixed interest funds (bonds as you put it) have been showing signs of recovery with yields much improved and demand increasing.

It is ruining my weekend and I just want to know if we can get out of the situation.

Your risk profile doesnt match a 50% equity exposure. It should be closer to 20% probably, with perhaps a phasing into the stockmarket over a period. Plus you have seen a bank adviser. So you have two good reasons not to proceed.

Obviously my logical head says "dont be so stupid because the real value of our money is being eroded by falling interet rates and higher inflation but I cant seem to stop wottying today

Your logical head is correct and you need to be wary of inflation and falling interest rates. However, your head should also be telling you that you dont get advice from a bank and that whilst you call yourself medium risk you heart isnt medium.

Get advice from an investment IFA. It will be cheaper and the advice will be better. Make sure its an investment specialist and you will be fine. The idea to invest and the reasons for doing it are right. You just need to have it done in a way that is suitable to you. Maybe even use a guaranteed product if need be.

chalky_75

Thanks again dunstonh-- your answers make every sense to me. Could you confirm that there is a cooling off period or are we tied into the portfolio because we have signed. The money is not in the bank but in our high interest savings internet account at the moment.

dunstonh

Cooling off periods are 14-30 days on investments. They are issued after the application has been received at point of investment. However, nothing stops you cancelling it now by telling the adviser you dont want to proceed.

You havent lost anything because you are not in the investments yet. The minute its invested you are then liable for movements in the market. So get there first.

Please dont let the idea of investments go though. There are plenty of viable low risk investments at the moment. You have low risk funds with very attractive yields now (7 to 8.5%). You dont have to use the stockmarket although for long term, having a tad of the money in at the lower risk end of the stockmarket is a good thing. Phasing it in over a period is an option so you put a few percent in now, a bit more in 3 months etc etc until you get to the level of exposure you want.

chalky_75

Thank you so much -- you are an absolute star to take the time nad trouble to answer all my queries. I feel so much better and have learnt a lot about myself this week end