70K to invest

kimfarren

Ive been advised to put 41K into F&C Multi Manager Distribution Fund. 7K into Fidelity Special Situations and 7K into JP Mogan Natural Resources plus my hubby and myself to invest the £7200 each into this years ISA. I plan to leave it for 10 years. Each year money will be taken from these investments and put into the ISA wrapper so hopefully ending up with all money in the ISA wrapper at the end of the 10 years. Ive been told this is a 'cautious' investment.

Obviously the bank is going to charge me a one off arrangement fee of about £2.5K to set this up and then between 0.6% and 0.75% of the fund value per annum.

Does this sound like a good investment?

Baldur

Taking advice from a bank for this type of investment is unwise, you'd be better off, in my opinion, talkimg to an Independent Financial Adviser, rather than what are, effectively, salespeople with access to a limited range of products at a bank.

jem16

kimfarren wrote: »

Ive been advised to put 41K into F&C Multi Manager Distribution Fund. 7K into Fidelity Special Situations and 7K into JP Mogan Natural Resources plus my hubby and myself to invest the £7200 each into this years ISA. I plan to leave it for 10 years. Each year money will be taken from these investments and put into the ISA wrapper so hopefully ending up with all money in the ISA wrapper at the end of the 10 years. Ive been told this is a 'cautious' investment.

Who has arranged this for you? It doesn't sound like typical bank advice as it's using funds from different providers.

What funds are going into the ISAs?

Obviously the bank is going to charge me a one off arrangement fee of about £2.5K to set this up and then between 0.6% and 0.75% of the fund value per annum.

So initial charge of 3.5% - more or less the maximum commission so quite high. Is the 0.6% on top of the normal fund charges of around 1.5% or what?

dunstonh

A bit lazy on the portfolio recommendations. What investment strategy is the adviser using? (quick answer to that will be none).

F&C Multi Manager Distribution Fund

Thats the lazy fund.

7K into Fidelity Special Situations and 7K into JP Mogan Natural Resources

They are high risk funds and smack of fashion investing.

Each year money will be taken from these investments and put into the ISA wrapper so hopefully ending up with all money in the ISA wrapper at the end of the 10 years.

Bank advisers often say that but yet to find one that actually follows through on that.

Ive been told this is a 'cautious' investment.

Its medium not cautious. Whilst having funds above your risk profile is quite normal, you would expect a greater diversification so not to have all eggs in one basket (or two in this case).

Obviously the bank is going to charge me a one off arrangement fee of about £2.5K to set this up and then between 0.6% and 0.75% of the fund value per annum.

Why obviously? £2500 is a very large fee for size of investment. Typical Maximum would be closer to £1650. Average would be £990. Plus, you shouldnt really pay any more than the natural trail commission of 0.5% (thats the annual commission generated naturally from the funds). 0.6-0.75% suggests they are building in extra fees on top of the natural.

Does this sound like a good investment?

Its not bad. Its lazy, low skilled and the F&C fund is what you expect N&P or HSBC advisers to be flogging as they get extra commission on those. If its either of those two banks then it smells of commission bias. You could get a lot worse but you can easily get a lot better and a lot cheaper from a real IFA and not a bank adviser who has the title but not the skills.

kimfarren

Thanks for your replies.

Its Barclays that I bank with and who have given me this advice. I have just inherited this money from my mum. When I banked the money they asked if I wanted to speak to someone about what to do with it. I was undecided whether to just put it all into savings or to invest. I will definitely try an IFA before I commit to this. I am not a risk taker and do not want to risk losing this money as mum worked bl**dy hard as a single mum to leave myself and my brother something.

We want the money to grow as our dream is to have a smallholding one day (dream since childhood for me) We are about 50K - 60K short now of our goal so we want this money to grow so that we can achieve this goal in about 10 years time when our children will all be financially independent (not that they ever truly are, I know!) Maybe this is a unrealistic expectation, in which case I would rather someone would say - no way, not likely!

I will seek independent financial advice first though. Thanks again.

earlgrey_3

Have I got this right?

Barclay's expect you to pay them £2.5K +0.6-0.75% pa to have them allocate your funds; they want to put more than half with F&C who themselves charge you another 1.5% pa to allocate your funds. F&C then place your funds with various fund-managers who in turn charge another 1.5% to allocate your funds - mostly in corporate bonds.

As Dundtonh says, seems a very lazy approach. More of an employment scheme than an investment opportunity.

isofa

Another reason, never to use your bank for this type of advice. They are merely interesting in making a profit from you.

Look how, in a slice of free advice above, how dunstonh explains the options you have been provided - someone who knows his onions!

Get some proper IFA advice (not from a bank or building society). Avoid using your bank for this type of investment, actually for any other type of investment too.

Just my opinion

majorzott

One point if you go to a IFA - I would suggest that you ensure that you are paying for the advice as a fixed fee. If the IFA recomends solutions that he will be paid commission on, then they may not be entirely in your interest.

dunstonh

One point if you go to a IFA - I would suggest that you ensure that you are paying for the advice as a fixed fee.

A common alternative is a fixed percentage. Say 1% initial. That can be better for smaller investors than a fixed fee. Although typically you would expect a cap and collar on that percentage. The percentage option removes any potential for bias in the same way a fixed monetary fee does.

kimfarren

I've got an appointment with a IFA next week. What does a 'collar' mean? I understand cap but not collar.

Aegis

A cap is the highest level a rate can reach, a collar is the lowest level a rate can reach.