What sort of a return can I get on £650k?

[JiggyJaggy]

DonkeyApple said:

That’s VC investment and you wouldn’t do it for 5%! Or do it at retirement age with funds that are needed to generate a living income.

If a business can’t borrow conventionally at 5% then it needs to be giving away equity and security and paying double figures.

You wouldn’t lend to a firm at 5% that isn’t in sound enough shape to borrow from a formal lender at that rate.

No one has said anything about not being able to borrow conventionally as we have only just looked into expansion in the last few weeks and I stumbled across this thread. Someone investing say £250,000 in years when they are looking to retire etc may easily welcome circa £17-20k return when compared to BTL property or alternative investments.

[DSLiverpool]

Grandad Gaz said:

Sorry, should have said. Low risk. We need the return to live off.

I've been self employed for about 35 years. My private pension is not worth a lot, so the income must be pretty much guaranteed.

Thanks

Assuming you own the home your moving to? And you don't say how old you are but assuming you could live on £30k cash a year that's 20 odd years of living without doing anything plus you would get a bit of interest.
Does that not work for you?

[DonkeyApple]

JiggyJaggy said:

No one has said anything about not being able to borrow conventionally as we have only just looked into expansion in the last few weeks and I stumbled across this thread. Someone investing say £250,000 in years when they are looking to retire etc may easily welcome circa £17-20k return when compared to BTL property or alternative investments.

5% is £12.5 and you’re not a counting for risk!! But mentioning that official lenders are reticent to lend does somewhat highlight this.

[sidicks]

JiggyJaggy said:

No one has said anything about not being able to borrow conventionally as we have only just looked into expansion in the last few weeks and I stumbled across this thread. Someone investing say £250,000 in years when they are looking to retire etc may easily welcome circa £17-20k return when compared to BTL property or alternative investments.

You seem to be ignoring the massively different risk profiles of BTL v small company VC investment.

The latter should be 15%+ not 5%!!

[Badda]

Have a look on wise alpha - household names pay 5-7% so why would anyone lend you money at 5%?!

[V8 Fettler]

DonkeyApple said:

V8 Fettler said:

It's farcial that punters have to make life-changing financial decisions where there is a high risk that their professional adviser is an idiot.

How does a punter filter out the idiots?

An IFA works for you. He is in your employ.

Most people chose their IFA by just opening the door and letting him come in, make himself at home and just buy whatever he is selling.

But he is an employee and you must treat them like any prospective employee. You need to interview them and interview enough to stand a chance of finding the right employee who is going to work properly for you.

But first you need to know what the job is that they will be doing. You can’t start interviewing for a role if you have not yet defined what that role is.

The landscape is changing rapidly for IFAs as comm is gone and other remuneration types drive completely different behaviour and so it’s never been more important to educate yourself, define the role, set the questions and interview enough to weed out the weak and unsuitable.

The other way to look at this from the perspective of those with average wealth is that you don’t need to buy products from an IFA (most aren’t independent anyway but tied to a product vendor so genuinely cannot offer independent advise just sell what they are regulated to sell) the market for self directed investment products is pretty impressive nowadays but what you do need to buy is the advise on how to diversify and how to utilise all your tax benefits.

It is probably fair to argue, in simplistic terms, that the performance difference between sticking all your money into blue chip index ETFs will yeild the exact same return as paying an IFA to create a complex blended portfolio. But the real key is not per se the underlying investments but ensuring that these assets are held in the most tax efficient manner and that you utilise every wrapper advantage. That is the advice that is catagorically worth paying for as that is what can make you tens of thousands over your retirement.

For most punters, a professional IFA is not an employee, he's a professional adviser employed on a consultancy basis, therefore his PI cover should be at risk if he provides defective advice.

[V8 Fettler]

sidicks said:

DonkeyApple said:

An IFA works for you. He is in your employ.

Most people chose their IFA by just opening the door and letting him come in, make himself at home and just buy whatever he is selling.

But he is an employee and you must treat them like any prospective employee. You need to interview them and interview enough to stand a chance of finding the right employee who is going to work properly for you.

But first you need to know what the job is that they will be doing. You can’t start interviewing for a role if you have not yet defined what that role is.

The landscape is changing rapidly for IFAs as comm is gone and other remuneration types drive completely different behaviour and so it’s never been more important to educate yourself, define the role, set the questions and interview enough to weed out the weak and unsuitable.

The other way to look at this from the perspective of those with average wealth is that you don’t need to buy products from an IFA (most aren’t independent anyway but tied to a product vendor so genuinely cannot offer independent advise just sell what they are regulated to sell) the market for self directed investment products is pretty impressive nowadays but what you do need to buy is the advise on how to diversify and how to utilise all your tax benefits.

It is probably fair to argue, in simplistic terms, that the performance difference between sticking all your money into blue chip index ETFs will yeild the exact same return as paying an IFA to create a complex blended portfolio. But the real key is not per se the underlying investments but ensuring that these assets are held in the most tax efficient manner and that you utilise every wrapper advantage. That is the advice that is catagorically worth paying for as that is what can make you tens of thousands over your retirement.

I think this is important - most people seem to assess (in hindsight) the advice given by an IFA based on the resulting investment outcome, which is entirely wrong. Few IFAs are properly qualified to analyse investment markets alongside economics to identify the right asset classes to invest in at the right time. Even fewer can accurately predict the future...

What they can do is:
- Understand your risk appetitive and structure a high level asset mix consistent with those requirements
- Identify which investment / savings / protection products might be suitable for you, given your personal situation and objectives
- Advise on the most efficient way of accessing products to meet those needs.

Why is it wrong to measure the performance of a professional financial adviser on the basis of the performance of the financial products recommended by the professional financial adviser for which he receives a professional fee?

[V8 Fettler]

bhstewie said:

V8 Fettler said:

It's farcial that punters have to make life-changing financial decisions where there is a high risk that their professional adviser is an idiot.

How does a punter filter out the idiots?

I would say do your own homework and trust but verify.

If I was lucky enough to have £650k I wouldn't speak to a single IFA and simply do what they suggested.

I can fully understand the value of an IFA in making sure you're planning financially correctly i.e. you have enough to live off and you're maximising allowances, but once you get down to the nitty gritty of selecting funds I see too many threads online where an IFA seems to have dumped a client into a "box" with whatever providers portfolio's they offer and makes quite a good ongoing return from that.

Do your own homework on what? The quality of the financial adviser or the quality of the various financial products?

[DSLiverpool]

I must be missing a trick here, my strategy (as little pension) was to get a house paid for that will survive two downgrades releasing circa £250k twice and leaving us in a flat at 70 odd.
Not for everyone and maybe I have simple spending habits but maybe I’m wrong.

[bitchstewie]

V8 Fettler said:

Do your own homework on what? The quality of the financial adviser or the quality of the various financial products?

Well, I get that people may not like spelling out their entire financial situation on a forum but if someone walks through the door and says "Hi I'm an IFA" they'll tell them down to every single penny, so I think what I'm saying is that other than time spent there are enough forums and resources out there to get plenty of opinions around the things you've been advised.

As for products, similar thing, if an IFA said put the entire equities allocation into Woodford Patient Capital for example I wouldn't be doing it simply because an IFA recommended it - I don't think they'd do that but you get the idea.

I've only taken an interest in this stuff for a few months myself so I'm not knocking IFA's, it's more that I think there is enough information out there and at the end of the day it is your money - if you devote a month of your life to reading and absorbing as much as possible it will have such a massive impact on your future that it's probably the cheapest time you'll ever spend.

[Badda]

DSLiverpool said:

I must be missing a trick here, my strategy (as little pension) was to get a house paid for that will survive two downgrades releasing circa £250k twice and leaving us in a flat at 70 odd.
Not for everyone and maybe I have simple spending habits but maybe I’m wrong.

Personal preference I suppose. Sounds like you've put all your eggs in one basket though. I've got a mix of property, investments and pensions to see us through and think this is more usual than relying on the family home.

[DonkeyApple]

V8 Fettler said:

For most punters, a professional IFA is not an employee, he's a professional adviser employed on a consultancy basis, therefore his PI cover should be at risk if he provides defective advice.

I don’t mean an actual, legal employee!!! I’m talking about the mindset to hold when looking to engage one.

PI, FSCC, Ombudsman. Lots of cover exists to protect the retail investor. None of which stands in the way of poor performance. Invest time in choosing the IFA correctly in the first instance. That investment of time can save someone tens of thousands.

[sidicks]

V8 Fettler said:

Why is it wrong to measure the performance of a professional financial adviser on the basis of the performance of the financial products recommended by the professional financial adviser for which he receives a professional fee?

The IFA can’t be expected to predict the future.

[NRS]

DSLiverpool said:

I must be missing a trick here, my strategy (as little pension) was to get a house paid for that will survive two downgrades releasing circa £250k twice and leaving us in a flat at 70 odd.
Not for everyone and maybe I have simple spending habits but maybe I’m wrong.

It might well work, but as mentioned there more risk than spreading it out over different investments. For example it seems a lot of people are doing what you are doing. It could well result in house prices dropping a lot if everyone in your generation starts putting their house for sale, pushing prices down, and then people don't buy as they see the prices going down so wait longer, pushing prices down even more. Or perhaps a law change might mean you face a lot more tax.

However it is also unlikely to work as well these days due to the already high price of houses/ low interest rates. You do see the odd person pop up here and say buy houses as they did very well from them, without seeming to realise it is a very different time to say the early 1990's when they bought their houses.

[DSLiverpool]

Badda said:

DSLiverpool said:

I must be missing a trick here, my strategy (as little pension) was to get a house paid for that will survive two downgrades releasing circa £250k twice and leaving us in a flat at 70 odd.
Not for everyone and maybe I have simple spending habits but maybe I’m wrong.

Personal preference I suppose. Sounds like you've put all your eggs in one basket though. I've got a mix of property, investments and pensions to see us through and think this is more usual than relying on the family home.

After I sold the phone business in 2015 I had a wobble and (half accidentally) set up a business that works fully without me, in a year or so it should pay me £3/5k a month with no input at all so I have diluted it a bit - I have been lucky business wise.
To set up such a business you cannot take a salary (unless very talented which I am not) so it took a year to get £680 a month, shortly it should be regular divis all being well.

[Badda]

DSLiverpool said:

Badda said:

DSLiverpool said:

I must be missing a trick here, my strategy (as little pension) was to get a house paid for that will survive two downgrades releasing circa £250k twice and leaving us in a flat at 70 odd.
Not for everyone and maybe I have simple spending habits but maybe I’m wrong.

Personal preference I suppose. Sounds like you've put all your eggs in one basket though. I've got a mix of property, investments and pensions to see us through and think this is more usual than relying on the family home.

After I sold the phone business in 2015 I had a wobble and (half accidentally) set up a business that works fully without me, in a year or so it should pay me £3/5k a month with no input at all so I have diluted it a bit - I have been lucky business wise.
To set up such a business you cannot take a salary (unless very talented which I am not) so it took a year to get £680 a month, shortly it should be regular divis all being well.

Ok...not sure why you said you're relying on your home if you have a business. Good luck and I hope your income matches your expectations next year.

[DSLiverpool]

Badda said:

Ok...not sure why you said you're relying on your home if you have a business. Good luck and I hope your income matches your expectations next year.

It's a new business, it doesn't pay much and might not succeed but it was an option as I was doing nothing.

[V8 Fettler]

bhstewie said:

V8 Fettler said:

Do your own homework on what? The quality of the financial adviser or the quality of the various financial products?

Well, I get that people may not like spelling out their entire financial situation on a forum but if someone walks through the door and says "Hi I'm an IFA" they'll tell them down to every single penny, so I think what I'm saying is that other than time spent there are enough forums and resources out there to get plenty of opinions around the things you've been advised.

As for products, similar thing, if an IFA said put the entire equities allocation into Woodford Patient Capital for example I wouldn't be doing it simply because an IFA recommended it - I don't think they'd do that but you get the idea.

I've only taken an interest in this stuff for a few months myself so I'm not knocking IFA's, it's more that I think there is enough information out there and at the end of the day it is your money - if you devote a month of your life to reading and absorbing as much as possible it will have such a massive impact on your future that it's probably the cheapest time you'll ever spend.

Unfortunately, most people don't have the ability to select a good IFA or meaningfully review recommendations from an IFA. A punter should reasonably expect that an IFA is competent and acts in the punter's best interests. However, as we know, "...very many IFAs are xxxxx idiots. Grubby little salesmen who only aren’t selling windows because they attended a good school and managed just enough to avoid being an estate agent or job recruiter."

[V8 Fettler]

DonkeyApple said:

V8 Fettler said:

For most punters, a professional IFA is not an employee, he's a professional adviser employed on a consultancy basis, therefore his PI cover should be at risk if he provides defective advice.

I don’t mean an actual, legal employee!!! I’m talking about the mindset to hold when looking to engage one.

PI, FSCC, Ombudsman. Lots of cover exists to protect the retail investor. None of which stands in the way of poor performance. Invest time in choosing the IFA correctly in the first instance. That investment of time can save someone tens of thousands.

The FSCC and Ombudsman are demonstrably incompetent with little long term interest in the service provided by IFAs, witness the vultures and sharks feeding on the steelworkers' pension funds. Enduring PI cover is probably the best tool to manage IFAs, but that would mean relying on the insurers getting it right, rock and a hard place.

A contractor (rather than employee) would be a better description of an IFA.

[V8 Fettler]

sidicks said:

V8 Fettler said:

Why is it wrong to measure the performance of a professional financial adviser on the basis of the performance of the financial products recommended by the professional financial adviser for which he receives a professional fee?

The IFA can’t be expected to predict the future.

I would expect a good IFA to use his expertise to provide good advice to punters, an element of that advice will involve crystal ball gazing, just as there is in many other professional fields e.g. designing tall buildings to withstand high winds.

A good IFA will understand his clients and the various investment sectors, unfortunately - as we know - "...very many IFAs are xxxxx idiots. Grubby little salesmen who only aren’t selling windows because they attended a good school and managed just enough to avoid being an estate agent or job recruiter."