Help with calculations!

whiteflag_3

EdInvestor wrote: »

Use a discount broker which will rebate charges such as www.h-l.co.uk
(Plenty of useful info on the website about popular funds).

Im concerned that you are really on some sort of "kickback" from Hargreaves Landsdown. Please can you confirm that you have no vested interest in promoting the services of this IFA firm?

Perhaps you should change your signature to show this, then perhaps you wont look like a mobile advert?

whiteflag_3

EdInvestor wrote: »

It's importnat to learn how to manage this risk.

landgirl, its not important to know how to manage risk. Its like many things in life, you can choose to delegate it to someone who is better qualified.

It may not be the cheapest option but you may have other priorities in life- like enjoying yourself. Find a good financial planner as I advised earlier and let them guide you so there is no risk, leaving you to get on with what you like, worry free.

TMFTP

whiteflag wrote: »

landgirl, its not important to know how to manage risk.

Find a good financial planner as I advised earlier and let them guide you so there is no risk, leaving you to get on with what you like, worry free.

That's simply not true. A financial adviser will do just that - advise. The end decision is ultimately your own. If things go the wrong way and the adviser has pointed out the relevant information, then you have no comeback. That is NOT "no risk".

EdInvestor

whiteflag wrote: »

Im concerned that you are really on some sort of "kickback" from Hargreaves Landsdown.

I only mention this discount broker because it's the cheapest.Of course it's also the biggest, which has probably got something to do with point one.

dunstonh

I only mention this discount broker because it's the cheapest.Of course it's also the biggest, which has probably got something to do with point one.

They are not the cheapest. You always discount the cheapest options to promote SIPPs, in particular HL's SIPP.

Retired_I.F.A.

I wonder if Ed's got the hots for my old life inspector Tom Mc Phail.?

EdInvestor

dunstonh wrote: »

They are not the cheapest. You always discount the cheapest options to promote SIPPs, in particular HL's SIPP.

HL's ISA and direct investment deal into unit trusts is the cheapest, particulary for regular investments.

It has a few competitors in the SIPP area, but is still the cheapest for regular investment in funds, as it charges no transaction fees and has no fee for the SIPP itself.

For investment in shares gilts or unit trusts in a SIPP there are cheaper providers, including https://www.sippdeal.co.uk and https://www.alliancetrust.co.uk

jamesd

Hungerdunger, it's an example of how you combine funds to get diversification and hit a risk target. It's a standard method that lots of newcomers aren't familiar with.

It's rare for me to suggest that someone consider investing in shares. I think that funds are more often going to be suitable. In the case of this particular example of how you can combine funds, the first three are dominated by either non-share investments or non-traditional approaches to using shares in funds. That's why they are there and also why I used relatively high percentages of them to hit the risk target for this mixture.

If you're aware of alternatives to the first two funds that have similar properties I'm very interested in hearing about them. At the moment the options available in the areas that they cover are limited. One alternative candidate was launched this week, the Skandia Alternative Investments fund, but it's too soon to know if it'll live up to its potential. I'll almost certainly experiment with it myself, though.

Your comments that they are in shares and about their use in the current climate suggests that you're not aware of the nature of the three main funds in the mixture and how they invest. Please do read their prospectuses or similar descriptions if this is so, since the reason that they are in this mixture is precisely because they have properties that are appropriate for the current and negative market movement possibility.

Please do feel free to put together a mixture that will illustrate useful principles and will also have comparable risk profile to this one, if you'd like to add some welcome variety to the discussions.

Similarly, if you have alternative approaches that you believe the questioners in those discussions might consider, please do make those suggestions to them.

The relative of the 76 year old was asking for investments and the time horizon seems suitable for investing, as did the constraints given on the investment types to use. A significant percentage of 76 year olds will live 15-20 years and that's well into the territory where inflation will seriously hurt their income and/or capital if they stick to using savings accounts for their investing.

Here's why I chose each of the funds in the mixture:

30% BlackRock UK Absolute Alpha

Hedging techniques like shorting so it makes more money in volatile and dropping markets, likely to do well if there's a crash. Very stable growth and a reasonable prospect of 10-15% growth in the possible market conditions over this year. No alternative UK fund with these properties exists for consumers at present.

20% Cru Investment Portfolio

Alernative investments, like lending to businesses based on their orders and secured against their stock, hedge funds. Diversification and even greater stability than UK Absolute Alpha. No alternative UK fund with these properties exists for consumers at present, except another from this house.

20% Invesco Perpetual Monthly Income Plus

Corporate bonds so non-share investing again, a small percentage of UK equity income to get some UK stock market exposure to improve performance if the markets do well. Could be replaced fairly readily with another fund.

20% Invesco Perpetual Income

UK equity income with a manager who's fairly cautious, one of the most popular funds in the UK. Could be replaced fairly readily with another fund.

10% Neptune Global Equity

Non-UK equity, global growth with a very high emerging markets proportion, to diversify away from the UK and do well if markets grow. Some alternatives exist but this particular manager has handled recent events quite well.

Hungerdunger wrote: »

Can you clarify whether you have any vested interest in promoting these investments, or is it that you genuinely see them as a low-risk way to make a lot of money?

I don't work in the financial services industry and will make no money at all if people buy these funds. Mentioning these funds may harm my own financial interests somewhat, since at least two of them may have their ability to make money harmed if they become more popular. That's happened before: a cash ISA that was good and mentioned a lot found itself too popular and set minimums that blocked me from using it myself.

This mixture of investments is not a way to make a lot of money in any short timeframe. That's not what it's designed to do. The design of this mixture is for capital preservation and probably making more money than using a savings account, whether markets go up or down. It's also intended to be tax efficient, since most of the gains come in the form of capital growth that will be tax free for most people in most years. As a result only 10% is in a fund that could qualify as potentially making a lot of money, instead favoring those that have steady and fairly predicable growth and income properties.

That design is also why it's useful for the cases where I mention it: low risk target but likely better than savings return so it's useful education for those who may be only considering savings accounts and can benefit from an introduction to the lower risk end of things that can be held in a stocks and shares ISA or pension. If someone did just copy it they aren't likely to get hurt.

The cases where the moderators here have acted have been where high risk options have been discussed without adequate strong warnings of the potential to lose a lot of money (buy silver now, say, a great way to quickly lose a lot of money), or where only a partial picture was given (huge profits being made from land-based wind farms, without mentioning that the big players already noticed and bought up all of the decent available sites, so the opportunity to make lots of money had already vanished). That's a very different world from a well diversified low risk mixture of funds being used to illustrate how to construct portfolios to hit risk targets. There's similar finesse over in the gambling introductory loopholes board, where gambling isn't acceptable but betting that is not gambling is fine.

whiteflag_3

TMFTP wrote: »

That's simply not true. A financial adviser will do just that - advise. The end decision is ultimately your own. If things go the wrong way and the adviser has pointed out the relevant information, then you have no comeback. That is NOT "no risk".

I think I said "financial planner" not "adviser" . They are not the same thing!

TMFTP

whiteflag wrote: »

I think I said "financial planner" not "adviser" . They are not the same thing!

Quite right. I incorrectly assumed you must have used the wrong term. As you hadn't, your statement is potentially more incorrect. After your financial planning session - what happens then?

If you select the product(s) yourself that = risk. Or, you go to an adviser (on whatever basis) and we're back to where we started.

There is simply NO "risk-free" option.