what to do with 350k?

dunstonh

Must admit she was paying into a prudential AVC scheme but like so many lost confidence in it and stopped paying so its now frozen

Shame. They have been quite good. Certainly better than cash. (and its paid up, not frozen - different meaning).

Guess she could always restart it but the pot is small so there woint be much for an annuity as yet and 3 years isnt going to make much of a difference i wouldnt have thought

not worth it for 3 years.

The vast majority ,I'm told ,do not outperform the trakers

which is actually incorrect. It's one of the myths that surrounds the tracker vs managed debate. A managed fund investing with the same aim as a tracker would be expected to perform less than a tracker. However, the majority of unit trusts have investment aims and different risk levels which are not covered by a tracker fund. With unit trusts, it isnt possible to build a decent portfolio through use of trackers only. In fact, it would be foolish to even try.

In fact tow that were recommended to me went pear shape during the tech bubble crash so I am much more wary.One thing ,though ,our Schroder one is in Skandia so can easily be changed. That one was also recommended, the other two being Invesco European growth ,smaller companies and Henderson Tech funds,I also had a Fidelity health fund which was rubbish so changed it to European fund.

Sounds like you are not investing with any strategy (i.e. high yield or sector/asset allocation). Stock picking (or fund picking) at random almost isnt the right move. Also sounds like you are investing above your risk profile as well as some of those are very high risk.

I will really need some convincing by a good iFA( fee based) about going back to unit trusts

There are 2000 unit trusts cover most risk profiles and vastly different investment areas. Your experience of investing is poor quality, fashion investing.

It's quite simple, if you don't utilise investments, you will be left with cash deposits and if that money is used to provide an income (through interest) then you are guaranteeing to lose money in real terms.

You need to invest to counter inflation but that doesnt mean you pick funds at random or pick very high risk funds with no strategy as has happened before.

donmaico

Must admit i dont recall anyone mentioning strategies to me. I was shown a list, told about various sectors,volatility etc but made my choices based on as you say, fashion. I kind of reasoned that if they went down quickly they would quickly pick up as well.Volatility didnt seem to worry me much.Hindsight is a wonderful thing and i guess looking back I wouldnt have made those choices had I reasoned better.But I also think the choice of IFA is of paramount importance for there is something about the relationship between client and service provider that engenders confidence.I never felt entirely comfortable with the people I saw. Guess my biggest criticism was the lack of advice. It was more a case of "you made your choices now live with them"One thing I remember being told is that some funds are so huge nothing ever gets moved around, so I thought "what is the job of the fund manager then?"In my cynical moments i would tend to believe it was to extract money from muppets like myself and go and play a round of golf. Obvious exceptions being the likes of Anthony Bolton whose special situations has done so well

Anyway i found this site which provides at least 3 in my area
http://www.unbiased.co.uk/

dunstonh

Guess my biggest criticism was the lack of advice. It was more a case of "you made your choices now live with them

This is something that has happened which is being resolved from next year. Well, when I say resolved, I mean a bit clearer. IFAs will recommend funds and not put the choice with you (as they really always should have done). Sales reps will not recommend funds but put the choice back to you. You will know in advance if you are seeing a sales rep or an IFA. Whereas currently the waters are a bit muddy on that front.

One thing I remember being told is that some funds are so huge nothing ever gets moved around, so I thought "what is the job of the fund manager then?"In my cynical moments i would tend to believe it was to extract money from muppets like myself and go and play a round of golf. Obvious exceptions being the likes of Anthony Bolton whose special situations has done so well

Larger funds are less nimble and cannot be as quick to react a lot of the time. However, most funds are much smaller and increasingly focused on certain areas so a portfolio of focused funds can be an ideal solution but there are always exceptions. Historically you had Fid Spec Sits but Inv Perp Income is another.

You also need to note that historically, most people tended to end up in with profits, cautious managed, balanced managed or distribution funds. That is rather dated by todays standards (although still can be appropriate for some). A lot of the old ways of thinking relate back to those particular funds. For example, you would expect a FTSE tracker to outperform a balanced manged, cautious managed, distribution and with profits fund over the long term. However, the FTSE all share tracker is higher risk and has higher volatility and since 2000 it would have performed worse than most, if not all of those funds. Investing today is very different to 5 years ago, let alone 10 or 20. We have far more data available and the selection of investment options has never been better for the small retail investor.

Anyway i found this site which provides at least 3 in my area

Make sure they are investment specialists. You dont want a jack of all trades, master of none or one that spends 90% of their time doing mortgages.

You should be able to spot the lower skilled advisers by the types of investments they recommend. Single fund, no strategy, no explanations, no research provided. Plus, with your amount you should be looking at good discounts.

jamesd

About half of share funds don't outperform trackers and consistently fail to do so. So you don't buy those - they are often insurance company run funds with locked in customers and are easy to avoid. Next up come trackers, which consistently under-perform the index they are tracking by a little because of management costs. Then you get the better managed funds and can look for the ones with a consistent record of above average performance and no changes of manager to invalidate that past record.

When it comes to unit trusts the objective in selecting them is to put together a combination that will achieve the target volatility (month or year on year variation in value). That's done by varying the funds chosen and the proportions in each of them. Likely ten to fifteen different funds for your sort of money - that's the selection I have myself even for considerably less money. So you might have some tech-equivalent (China today is that) but it would be a fairly small proportion of the mixture and would be matched by less variable performers like Invesco Perpetual Income in the UK and/or a global growth fund that don't bounce around so much.

Invesco Perpetual Income demonstrated what the manager of a huge fund does: the fund was moved out of banks and into cautious investments last spring, so it avoided larger drops in value than it could have suffered. A tracker would have been required to stay invested in the banks so that it would track the index falling properly.

It's no problem for a decent IFA to do this and you should also ask that the service include annual rebalancing (of the proportions of investments in each area and of appropriate amounts in each area) plus advice if a fund manager changes, since fund manager changes are a significant cause of negative changes in fund performance.

donmaico

Guess if I opt for fee based advisor then the recommendations should be unbiased.Ideally I would want someone rather more hands on than the last lot who must of thought me small beer and not worth bothering with. Periodic reassessments ,even advice out of the blue to move an investment or other, would be helpful.
Not sure on the ISa rules . Can one take a new out each year. At the moment we have two into which we pay £50 each pm and one( maxi) which is a lump sum one.
How diversified should ones portfolio be? How many stocks and shares?I know people say they outperform bank accounts in the long run but there also some real dogs out there.
I suppose the most offputting thing is when one reads about the bad investments .One of my clients ,who is not exactly skint ,lost tens of thousands as a result of being a Name.He could afford the loss whereas I cant.The amount I lost on the Invesco European fund was trifling by comparison

dunstonh

Guess if I opt for fee based advisor then the recommendations should be unbiased.

Yes. They should be anyway but real life..... With your amount, fee basis is common sense and cheaper. This can either be a fixed amount in pounds or a fixed percentage of say 1%. That way you remove any product bias as the amount you pay is the same regardless of investment, wrapper or whatever. If pensions are involved, then having the fee taken from the product can be more tax efficient as can be the case with some investments.

Periodic reassessments ,even advice out of the blue to move an investment or other, would be helpful.

Servicing IFAs or new model IFAs are becoming more common but are still generally in a minority. It would be worth making sure you get some commitment to servicing.

Not sure on the ISa rules . Can one take a new out each year.

yep. Every tax year the slate is wiped clean and you get a new £7200 allowance to contribute.

How diversified should ones portfolio be?

It depends on the amounts involved. I just did a bed and ISA transaction for an income portfolio this morning which is £150k and that has 14 funds (cash and NS&I holdings not included). You can go over the top and diversify too much but the higher the risk the more you are likely to diversify as you are likely to have more specialist areas. i.e. China, India, Brazil, Commodities, Emerging markets etc where you need to diversify.

I know people say they outperform bank accounts in the long run but there also some real dogs out there.

You will never ever get it 100% right, 100% of the time. Hence why you diversify.

I suppose the most offputting thing is when one reads about the bad investments .One of my clients ,who is not exactly skint ,lost tens of thousands as a result of being a Name.

Thats professional investor stuff and a long way from things like unit trusts.

He could afford the loss whereas I cant.The amount I lost on the Invesco European fund was trifling by comparison

He could afford the loss so probably had a higher risk profile and he saw that as lower risk than you would perceive it. This is why it is vital to not only to make sure that the level of risk on the portfolio matches your needs but also that the type of investments used match your experience.

donmaico

well thats great deal of good advice which I very much appreciate . Many thanks and i'll talk to my wife. Any decisions will have to wait till after probate......... and thats another story altogether,