Discussion
I'm currently getting confused by all the different options available for long term investments.
Currently at the point where our short term emergency cash is at the level I'm happy with, so looking to put new money into something long term to pay of the mortgage in say 10 years time (currently have 20 yrs remaining).
I've looked at the typical MoneySavingExpert top picks, and fees seem to hover around the 0.5% level with additional trading fees. Went to see a financial advisor about our company pension, and brought this up. He had a fund option which averaged around 36% over 5 years up to and including 2015, and is wrapped in an ISA. This seems decent on the face of it, the only issue is the fees (5% in yr 1, then 2% after that).
Does this seem decent? I can't see myself being active in trading myself, so like the idea of leaving it to experts. I'm not after short term gains, I just want to beat the mortgage rate which is 2.84%, and will likely be lower when I remortgage in 6 months.
Currently at the point where our short term emergency cash is at the level I'm happy with, so looking to put new money into something long term to pay of the mortgage in say 10 years time (currently have 20 yrs remaining).
I've looked at the typical MoneySavingExpert top picks, and fees seem to hover around the 0.5% level with additional trading fees. Went to see a financial advisor about our company pension, and brought this up. He had a fund option which averaged around 36% over 5 years up to and including 2015, and is wrapped in an ISA. This seems decent on the face of it, the only issue is the fees (5% in yr 1, then 2% after that).
Does this seem decent? I can't see myself being active in trading myself, so like the idea of leaving it to experts. I'm not after short term gains, I just want to beat the mortgage rate which is 2.84%, and will likely be lower when I remortgage in 6 months.
fatandwheezing said:
He had a fund option which averaged around 36% over 5 years up to and including 2015, and is wrapped in an ISA. This seems decent on the face of it, the only issue is the fees (5% in yr 1, then 2% after that).
(1) Don't be deceived by past performance, and (2) yes, 5% is bonkers.Why are IFAs obsessed with funds? Why don't they advise on shares? Fewer layers of people to feed.
Simpo Two said:
(1) Don't be deceived by past performance, and (2) yes, 5% is bonkers.
Why are IFAs obsessed with funds? Why don't they advise on shares? Fewer layers of people to feed.
How are IFAs expected to do the level of research necessary to advice on individual shares?Why are IFAs obsessed with funds? Why don't they advise on shares? Fewer layers of people to feed.
5% is presumably bid/offer spread?
2% seems high but it depends exactly what it's invested in.
The different funds are split between different equities, property, cash and gilts, with the %ge in equities increasing with the higher risk profiles. They don't do a 100% equities option.
There's a 3% initial charge, and the remaining 2% is split 1.5% to St James' place, 0.5% to IFA.
My feeling is that it does seem high compared to other options, but I don't know the ins and outs of going with a web option.
There's a 3% initial charge, and the remaining 2% is split 1.5% to St James' place, 0.5% to IFA.
My feeling is that it does seem high compared to other options, but I don't know the ins and outs of going with a web option.
sidicks said:
How are IFAs expected to do the level of research necessary to advice on individual shares?
Well, there are bazillions of funds and they seem to be able to advise on those. Although actually perhaps not; in my experience they seem to have a handful of favourites and stay with those. I'm sure it's not beyond the wit of an IFA to know about some blue chip shares, dividend ratios etc. It is all 'finance' at the end of the day.fatandwheezing said:
I'm currently getting confused by all the different options available for long term investments.
Currently at the point where our short term emergency cash is at the level I'm happy with, so looking to put new money into something long term to pay of the mortgage in say 10 years time (currently have 20 yrs remaining).
I've looked at the typical MoneySavingExpert top picks, and fees seem to hover around the 0.5% level with additional trading fees. Went to see a financial advisor about our company pension, and brought this up. He had a fund option which averaged around 36% over 5 years up to and including 2015, and is wrapped in an ISA. This seems decent on the face of it, the only issue is the fees (5% in yr 1, then 2% after that).
Does this seem decent? I can't see myself being active in trading myself, so like the idea of leaving it to experts. I'm not after short term gains, I just want to beat the mortgage rate which is 2.84%, and will likely be lower when I remortgage in 6 months.
Not sure if I've missed something but what's wrong with just overpaying the mortgage? You'll "make" 2.84% tax-free (by not paying out of taxed income the interest on the amount you overpay) plus there will be the compounding effect of reducing the outstanding capital on which that interest accrues. There'll be no equity risk and presumably no fees so long as your mortgage allows overpayments.Currently at the point where our short term emergency cash is at the level I'm happy with, so looking to put new money into something long term to pay of the mortgage in say 10 years time (currently have 20 yrs remaining).
I've looked at the typical MoneySavingExpert top picks, and fees seem to hover around the 0.5% level with additional trading fees. Went to see a financial advisor about our company pension, and brought this up. He had a fund option which averaged around 36% over 5 years up to and including 2015, and is wrapped in an ISA. This seems decent on the face of it, the only issue is the fees (5% in yr 1, then 2% after that).
Does this seem decent? I can't see myself being active in trading myself, so like the idea of leaving it to experts. I'm not after short term gains, I just want to beat the mortgage rate which is 2.84%, and will likely be lower when I remortgage in 6 months.
Jockman,
I thank you for those kind words sir.
Fat-and..
Assuming for one minute that investing in a sticks and shares ISA *is* the right thing for you (could you do other better things with the money?), consider something like Robo advice. It's not for everyone, but it's a halfway house option for those who don't want or need a full fat service, but who don't either, want to go it alone. The levels and types of service differ.
I say this, not to push my service, but to give you an idea of what to look for.
My ongoing annual cost is in the region of .8% pa with an initial cost of .5%. There's nothing else to pay at all, unless you want a statement every six months (that's a fiver). The cost includes funds, rebalancing, discretionary management etc. By contrast, clients who want to try and dip in and out if the market, try to time it etc, can choose others who offer that (and offer it far better than me).
This is a very recent most definitive report yet, looking at the subject.
http://langcatfinancial.co.uk/D2CGuide2016/COME%20...
I thank you for those kind words sir.
Fat-and..
Assuming for one minute that investing in a sticks and shares ISA *is* the right thing for you (could you do other better things with the money?), consider something like Robo advice. It's not for everyone, but it's a halfway house option for those who don't want or need a full fat service, but who don't either, want to go it alone. The levels and types of service differ.
I say this, not to push my service, but to give you an idea of what to look for.
My ongoing annual cost is in the region of .8% pa with an initial cost of .5%. There's nothing else to pay at all, unless you want a statement every six months (that's a fiver). The cost includes funds, rebalancing, discretionary management etc. By contrast, clients who want to try and dip in and out if the market, try to time it etc, can choose others who offer that (and offer it far better than me).
This is a very recent most definitive report yet, looking at the subject.
http://langcatfinancial.co.uk/D2CGuide2016/COME%20...
Simpo Two said:
sidicks said:
How are IFAs expected to do the level of research necessary to advice on individual shares?
Well, there are bazillions of funds and they seem to be able to advise on those. Although actually perhaps not; in my experience they seem to have a handful of favourites and stay with those. I'm sure it's not beyond the wit of an IFA to know about some blue chip shares, dividend ratios etc. It is all 'finance' at the end of the day.1. If your IFA is advising on individual shares - run a mile.
2. If your IFA is suggesting 5% then 2% - run a mile.
3. If your IFA has anything to do with a company whose name involves a Place and someone who has been canonised - run a mile.
Even if the IFA had managed to double the available time to him by making a day last 48 hours, and had some history/expertise picking stocks... you should still be looking at a diversified portfolio rather than an eggs-in-one-or-two-baskets strategy, IMHO.
And I research individual stocks all day every day (twice on Sundays) - it's quite hard.
walm said:
My rules of thumb:
1. If your IFA is advising on individual shares - run a mile.
2. If your IFA is suggesting 5% then 2% - run a mile.
3. If your IFA has anything to do with a company whose name involves a Place and someone who has been canonised - run a mile.
1. If your IFA is advising on individual shares - run a mile.
2. If your IFA is suggesting 5% then 2% - run a mile.
3. If your IFA has anything to do with a company whose name involves a Place and someone who has been canonised - run a mile.
I could get fit following your advice.
I appreciate sidicks will roast us but spot on !!
walm said:
Simpo Two said:
sidicks said:
How are IFAs expected to do the level of research necessary to advice on individual shares?
Well, there are bazillions of funds and they seem to be able to advise on those. Although actually perhaps not; in my experience they seem to have a handful of favourites and stay with those. I'm sure it's not beyond the wit of an IFA to know about some blue chip shares, dividend ratios etc. It is all 'finance' at the end of the day.1. If your IFA is advising on individual shares - run a mile.
2. If your IFA is suggesting 5% then 2% - run a mile.
3. If your IFA has anything to do with a company whose name involves a Place and someone who has been canonised - run a mile.
Even if the IFA had managed to double the available time to him by making a day last 48 hours, and had some history/expertise picking stocks... you should still be looking at a diversified portfolio rather than an eggs-in-one-or-two-baskets strategy, IMHO.
And I research individual stocks all day every day (twice on Sundays) - it's quite hard.
An IFA is not a stockbroker (& neither is a stockbroker an IFA). Both fall under completely different regulatory/licensing rules.
A good IFA will know about blue chip shares, dividend ratios etc, but will be forbidden from advising on them due to licensing rules as set out buy the regulator.
And it's not "all finance at the end of the day" - your accountant will not be offering advice on shares either, in the same way as I do not compile annual accounts & audit them for clients.
darreni said:
Walm is spot on.
An IFA is not a stockbroker (& neither is a stockbroker an IFA). Both fall under completely different regulatory/licensing rules.
A good IFA will know about blue chip shares, dividend ratios etc, but will be forbidden from advising on them due to licensing rules as set out buy the regulator.
And it's not "all finance at the end of the day" - your accountant will not be offering advice on shares either, in the same way as I do not compile annual accounts & audit them for clients.
Good points, I initially qualified as a stockbroker, the phrase 'broker' emphasises the sales aspect of it. I was glad to walk away and become an IFA. Advisers aren't stockpickers; for some clients, that mindset works - for others, it doesn't. I like the longtermism of strategic advising; there's no constant imperative to churn at every turn. An IFA is not a stockbroker (& neither is a stockbroker an IFA). Both fall under completely different regulatory/licensing rules.
A good IFA will know about blue chip shares, dividend ratios etc, but will be forbidden from advising on them due to licensing rules as set out buy the regulator.
And it's not "all finance at the end of the day" - your accountant will not be offering advice on shares either, in the same way as I do not compile annual accounts & audit them for clients.
Thanks for all the replies. Looks like a bit of a duff deal then, .
I agree that paying off the mortgage is the safe thing to do, but I'm looking for a "smarter" option which might reduce the mortgage term faster. Completely forgot about the car loan I have a year left on, so Ill tackle that first, then work out what to do.
Ginge R - thanks for the link, I'll have a look at that. Might drop you a PM in the near future if that is OK?
I agree that paying off the mortgage is the safe thing to do, but I'm looking for a "smarter" option which might reduce the mortgage term faster. Completely forgot about the car loan I have a year left on, so Ill tackle that first, then work out what to do.
Ginge R - thanks for the link, I'll have a look at that. Might drop you a PM in the near future if that is OK?
OP, from what you are saying, it seems you are not aware that St James Place are not IFAs.
They are not independent. They are an extortionately expensive tied proposition with a well resourced marketing department and cleverly constructed brand.
You can you get proper independent advice for less - don't judge the whole market by your experience thusfar.
They are not independent. They are an extortionately expensive tied proposition with a well resourced marketing department and cleverly constructed brand.
You can you get proper independent advice for less - don't judge the whole market by your experience thusfar.
TFP said:
OP, from what you are saying, it seems you are not aware that St James Place are not IFAs.
They are not independent. They are an extortionately expensive tied proposition with a well resourced marketing department and cleverly constructed brand.
You can you get proper independent advice for less - don't judge the whole market by your experience thusfar.
Indeed.They are not independent. They are an extortionately expensive tied proposition with a well resourced marketing department and cleverly constructed brand.
You can you get proper independent advice for less - don't judge the whole market by your experience thusfar.
They recently quoted us a 3% annual fee on our 3 SIPPs worth £400,000 each.
£36,000 pa.
We currently pay 0.5%.
£6,000 pa.
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