Intelligent Money - your investment questions answered

[Phooey]

Few questions re your JISA -

I'm strongly considering transferring my daughters stakeholder CTF (HSBC) to a JISA. Value at just under 11yrs is approx £22k and I add £200/month by DD.

1/ Can I find info on your website re your JISA?

2/ What is your JISA invested in?

3/ Costs? And will you be doing a similar non-PCM fund for 0.57%?

4/ How long roughly would the switch take (or how long would she be out of the market)?

5/ Might I be wise to hang on till after Brexit etc before meddling? My gut feeling is wait till next year but interested in your opinion..

6/ My aim was to build her a £50k pot @ 21yrs. Am I on track?

7/ Does she still get Nik as a Private Client Manager, and can she call him any time to talk Ponies and play Roblox?

Cheers

[Bonefish Blues]

Phooey said:

7/ Does she still get Nik as a Private Client Manager, and can she call him any time to talk Ponies and play Roblox?

Cheers

I fear Julian may well add that to his repertoire

[Phooey]

Bonefish Blues said:

I fear Julian may well add that to his repertoire

PCMKPO Private Client Manger & Kids Party Organiser

[Bonefish Blues]

Phooey said:

Bonefish Blues said:

I fear Julian may well add that to his repertoire

PCMKPO Private Client Manger & Kids Party Organiser

Here's Finance Nik kids - just like Peppa Pig, but more fiscally aware. Enjoy

[JulianPH]

Why didn't you just give me a call mate, or pop over for a beer and let her have a swim!!!

(for no particular reason Phooey and I have never met, but we live 2 miles away from each other!)

1) Key Features and T&Cs are on the footer of every page and you just select "Junior ISA" on the online application. We don't go into anymore detail but we are doing a website rebuild to take into account the new IM Index portfolios and GIA, so I will look at adding something about this.

2) You can chose from any of our portfolios. My daughter's is in IM Optimum Global Growth, but you may prefer a different approach. Her next one will go into IM Index 100% or 80% (perhaps a split).

3) 0.87% for IM Optimum and 0.57% for IM Index.

4) That depends entirely on the speed of HSBC. She won't be out of the market long though as when HSBC do transfer it over we invest by the end of the next working day (unless markets are daft, when we may keep you in cash until they straighten and we can buy more shares for the same money).

5) I think much has already been priced in, though if the pound does fall further this would push the FTSE up. It is not timing the markets, it is time in the markets!

6) It all depends upon markets, bu if you average 7% a year you will hit £50k for her when she is 21/22.

7) She can have Nik at her beck and call 24/7! His daughter has just turned 15 so he has great experience with Ponies and Roblox and will be happy to look after her every whim!!!

I am sure Nik will be delighted to read about his new PCM undertakings!

[JulianPH]

Bonefish Blues said:

Phooey said:

Bonefish Blues said:

I fear Julian may well add that to his repertoire

PCMKPO Private Client Manger & Kids Party Organiser

Here's Finance Nik kids - just like Peppa Pig, but more fiscally aware. Enjoy

I can now only hear "Finance Nik" to the tune of "Pepper Pig"!!!

[Phooey]

JulianPH said:

Why didn't you just give me a call mate, or pop over for a beer and let her have a swim!!!

(for no particular reason Phooey and I have never met, but we live 2 miles away from each other!)

1) Key Features and T&Cs are on the footer of every page and you just select "Junior ISA" on the online application. We don't go into anymore detail but we are doing a website rebuild to take into account the new IM Index portfolios and GIA, so I will look at adding something about this.

2) You can chose from any of our portfolios. My daughter's is in IM Optimum Global Growth, but you may prefer a different approach. Her next one will go into IM Index 100% or 80% (perhaps a split).

3) 0.87% for IM Optimum and 0.57% for IM Index.

4) That depends entirely on the speed of HSBC. She won't be out of the market long though as when HSBC do transfer it over we invest by the end of the next working day (unless markets are daft, when we may keep you in cash until they straighten and we can buy more shares for the same money).

5) I think much has already been priced in, though if the pound does fall further this would push the FTSE up. It is not timing the markets, it is time in the markets!

6) It all depends upon markets, bu if you average 7% a year you will hit £50k for her when she is 21/22.

7) She can have Nik at her beck and call 24/7! His daughter has just turned 15 so he has great experience with Ponies and Roblox and will be happy to look after her every whim!!!

I am sure Nik will be delighted to read about his new PCM undertakings!

Pool and beer . If we was to come round mate you'd never get rid of me. There's 8 of us (including the dogs)

Thx for the offer mate. I'll give you a call - didn't think you'd appreciate it on a Bank Holiday and I was just looking at her CTF online which then reminded me I probably ought to look at switching to a JISA.

[JulianPH]

Phooey said:

Pool and beer . If we was to come round mate you'd never get rid of me. There's 8 of us (including the dogs)

Thx for the offer mate. I'll give you a call - didn't think you'd appreciate it on a Bank Holiday and I was just looking at her CTF online which then reminded me I probably ought to look at switching to a JISA.

You know you are always welcome!

I'm just about to crack open a cold one and if you decide to pop over you can clear up any dog crap yourself!!!

Cheers mate!

[Phooey]

JulianPH said:

You know you are always welcome!

I'm just about to crack open a cold one and if you decide to pop over you can clear up any dog crap yourself!!!

Cheers mate!

Thx mate

It's not the dogs that are the problem though. It's the kids

[JulianPH]

Phooey said:

JulianPH said:

You know you are always welcome!

I'm just about to crack open a cold one and if you decide to pop over you can clear up any dog crap yourself!!!

Cheers mate!

Thx mate

It's not the dogs that are the problem though. It's the kids

Now I know why you have never invited me round to your house!

[forest172]

Hello

Can a limited company open an account with you?

[JulianPH]

forest172 said:

Hello

Can a limited company open an account with you?

Yes, but not using our on-line process.

The tax implications are also very different, some disadvantageous and some adventitious.

I would recommend you speak to Nik (or me) before doing anything.

Julian

[B9]

Hi Julian

I have a couple of company pensions with Scottish Widows which have performed well over the last few years

I'm trying to get my head around the 'fee' part using your exmaple above, but struggling to apply it to my circumstances and work out exactly how much a 1% fee is costing..

Let's assume my current pot is £50k and I contribute £1.5k per month via salary sacrifice (incl employer cont)
I'm seeing 8% returns and the fee is 1% (do we assume this is applied after the 8% interest?)
I'd like to draw down in 25 years.

My understanding is that it would play out per below

Year 1:
Starting fund £50,000
Contributions £18,000
Interest @ 8% (8% of the initial £50k and c.4% of the contributions pro-rata): £4,720
Total fund value at end of year: £72,720
Fee: -£727
End of year value after fee: £71,993

Year 2
Starting fund £71,993
Contributions £18,000
Interest @ 8% (8% of the initial £72k and c.4% of the contributions pro-rata): £6,479
Total fund value at end of year: £96,472
Fee: -£964
End of year value after fee: £95,508

Playing it forward 25 years I only get to £150k in fees, so struggling to see how people are paying £500k in fees in your examples, so worry that I've grossly underestimated what I'm paying..

Is there a loss of earnings or something I'm missing?

Thanks

[JulianPH]

Hi B9

My examples were only examples. The circumstances you put forward - £50k upfront and £1.5k a month - would equal (assuming a 7% average annual return before adviser charges) a loss of nearly a quarter of a million pounds.

You are not missing anything (such as loss of earnings). I think you are just not compounding the figures.

If you are seeing 8% average returns (and these will be after fees) then whilst not brilliant, these are not bad (in the slightest).

I assume you are getting an employer contribution on top of this, so I would suggest (on face value) that staying exactly where you are makes much better sense for you. If you would like a detailed analysis of this the please get in touch (it is free!).

If I have missed anything out here then please do pick me up on it and I will respond accordingly.

Cheers

Julian

[JulianPH]

Just to add (for B9 and others), 8% a year (after charges) is not in the slightest bit bad!

Yes, you could have done better, but equally you could have done much worse.

Nothing to regret there.

[Mattt]

Aren’t predictions in the industry run on 3/5/7% as low/med/high?

[JulianPH]

Hi Mattt, it's a very long time since I was involved in illustrations but the numbers you give sound about right these days.

I gave an example at 7% as this is the closest figure within that range to the reality of the last decade (for comparison) whereby our growth portfolio went into double digits for average annual returns and even our lowest risk defensive portfolio (80% gilts and bonds) averaged over 8% a year.

[SSG1000]

Hi Julian, could I get some more info on the new portfolios that you are launching, please?

Thanks
SSG

[joestifff]

Julian

I am not sure if my question is better placed here, or via PM.

Basically I have a pension (SIPP) i presume with Aegon from a previous employment. It is not large, but could buy a nice car.

I am in a new job, and the current pension is 5%/5%, however it is with the peoples pension. I am senior in the ranks, and I know I could convince my employer to go onto salary sacrifice, and probably up contributions, as I am starting to prove myself in this role.

I guess what I am saying, is would my money be better placed with yourself, with your guidance etc. I have no idea what funds I am in. I know Aegon is managed so am probably paying some horrific fees. They (Aegon) have been trying to convince me to go salary sacrifice, but with young children, and mortgages, and the general "scared of checking my own pension as I don't understand it" I have ignored it for a couple of years.

I am not rich, never will be, my pension will never be huge. But I just feel I am not getting value for money, and if you knew my line of work then i'm embarrassed to admit I do not understand stocks and shares and SIPPS.

I am happy to PM you details exactly of funds I am in and rates etc (if I can find them!!!!!!)

Thanks

Joe

[JulianPH]

joestifff said:

Julian

I am not sure if my question is better placed here, or via PM.

Basically I have a pension (SIPP) i presume with Aegon from a previous employment. It is not large, but could buy a nice car.

I am in a new job, and the current pension is 5%/5%, however it is with the peoples pension. I am senior in the ranks, and I know I could convince my employer to go onto salary sacrifice, and probably up contributions, as I am starting to prove myself in this role.

I guess what I am saying, is would my money be better placed with yourself, with your guidance etc. I have no idea what funds I am in. I know Aegon is managed so am probably paying some horrific fees. They (Aegon) have been trying to convince me to go salary sacrifice, but with young children, and mortgages, and the general "scared of checking my own pension as I don't understand it" I have ignored it for a couple of years.

I am not rich, never will be, my pension will never be huge. But I just feel I am not getting value for money, and if you knew my line of work then i'm embarrassed to admit I do not understand stocks and shares and SIPPS.

I am happy to PM you details exactly of funds I am in and rates etc (if I can find them!!!!!!)

Thanks

Joe

Hi Joe

With regard to your current workplace pension it will have its fees capped at 0.75% a year and the generous employer contributions are not something you would want to miss out on.

If you can negotiate salary sacrifice or increased employer contributions that would be the icing on the cake. Also it is worth looking at all of the investment options available to you within this scheme rather then simply sticking with the default, though the default may well be the best option as it will be a target-dated tracker (and the charges cap only applies to the default fund).

Regarding your Aegon pension from a previous employer I don't understand why Aegon would be trying to get you to go into salary sacrifice as you a no longer an employee within that scheme.

Do you mean that they are trying to convince you to salary sacrifice from you new employer into your old scheme. I can't see many employers being happy to make contributions into one pension and then salary sacrifice into another!

Please feel free to PM me with the details and I'll have a look at it for you. It may be old fashioned, lumpy and expensive, but equally it could be modern, lean and well performing with good flexibility.

If you can't find them don't worry, just let me know and I can get Nik to put in a request directly to Aegon.

Most of the time we do find people are in old fashioned, expensive and under performing pensions/funds, but it is not uncommon to find people who are in very good pensions where there is no point in moving away.

Of course the value of having a named financial professional available to you whenever your want to go over anything financial or assist your with planning (without having to pay advice fees) is something else that may influence your decision on what action to take (if any).

I look forward to hearing from you!