Wanting to invest a wadge of money .2 choices atm as i'm ancient i can stick it in a fixed rate account with Saga .Using our ISA allowance we can get 3.83% for 3 years .Or an Independent Financial Adviser is trying to persuade us that we can do much better with a stocks and shares ISA .We have already been through a profile and come out as VERY cautious investors so what he is suggesting is in line with our view of risk .He's coming back tomorrow with more details .
From what he has told us we can access this money any time COULD be looking at at least double the return of the Saga product .So do we aim higher to maximise our return or play safe with Saga ?Like the title says 5 years down the line we could either be patting ourselves on the back or kicking ourselves for not going for it .

Well depends what he suggests you invest in – probably relatively safe Unit Trusts or similar rather than individual companies. A way of looking at it is could you afford to lose it all but that's unlikely if risk is spread. Of course he'll make more money from you if you don't get a savings account…! Indeed he shouldn't make anything from you if you go for a cash ISA.

Stability is the key.

I would go with the Saga thing.

Why not spread your risk and put some in both if your not comfortable with having all your eggs in one basket ❓ Or if you are not comfortable with the advice the IFA has given you (which if you were you wouldn't be asking on here) seek a 2nd opinion from another IFA to see what they think.

Does the IFA that you have spoken to have access/knowledge of the product you are being offered via SAGA and if so what are his views on it ❓

How is the IFA being paid, are you paying him, is he taking commission from the product provider or a mixture of the two. If your paying him then he might feel differently about the SAGA product than if he's just commission only if SAGA are not a provider/product he can access ?

All points to think about but in the end its your money and alot of it is down to gut feeling "past performance is not a guarantee of future returns" 😉

Yeah i believe that our investment would be spread pretty well .He showed us a long list of companies and percentages of money went where .Get the nuts and bolts of it tomorrow .We had our fingers burnt the end of last year with one investment .Fortunately we got our money back now wife is sensing deja vu saying if something sounds too good to be true it probably is .

Why does it sound too good to be true?

Depends how long you intend to invest for? I wouldn't recommend a stocks and shares based investment for anything less than 5 years minimum so if you have a 2-3 year timeframe i'd stick with banks and building societies. I'd suggest he'd be leaning towards fixed interest investments which are generally lower risk than share based but still carry the risk that your capital will not be safe. Having said that, you'll easily find funds that will yield you over 6% (tax free in your ISA's) which is far better than the cash ISA rate. With the benefit of hindsight we would all have invested in March 09 and watched the profits roll in but then no one has the crystal ball you're after.

My personal feeling is that we have turbulent times ahead and there are still many problems with the world economy. I'd be looking more globally to find better growth prospects but as your risk profile is extremely cautious then it's probably not for you.

I've always said to clients that if you are the sort of person who will lie awake at night worrying about your investments then they are not for you. You have to be willing to accept a capital loss if you want the potential for extra capital gain. Even the most cautious funds suffered badly in the recent troubles. As Bigsi said, maybe try a bit of both with erring to the cash side more.

Why does it sound too good to be true?
Well i guess the level of potential return against the Saga example .Which is actually about the best out there at the moment .
I suppose it would be a product that is being managed regularly to maximise return and as such is a different type of investment than a fixed rate deal .

Use the money to buy a below market value property and rent it for the next few years. Predictions suggest that property will be 20% higher by the end of 2013 than it currently is now. If you buy below market value, you will be up from the start and will also have a nice comfort zone should something negative happen to the property market when you come to exit.

Genuine example. A client of mine has just bought a property for £69k that was valued last week by a RICS surveyor at £99k. He already has tennents in there paying more than his mortgage will cost. Even if property doesn't increase in value by 1p over then period of his ownership, he'll still be up. If property fall, he has a 30% buffer.

To be fair to the IFA he has emphasised the importance of us being comfortable with whatever we choose and as such hasn't tried to push us to much .We have also been told that if it is going to cause us sleepless nights then it's not for us .
We've already got an investment bond with Aegon/Scottish Equitable that is seperate .So maybe Saga for the rest ?

squin it aint quite that much money !!!

Fair enough 😉

That example above cost him less than £7k upfront and in 6 months time it won't have cost him a penny. I won't bore you with how, but it's not too complicated.

So what happens if the property market crashes again and if interest rates rocket? Property is great when it works well but plenty of people have had their fingers burnt over the last few years.

All rosy at the moment but the downside is if the tenants move out and replacement ones can't be found, mortgage costs go up and house values fall he could be stuck with an unsellable extra property costing him a lot of money every month in mortgage payments and running costs.

Not knocking it completely as it will work for plenty of people but again, i always point out the potential downsides. Final thing is bad tenants who can make the whole scenario into a nightmare.

I have been using an online share broker for buying and selling. I have been following one or two companies and have made a few quid out of it but you could lose cash also. i like being in control of my own cash rather than the smarmy types that sold us our endownments etc 20 years ago. Apologies to anyone working as a financial advisor honestly not trying to have a pop.

MrTall – Member
So what happens if the property market crashes again and if interest rates rocket? Property is great when it works well but plenty of people have had their fingers burnt over the last few years.

All rosy at the moment but the downside is if the tenants move out and replacement ones can't be found, mortgage costs go up and house values fall he could be stuck with an unsellable extra property costing him a lot of money every month in mortgage payments and running costs.

Not knocking it completely as it will work for plenty of people but again, i always point out the potential downsides. Final thing is bad tenants who can make the whole scenario into a nightmare.

All valuable points.

If as per my example you bought today at 30% below today's value, you'd have to see an extra 30% crash off of the 20% that we have already experienced. Not impossible, but we are all **** if that happened in more ways than just the value of our houses.

Rental voids are a risk, but the old saying is that you make money when you buy property (not sell) and buying the right property in the right area helps to reduce the risk of rental voids.

One of the main reasons why property should be a better bet is due to the class of investment, we live in houses and the mass population will always need houses.

My experience of a stocks and shares isa is not good.
5 years ago I invested 2,500 with Fidelity.
Year 1. 2,700
Year 2. 2,400
Year 3. 2,100
Year 4. 1,700
This year were back up to just under my initial investment.
So the info given about the possibility of loosing money is for real.
I have to admit that during the last year my 1,700 investment has grown very well.
So with that I intend to cash the bloody thing and buy a new bike and enjoy myself while I still can and sod tomorrow 😉

Buy some gold, will perform better than trackers or ISAs.

An IFA will help you invest your money till it's all gone :o)

Why does it sound too good to be true?
Well i guess the level of potential return against the Saga example .

Well yeah potential – means little! A lottery ticket has the potential of making me a millionaire….

Higher the risk, higher the potential reward – and the potential loss.

If as per my example you bought today at 30% below today's value, you'd have to see an extra 30% crash off of the 20% that we have already experienced. Not impossible, but we are all **** if that happened in more ways than just the value of our houses.

But surely you can't just head out and buy a house at 'below market value'. 9 times out of 10, if someone is willing to sell it to you for 30% less than what you think is market value, there is going to be something wrong with it that means it is worth 30% less than you think. And a surveyor who you are paying will put pretty much any price you ask them on it, RICS or not.

relatively safe Unit Trusts or similar

Only 'relatively' safe. Like if you'd bought some in 2003, you wouldn't be a happy bunny now (£2000 turned into about £1000 in my experience, although it is now coming slowly back up again, almost as much as the original investment now).

Joe

joemarshall – Member

If as per my example you bought today at 30% below today's value, you'd have to see an extra 30% crash off of the 20% that we have already experienced. Not impossible, but we are all **** if that happened in more ways than just the value of our houses.

But surely you can't just head out and buy a house at 'below market value'. 9 times out of 10, if someone is willing to sell it to you for 30% less than what you think is market value, there is going to be something wrong with it that means it is worth 30% less than you think. And a surveyor who you are paying will put pretty much any price you ask them on it, RICS or not.

You can buy BMV property, not normally via usual routes such as estate agents, but occasionally they have them. BMV properties are found using different methods.

Not true that a BMV property has to be distressed. In the last 2 weeks alone, I have helped 2 seperate clients buy BMV property and each time each property didn't need a thing doing to it, not even re-decorating. One 30% below market value and the other 25% bmv. BMV properties come via all sorts of routes.

Wrong re surveyors when it is the mortgage company on remortgage that they are working for. A RICS surveyor won't value a property at whatever price you choose. Even if you are paying a surveyor, they're not going to fabricate figures to the extent of £30K above on a £70k property.

elatively safe Unit Trusts or similar

Only 'relatively' safe. Like if you'd bought some in 2003, you wouldn't be a happy bunny now (£2000 turned into about £1000 in my experience, although it is now coming slowly back up again, almost as much as the original investment now).

Hmmm…you've done rather badly then.

April 2003 FTSE 100 was around 3,800 and now it's around 5,300 not a great return but still positive – about 5% annualized growth I make that.

Have a look at a 20-year Nikkeichart before putting too much in shares. Japan went through a banking crisis that left the country with a high level of debt compared to GDP. The debt has continued to grow while the economy has stagnated. I suspect Europe will do the same for the next 20 years.