Beginner Investor: need direction..

nicko33

motiv4 wrote: »

Im contemplating making a big financial decision over the next week.

My advice would be to not rush it.
It doesn't all have to be done next week and it doesn't all have to be invested at once.

Take the time to try to understand what the advisers you saw were talking about.
hang around the forums for a while and see what other people do with their situations.

motiv4

SpinnerB wrote: »

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

Lol thanks for the great post. This is "probably" the sort of route i think i want to go along. the ISAs i already got and i just wonder "wheather all ISAS are created equal"... that is where i think an IFA will help me and direct me i think.

A tracker fund of some sort is ideal i think as i have to do "minimal" work and seems to be a solid investment. i was actually tryin to invest into the US tracker funds a few months ago but i gave up after a while...

I am also thinking that paying an hourly rate would be a better route for me, as on a 100k investment they want 3k as upfront cost as well as maintainenance of 1k peryear, (im not sure if they actually handle any transactions or just watch and advise me to move funds.. something i have noted to clear up with them). I think with good reserch i can come up with a decent action plan and start to learn the ropes..

lol as far as the car i was in the BMW showroom testdriving the 335D Msport 2months ago... but the salesman couldnt close and wanted me to pay listed price without any discount so i got totally put off cars for the time being... i think ill wait till my networth is 250k+ before thinking about a car... i think i would need house first thou.
lol online gambling is unbeatable.. but online poker is verybeatable. anyone that is smart has a good chance of doing well imo. just make sure to read good books before depositing money.

again thanks for the advice i am in no rush to make the investment although at the time of first posting this i thought i was... but i plan to think long and hard before i move any of my money anywhere.. although gnna bung it in isas asap. and ofc keep trolling here

dunstonh

I am also thinking that paying an hourly rate would be a better route for me, as on a 100k investment they want 3k as upfront cost as well as maintainenance of 1k peryear,

According to FSA figures, 3% is the typical maximum but the average taken by IFAs is 1.8%. Natural fund based trail on £100k would be £500.

So, if you have been quoted 3% plus 1% p.a. then that would be paying over the odds.

An Hourly rate can actually work out quite expensive for £100k. Negotiating a lower initial commission of say 1% is probably a better option. At least if gives you a fixed figure and not an open ended hourly rate.

motiv4

wow that helps a lot!

i didnt have a bench mark to compare it to, now i feel more comfortable thnks !

motiv4

well my IFA blew me off as soon as i tried to negotiate the fees lower and asked to reduce my inital investment from 100k to 50k as i was not comfortable with investing it all in one go.

so much for that, i guess i will have to go along the investment route myself.

So my plans for the 100k are to start off safe, maybe a 5 year bond? for 30-40k
Top up all my ISas (should be 15kish)
Then search for Medium risk Investment Funds overseas? and use ~ 30k
And put remainder in a higher risk Fund

Oh and start pension contributions too... it never helps to start early..

dunstonh

The lower the investment, the lower the scope to discount.

So my plans for the 100k are to start off safe, maybe a 5 year bond? for 30-40k

A bond is just a tax wrapper and carries no risk profile. Its what you place inside the bond that carries the risk. That can range from cash to emerging market stocks.

Then search for Medium risk Investment Funds overseas? and use ~ 30k

Medium/High risk you mean.

And put remainder in a higher risk Fund

The higher risk funds should be spread round more.

Why are you not looking at any lower risk or medium risk funds?

motiv4

Thnks for the post,

My plans were to use the bond as cash/very Low risk investments.
I would prefer 70% of my investment lying in low (cash?) to Med risk investments that "should" beat the better savings acounts over 5+ years..

The reason i am going for the higher risk investments is i feel as though time is on my side? and over the long term i think the higher risk will pay better dividents maybe?

Or am i just completly going on the wrong tracks here?

dunstonh

Time can dilute the risk to some extent. Obviously you shoudlnt go gung ho into a high risk profile but go with a spread that averages out ot match your risk profile. You then rebalance the portfolio (annually on smaller portfolios but larger ones may be more frequent) to ensure that the risk of the portfolio still matches your risk profile.