Question re 700K investment
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The article notes that the average US largecap actively managed fund has not beaten a US largecap index. Side note that it is not actually possible to invest in the US largecap index without cost; though the costs are low.comment_as... wrote: »
There's quite a bit actually, have a look at this article: https://www.cnbc.com/2019/03/15/active-fund-managers-trail-the-sp-500-for-the-ninth-year-in-a-row-in-triumph-for-indexing.htmlSonOf wrote:
Evidence for thatcomment_as... wrote:There's not much point hiring an IFA because by they'll tell you to invest in what is popular and by definition that will be what's overpriced.
Regardless of the relative performance of US active funds vs US passive funds, the article doesn't really provide the requested 'evidence' that a UK independent investment advisor will typically encourage his clients to invest in 'what is popular' nor that 'what is popular' for UK-based retail customers is to invest in US-based and US-focussed active funds.
So it does not necessarily damage a UK independent investment advisor's credibility to hear that US active investment funds were shown to lag the US stock index for a theoretical investor who had, for some reason, invested in all of them.
While not a user of IFA services, my general understanding is that their role is to advise you on a fund or portfolio of funds which overall is suitable for your needs, among other things such as tax wrappers etc.An IFA in particular is fees upon fees as they then tell you to buy a managed fund.
Anecdotally, they certainly do not all tell you to buy a managed fund (or the managed US funds in your CNN article), though a broad portfolio will have exposure to multiple asset classes and some classes do not have particularly efficient or investible indices - and if you are not an investment professional yourself it can make sense to buy advice on how to maintain your asset allocation (or pay a fund manager to maintain it for you in a mixed asset portfolio fund if you do not want you or your adviser to need to be too 'hands on').
Yes, you are probably considering the term differently to how this board uses it.
Either you buy independent investment advice on what investment products to hold, or you proceed unadvised and select the investment products yourself ('doing it yourself').
As part of selecting investment products yourself, you might buy an investment product constructed by Woodford Investment Management and made available through an investment platform or a stock exchange. In creating your portfolio yourself using a Woodford fund as one of the building blocks, you would have 'done it yourself' (built an investment portfolio including a Woodford investment product) and it may later prove to have been unwise to have done that (i.e. to use one or more of the range of investment products offered by Woodford).
It may be of use when trying to narrow down 20,000+ investment options to go to a stocks statistics site for filtering purposes and pull out some ratios or stats to support further research (including the actual accounts and other public domain information).
However, most newbie investors would not know how to construct a portfolio out of 20,000 individual stocks and other investment options, so knowing the P/E ratio or F-score of Apple Inc does not really tell them what portion of their globally and sectorally balanced mixed asset portfolio AAPL should occupy, and what should make up the rest.0 -
I have not read all the answers you have had, but maximising pension is a must as it gives so much tax benefit. Wise fund investment should helpI'm a retired IFA who specialised for many years in Inheritance Tax, Wills and Trusts. I cannot offer advice now, but my comments here and on Legal Beagles as Sam101 are just meant to be helpful. Do ask questions from the Members who are here to help.0
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FYI OP, I'm retired and have a portfolio of a US equity tracker a Global equity tracker and a US bond index...I'm in the US. I also have small amounts in a multi-asset fund and a deferred annuity and cash. Since I retired almost 6 years ago I've averaged 8% annual return, which is just a little less than I averaged with a very similar portfolio for the last 30 years. I DIY so there's no IFA fee to take a large percentage of any income I drawdown.
If you want 3% to 4% income just put the money in something like VLS60 and keep a year or twos spending in the bank and research Guyton-Klinger withdrawal strategies. This does not need to be complicated.“So we beat on, boats against the current, borne back ceaselessly into the past.”0 -
bostonerimus wrote: »FYI OP, I'm retired and have a portfolio of a US equity tracker a Global equity tracker and a US bond index...I'm in the US. I also have small amounts in a multi-asset fund and a deferred annuity and cash. Since I retired almost 6 years ago I've averaged 8% annual return, which is just a little less than I averaged with a very similar portfolio for the last 30 years. I DIY so there's no IFA fee to take a large percentage of any income I drawdown.
If you want 3% to 4% income just put the money in something like VLS60 and keep a year or twos spending in the bank and research Guyton-Klinger withdrawal strategies. This does not need to be complicated.
Cheers yeah I think I'm a bit scared of turning growth into income, but I'm going to google this, and perhaps it's actually much more simple than I think it is. I suppose you just sell of the percentage that has grown? For example, if my VLS 60 grows 7% over the course of the year then I can sell of 7% (bearing in mind that this won't cover inflation; maybe it's better to sell off 4% and keep 3% "in the pot" so to speak, to cover inflation).
BUT is a VLS60 diverse enough for 700k?! I know its a diverse fund (having researched it).
A family friend who once worked in the city is helping to source a decent IFA for me (by word of mouth) so I hope to meet with them soon.0 -
'I would also like to consult another IFA.'
I was told that HL are not IFA's, but FA.
Lucky position indeed. But I'd be more careful with the info you tell people. I have a friend who has a similar amount of money, car etc that I have and it attracts the wrong type of person. Obviously I don't mean to be rude, but at 30 you are vulnerable to the wrong type of girl/man coming and using you for your financial status.
Also surely if you are being gifted this amount, the person who is gifting this will have some form of financial advisor. Would it not make sense to seek a personal recommendation?
I personally believe that those who shout the loudest about their wealth and straight away put numbers on the forum, are not honest. But I mean that isn't my problem.
At 30, if you have a mortgage paid off, and retirement fund planned, why do you need the income off 700k. I would strongly consider to at least put some for growth, and use the rest for income.
In terms of income, there are plenty of funds generating what you are after, plus often a 2-3% annualised return over the last 5 years or so. The info is out there.
People on here push passive investing. If you just want to be mr average then that is fine. However I'd rather pay an extra 0.5% and gain an extra 3%, good funds often far more than that too!
Take lindsell train, as an example or smithson.
I'm sure you are aware but make sure you have a diversified portfolio. It may be easy to stick the money on companies in the FTSE100, and get your average 4-5% but if it goes tits up, and it will at some point, it is a large amount to loose if a company goes into liquidation.
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johnadams7 wrote: »
People on here push passive investing. If you just want to be mr average then that is fine. However I'd rather pay an extra 0.5% and gain an extra 3%, good funds often far more than that too!
Indexing is all about being average so it is true that if you want alpha or just bigger than average gains look elsewhere, but also be careful that the extra 0.5% you spend on either an advisor or on fees doesn't result in a loss as there are plenty of those around as well.Take lindsell train, as an example or smithson.
I'm sure you are aware but make sure you have a diversified portfolio. It may be easy to stick the money on companies in the FTSE100, and get your average 4-5% but if it goes tits up, and it will at some point, it is a large amount to loose if a company goes into liquidation.
Funds like Lindsell Train Equity, Lindsell Train IT and Smithson are highly focused and so don't come with much diversity. They have done well because the managers are on a good streak and their stock picks are doing well. Be careful if you make these the core of your portfolio as the joy of great gains could easily be replaced with the pain of excessive losses as shown when LTI fell 30% this summer, so hey it might be a good buy just now. Also if you are looking at ITs be careful with any price premiums and I'd be nervous about Lindsell Train IT as it invests almost 50% in it's own parent company.“So we beat on, boats against the current, borne back ceaselessly into the past.”0 -
johnadams7 wrote: »
Also surely if you are being gifted this amount, the person who is gifting this will have some form of financial advisor. Would it not make sense to seek a personal recommendation?
Good idea though their FA might be, say, SJP, and had they not used them would have been handing over £1.4M
I personally believe that those who shout the loudest about their wealth and straight away put numbers on the forum, are not honest. But I mean that isn't my problem.
At 30, if you have a mortgage paid off, and retirement fund planned, why do you need the income off 700k. I would strongly consider to at least put some for growth, and use the rest for income.
I agree, OP it seems comes to the forum with a preconceived view that the best way to get income is via an income fund, whereas it can often be through growth or a mixture.
In terms of income, there are plenty of funds generating what you are after, plus often a 2-3% annualised return over the last 5 years or so. The info is out there.
The info is out there as to past performance. Selecting future performance is more uncertain.
People on here push passive investing. If you just want to be mr average then that is fine. However I'd rather pay an extra 0.5% and gain an extra 3%, good funds often far more than that too!
If only the choice was that simple. The fact that index funds even exist, show it isn't, because if you could just plump down an extra 0.5% and get 3% guaranteed, why would anyone do anything else?
Take lindsell train, as an example or smithson.
Or Woodford.
I'm sure you are aware but make sure you have a diversified portfolio. It may be easy to stick the money on companies in the FTSE100, and get your average 4-5% but if it goes tits up, and it will at some point, it is a large amount to l[STRIKE]o[/STRIKE]ose if a company goes into liquidation.
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Well, that would depend if it was 1% or 10% or 100% of your portfolio wouldnt it?0 -
johnadams7 wrote: »'I would also like to consult another IFA.'
Lucky position indeed. But I'd be more careful with the info you tell people. I have a friend who has a similar amount of money, car etc that I have and it attracts the wrong type of person. Obviously I don't mean to be rude, but at 30 you are vulnerable to the wrong type of girl/man coming and using you for your financial status.
Also surely if you are being gifted this amount, the person who is gifting this will have some form of financial advisor. Would it not make sense to seek a personal recommendation?
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Yeah to be honest I am quite a private person (by nature) so it feels a bit odd for me to be even talking to people on the internet about this. I just want to say, I hope I haven't come across like an !!!!!! or anything. I'm really shocked/suprised by this and basically just want to invest the money without doing anything stupid.
I definitely had a biase towards income based funds and this is something I'm going to speak to the IFA about!
I met a family friend who says he might know somebody. I still want to go into this with my wits about me, so to speak. I've been reading online about things to ask an IFA (to check if they are worth working with) so I think that's my next step.0 -
I definitely had a bias towards income based funds and this is something I'm going to speak to the IFA about!
There are many different types of income funds depending on what they emphasize. You could go from something that is heavy in bonds to something that concentrates of dividend stocks and there are even high dividend sector income ITs, but I wouldn't want to concentrate on any one sector when looking for income. So a global multi-asset fund that pays a dividend and has some bonds and equities and also gets some capital growth seems like a simple solution. I believe that concentrating on total return and asset allocation is the best "income" strategy. Also if these funds are outside a tax wrapper the taxation becomes important and current income might not be the best way to go.“So we beat on, boats against the current, borne back ceaselessly into the past.”0 -
bostonerimus wrote: »So a global multi-asset fund that pays a dividend and has some bonds and equities and also gets some capital growth seems like a simple solution. I believe that concentrating on total return and asset allocation is the best "income" strategy. Also if these funds are outside a tax wrapper the taxation becomes important and current income might not be the best way to go.
A global multi-asset fund is what I was planning to do BEFORE I asked this question based on my current knowledge. It does seem crazy to put it all one fund, but if the fund is good then why the hell not? My retirement portfolio is basically just a VLS 60 and that's one fund so...0
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