Investment Confusion

JasonG_2

rangers_fc wrote:

Ok some good replys here. If I could get my head round whats good. Are we saying Investmenty Trusts are a good investment because they often trade a discounts to NAV and the charges are so much lower than a Unit trust? I realise a monthly investment may be better than a lump sum investment so you get a mid market price in what you buy.Just not sure if now is a good time to buy, as the share prices are high with the markets preforming well recently.

Hi Rangers_fc, personally I do not think there is a "right time" to invest, and if there is I dont know it. I think you need to consider the nature of such an investment and if it is to be held for the medium to long term then anytime is good traditionally. Providing this is serious investment monies, ie not money that would be needed in an emergency etc.

Cost is of course an issue, but not the be all and end all. I wouldnt mind paying high charges if the performance makes it worth it. It sounds as if your thoughts re a collective investment make sense, as single shares really requires you to no what your doing, and obviously diversification is different/ less. As for single premiums or ,lump sums, I think that depends on your needs and available funds.

As for a fund and specific vehicle, if you are determined to go it alone, try the web sites out there that show funds and consider your attitude to risk, your thoughts on the fund and its profile going forward, past performance and history, volitility, charges and your tax position, tax effecient vehicles etc.

The bottom line is you have to decide if you are comfortable doing this, as the fee or extra initial charge (commission) you pay an advisor to is to do this with you. I would take proffesional advice personally, but I am "industry". I am sure there are those that can do it without. I personaly could not suggest a vehicle or fund without knowing your details/ specifics, and of course there are certain regulatory requirements etc etc.

Good luck, hope its of some help.

cheerfulcat

whiteflag wrote:

Hello Cheerfulcat

What has happened to change your mind and why all the hostility?

Hi, whiteflag,

I'm sorry, I didn't mean to come across as hostile! Sorry, dunstonh, I hope that you know I'm not attacking you personally.

Whiteflag, what I said before still stands; I accept that there may well be situations where an investment bond is a suitable vehicle (for mitigating tax), but for most people, most of the time, I think that they give very poor returns compared to holding shares and/or funds directly.

Regards

Cheerfulcat

dunstonh

I'm sorry, I didn't mean to come across as hostile! Sorry, dunstonh, I hope that you know I'm not attacking you personally.

And vice versa in my responses. Its often hard to carry the correct tone in posts and it can appear hostile when its not meant to be.

Investing is mostly about opinions anyway. Its the discussions that make it interesting.

Whiteflag, what I said before still stands; I accept that there may well be situations where an investment bond is a suitable vehicle (for mitigating tax), but for most people, most of the time, I think that they give very poor returns compared to holding shares and/or funds directly.

Certainly the majority of cases, OEICS/UTs and ISAs will fit the bill. I would say that I am around 75% ISA/UT/Oeics and 25% bonds on my mix professionally. Hence why I was saying that they cannot be ruled out as in those 25% of times they provide the best option.

It should also be noted that many of the funds available on bonds are re-invested into the unit/trust funds of the same name. Therefore performance on those can be identical minus the small difference in tax. The ones to be wary of now are the mirror funds (i.e. Skandia) where they hide charges into those so a mirror fund will not perform as a unit trust fund would.

So, the problem is that you have some rather poor investment bonds, you have some that used to be good but have been surpassed (like your Skandia i'm afraid) and you have some very good ones which are low cost and have a good fund range. What is also interesting is that the fund supermarkets are beginning to get into onshore investment bonds (in addition to offshore which have been present for a while). Although their offerings currently seem to target larger investments, that could be an area that is worth watching as they appear to be moving towards having the direct asset holdings but within the life assurance tax wrapper.

I researched a case recently where NU property fund was to be used. Over 10 years, the unit trust fund performed 11% better overall than the life fund. Thats down to the tax difference mostly. Then when i looked at charges the investment bond came in just over 14% lower over the term.

Now its important to note that the same fund was available on a few investment bonds but only one could beat the unit trust. So, you can't say with totaly certainty that one is better than another without researching both options first.

edit:

and btw, before you go thinking your Skandia was a waste of time, you must remember that Skandia were the first major provider to offer a multi-fund soluction and were doing it before fund supermarkets. For a time that was the only way to get access to the main funds within one investment. So whilst it was good a few years back, it hasnt kept up with the times and can easily be bettered now. However, i do like Skandia's portfolio reports. The same sort of information would cost £100pm from morningstar. So, if you are a stats type person, you may feel the extra cost of Skandia is worth it for the reports and information. As i think i said once before, you could consider them a luxury provider.