Corporate investments
Discussion
I have a relatively large sum of cash in my business account. My wife and I max out pension contributions and ISA’s but our Financial advisor is recommending a corporate investment. Do most people running a business do these when they have surplus cash in the business account?
He wants 3.5% initial and then 1.5 management fee which seems very high to me.
Anybody doing something similar and has it worked well for you?
Many thanks
He wants 3.5% initial and then 1.5 management fee which seems very high to me.
Anybody doing something similar and has it worked well for you?
Many thanks
Chipper said:
I have a relatively large sum of cash in my business account. My wife and I max out pension contributions and ISA’s but our Financial advisor is recommending a corporate investment. Do most people running a business do these when they have surplus cash in the business account?
He wants 3.5% initial and then 1.5 management fee which seems very high to me.
Anybody doing something similar and has it worked well for you?
Many thanks
Same here. Waiting for Intelligent Money to respond to emails.He wants 3.5% initial and then 1.5 management fee which seems very high to me.
Anybody doing something similar and has it worked well for you?
Many thanks
So much depends on how much money is involved, risk profile, structure, and what form the “corporate investment” takes as to whether it’s worthwhile.
I get the impression from the OP that he’s looking at the company putting money into funds? A relative does something similar with his spare company cash, putting it into funds and equities, but after loaning it into a separate company with appropriate formation docs/classifications to allow it to invest. He does it this way in order to time shift taking cash out of his business, effectively building another pot for when he wants to ease off working. He’s a tight git so I’d be stunned if he was paying the sort of fees the OP mentions.
There are other ways of doing it (and other forms of investment) if you have a holding company structure in place but few people seem to incorporate in this way when they first start up. Also, if you’re not seeking large returns your bank might offer fixed term or money market products.
Be careful whose money goes into any investment vehicle (remembering the difference between personal money and company money) as you don’t want to accidentally find yourself in regulated territory.
I get the impression from the OP that he’s looking at the company putting money into funds? A relative does something similar with his spare company cash, putting it into funds and equities, but after loaning it into a separate company with appropriate formation docs/classifications to allow it to invest. He does it this way in order to time shift taking cash out of his business, effectively building another pot for when he wants to ease off working. He’s a tight git so I’d be stunned if he was paying the sort of fees the OP mentions.
There are other ways of doing it (and other forms of investment) if you have a holding company structure in place but few people seem to incorporate in this way when they first start up. Also, if you’re not seeking large returns your bank might offer fixed term or money market products.
Be careful whose money goes into any investment vehicle (remembering the difference between personal money and company money) as you don’t want to accidentally find yourself in regulated territory.
To be clear, I am only offering my experiences and these are from some years ago. Things may have changed but I imagine the principles hold the same.
If you are investing via a business, it is likely that you will be considered a sophisticated investor and if anything goes wrong you're on your own, whoever promotes this structure will ensure that this is made clear. The chances of suing for poor advice are minimal and very expensive, the bar to proving liability will be high.
If they are guaranteeing a high return ask how because that's a red flag
The most likely issue is the ongoing cost with these structures, a bill for £200 here and an email for £100 there soon add up or transaction costs.
If the money is a limited company but the structure is deemed to be for your benefit, you've got potential directors loan issues etc.
Think carefully and investigate because in times of low returns, promoters whether intentionally or not skip over the detail and just try to sell a product.
The nightmare scenario would be a capital loss and a tax bill
If you are investing via a business, it is likely that you will be considered a sophisticated investor and if anything goes wrong you're on your own, whoever promotes this structure will ensure that this is made clear. The chances of suing for poor advice are minimal and very expensive, the bar to proving liability will be high.
If they are guaranteeing a high return ask how because that's a red flag
The most likely issue is the ongoing cost with these structures, a bill for £200 here and an email for £100 there soon add up or transaction costs.
If the money is a limited company but the structure is deemed to be for your benefit, you've got potential directors loan issues etc.
Think carefully and investigate because in times of low returns, promoters whether intentionally or not skip over the detail and just try to sell a product.
The nightmare scenario would be a capital loss and a tax bill
Gassing Station | Finance | Top of Page | What's New | My Stuff