Beginner Investor: need direction..

motiv4

Hi
Been reading a lot on the forums over the last few weeks and its been really usefull to me. The saving accounts articles were very good imo.

Im contemplating making a big financial decision over the next week so thought i would make a post, cant help to get some advice I am a total noob when it comes to the financial world.

I am 22year old Student, i have saved up ~£100k over the last year through gambling online (not advocating this as it is a very tough and competitive world..i have been really luky)
I still live with my parent and have virtually no expenses, this money is not really needed any time soon.. (i had it sitting in natwest current account for 6 months which was as good as burning my money, ive since moved it to A+L Direct saving + Hisave which is ok for me atm)

I have ISAs w Halifax and a couple of bonds but overall im not happy with either of their performances, they wud b doing just as well sitting in a savings account...


I have been contemplating getting an IFA to give me advice, (as both banks i went to get advice from tried to flogg me Bonds, which i read somewhere pay a high comision..) however i am very uncomfortable doing this for the full 100k ... what would be a suitable intoduction to investing if you were in a similar position?..

This week i finally met with 2 advisors and they both found my risk tolerance to be ~Medium and were talking a lot about stuff i didnt really understand, unit trusts and pension schemes etc etc..


Both advisors wanted a 3% upfront fee with a maintinace cost of 0.5% (+0.5% for some wraping pakage? so i can have easy acess to all my assets online) per year, Is this figure too high? average? low? (they also will charge similar rates if i make further deposts into my savings)

Being younger then the "average" investor i have noone to really ask for advice and get recomendations from, and all this is new to me.

On a side note, i expect to carry on gambling online (have a seperate bankroll for gambling then my savings) and hopefully carry on making money at a similar if not higher rate. and pump those into investments geared for maximal growth as i dont need the money for a few years...

My average income permonth is ~£12000 over the last 6 months. but this fluctuates anywhere between £2000 to £50 000 so is very variable..

In you opion is seeking the help of an IFA and paying those charges "worthwhile"?
I have an accoutn w online sharedealing services which also provides funds and trusts to invest into but dont seem to have the "high"? rates that the IFAs want but i would have to select and manage everything myself...although i am a very practical person i have not found a good basic starting point, and am unsure weather i should reserch as much as i can myself or just delegate the task to an advisor..

Or should i just go with what my high street bank thinks is the best plan?

Sorry for the long post but i am at a loss for where to begin to understand financial dealings.. without taking some sort of course in University..

missile

Your talents are wasted at Uni, get the next flight to Vegas

motiv4

heh i wud love to but i dont think it is a "smart career move". Fwiw im studying Medicine and like to think i will do something in my life that will help others (cheesy i know ..)... i do the gambling just for fun...but i have sorta perfectionist personality and want to be the best at anything i do (or try my hardest and if i cant suceed, then i give up lol)
that seemed to have gone well with the gambling

Meltdown_2

motiv4 wrote: »

Fwiw im studying Medicine and like to think i will do something in my life that will help others ..... i do the gambling just for fun...

Then perhaps you should donate any winnings from your gambling to charity ...;)

motiv4

lol what makes you think i dont give to charity? I have, but to give 100% of it away is sort of defeating the purpose.. i am still young and need to secure myself financially.. hence i would liek to invest some too.

noone can comment on the fees and commions being asked for? are they "fair"?

joesan

I was in a similar position as you a few years back....I would always say if you can do things yourself then why pay someone else. If you want more indepth info on what i did and the kind of portfolio i got PM me. With a large investment you will have to think about tax soon too so thats important point to look into also. Im not sure if you actually said you give to charity or not but if you do i would stop and actually invest that money and give it away later if you so choose to but save it up in a separate account so you can keep track. Saving money now and in the future maybe opening up a practice will do greater good in the long run. Thats just my point of view as I trust charities as much as I trust this government. Being a gambler myself i know that wins and loses comes in streaks and you may need a bigger bank roll as time goes.... and your bank roll could get wiped etc..

Being young and having a high income its prob best if you took on a little more risk with your investments. The only problem at the moment is the uncertainty in the markets, which could end up in your favour as you are holding alot of cash.

motiv4

Yea man thanks for the advice, yea i do give to charities but not always as money. im sponsoring my little bro to go to tanzania (leaving tomoro actually) to help raise money for mariecurie breast cancer.. and i also spend time in hospicies doin voluntary work.... but enough about those i feel comfortable with what i give.

Yea i would very much like to get involved in it all myself...!! its just knowing where to start and what to do to take a "safe" approach... as i have alrdy tried to invest in stock market with disaterous results (lost -5k) trying to jump onto a bandwagon when it has long passed...
im lookin at a flund list right now trying to find out if i should just invest myself instead of payin chunks to the IFA, but im thinking if my time wud b better spent doing what i do best or just bite the bullet and learn the ins and outs by reading as much as poss

missile

Are you related to Walter Mitty?

DocProc

Good job you weren't trading CFDs with Global Trader

http://ftalphaville.ft.com/blog/2008/02/15/10944/global-traders-letter-to-forlorn-clients/

Furthermore, you wouldn't have been able to get your money back under the FSA's £35,000 per client protection thingy either.

DocProc

E*Trade shares price has been well hammered these last few months. There was a bit of panic a few weeks ago with people withdrawing their funds, etc. after the share price collapsed 50% in one day. E*Trade is a VERY BIG player.

You need to ask yourself, 'Are any of them really really safe?' It only takes one rogue trader as you see above to bring down a financial institution.

If you do start trading shares, might I suggest you don't keep all your eggs in one basket?

SpinnerB

Hi Motiv4,

I am a beginner as well, so this is just based on me reading these forums and other research for the last couple of months.

Point 1 - Don't use a tied bank advisor. Very strong points are made here against them. An good IFA should have more possibilities to show you.

I know tax isn't really an issue for you yet but I would 1. Invest 30k in 2 NS&A Index-Linked certificates - puts the money out of temptation and is a strong safe back-bone for your more adventurous bits of the portfolio.

2. I would put 7k into cash(3k) and S&S(4k) isas now, and then another 7.2k in April when the new tax year starts. So 6.6k safe and growing in the cash isa and 7.6k in the S&S where you could practice your own fund management choices - which I think you would enjoy - remember the constant echo you will read here is spread your sector allocations and realise there is also different risk within each sector.

3. For the remaining 54k I would pay an IFA an hourly rate to help me decide on a portfolio spread and then do it myself - I would also ask them about using a SIPP - yeah who wants to think about a pension at 22 - but with growth ... to start off at your age would be a great start to your nest egg - I didn't start till my 30's & whenever I mention retiring at 55 people in the know laugh

4. I'd buy a Mercedes slk230 - they hold their price very well, but I would hate to think what your insurance would be LOL

Hope this is of some use to you - I have about 200k to deal with and I have come to the conclusion that after 1 & 2 which for me really make sense as I pay tax at 40%. As for the rest I have come to the conclusion that a couple of hundred quid an hour for some good advice is worth it to stop me trying to sort out all the options myself - You then just have the problem of how to find a good IFA - there is a section here

http://www.moneysavingexpert.com/protect/best-financial-advisers

which has some pointers ... just a different type of headache ...

Hope this helps a bit, if so hit 'thanks' I have yet to get one as I only ask questions ! and also feel free to PM me some tips about online gambling techniques