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A couple of long term investments are about to mature.Banks adviser will reinvest but the charge of 2.75% of the 50k plus possibly some commission on top seems a bit steep.I'm looking at stocks and shares isas as i already have a cash one, and topping up my private pensions.The isas would be ready made funds,just the risk level to pick.Not looking to touch the money for up to 8 years.Warren Buffets to the forum please.
*yawn* Coke and Hookers
create your own share portfolio.....lots of advice out there on best options. Some risky some not so risky. At least it would be interesting. 8)
Only worth putting money into pension if you can get the up front tax benefit, otherwise put as much as you can into ISAs (you've got this year's allowance and soon, next year's too). If you're married, make sure you use their ISA allowance too.
Never, ever invest via a bank. The charges are astronomical (2.75% ffs, it should be no more than 0.25%!) and the performance is almost always poor.
If you're a higher rate tax payer then stick it in your pension now, as you'll get 40% tax relief (20% now and the rest when you do your tax return).
If you're a basic rate tax-payer wait until after the Budget, as it sounds like the chancellor may change the tax relief rules.
I'm building a monorail between Askam and Ireleth, email inprofile
a dictionary might be a sound investment.
Investment platform like hargreaves landsdown? My other half has recently invested (a stocks and shares ISA) with them seems straightforward.
http://citywire.co.uk/best-investment-funds?section=money
http://www.hl.co.uk/funds/help-choosing-funds/wealth-150
Definitely use the cash to top up pension if you have 40% relief (and budget for it for next year too, maybe you can backdate, I'm not sure of the rules). Big yes to self-investing in shares, it's easy and the "experts" really don't know anything anyway, or else they would have made millions and retired. Weak efficient market hypothesis is all you need - just choose a random set of companies you like the look of, and keep your fingers crossed.
Incidentally, it's not so clear to me that the tax advantages of an ISA are worth the extra costs. On 50k you won't be getting much in the way of dividends and are unlikely to be bothered by CGT.
:boggle: random companies, keep fingers crossed.
To my mind the advantage of an ISA is taking away the hassle of GCT in the future if one of your picks goes ballistic, also removes the paperwork for tax return. Which is handy in my book.
I would tend to steer clear of single companies - mens you don't get the gains but unlikely to pick something like Rolls Royce or a retail outfit that might go bust..
Pick a handful of decent income/growth Investment Trusts or Open funds - within out outwit a pension - and save the grief of single equities..
You're swinging in the dark investing in the stock market IMO.
If any VCT's are raising at the mo I'd lump in with them. Tax relief on investment (reducing you're income by the amount invested), and interest free dividend income (up to 9% by some managers) and no CGT on disposal. Downside is there is very little free float, but if you don't need immediate access it's not really a problem.
If you're feeling a little bit more adventurous maybe have a look at EIS or SEIS, or even social investment(SITRs). You can have a blended portfolio, or if you really like the look of one, lump it all in.
The other option I quite like the look of at the mo is lending platforms. Most good ones have an insurance policy against default, and come April rumour has it that they will be eligible for an ISA wrapper.
HSBC FTSE 250 Index Fund, 0.18% management fee, beta=1.
Not screwed by heavyweight commodities/Oil stocks from the FTSE100.
Can be bought in an ISA or out.
Solid long term exposure, at minimal cost.
red = FTSE250 Index
black = UK All share
Dig big pond in back garden and line with strong plastic.
Buy oil and fill pond.
Cover with tarps etc.
Wait.
If any VCT's are raising at the mo I'd lump in with them.
Very high risk, funds do fold and the investors lose everything. They should only make up 5% of a portfolio and only for the brave.
Diversity. I wouldnt be sticking the whole lot in a single fund.
Mix of equity funds, some bonds probably too.
ISA / Pension depends alot on your existing tax bracket & how quickly you want to access it.
Rumours are that GO is considering removing the 40% tax relief for pension contributions from April. So if that applies to you it might be prudent to stick some in a Pension & gain the extra releif while it lasts?
I looked at VTCs a while back, the up front tax relief (30%?) sure is tempting... however this is usually surreptitiously bled off via a complex + usurious fee structure during the time you're locked into the investment (5 years?), after which you're left with an illiquid investment trading at a big discount to it's dodgilly-calculated NAV.
There are only one or two VCT managers worth bothering with, and they've not been fund-raising for a while. So draw your own conclusions about VCTs!
Regarding platforms, HL have a glossy site but their fees are a bit strong. Cavendish Investments piggyback on Fidelity's Fundsnetwork platform for 0.25% (on top of any fund OCF), and III are the most cost-effective for SIPPs - see [url= http://www.telegraph.co.uk/finance/personalfinance/investing/isas/10611058/Tables-cheapest-fund-supermarkets-for-Isa-investing.html ]HERE[/url]
IIRC you can carry [s]back[/s] forward pension relief for 3 years, so I'd use up any 40% allowance first over that period.
Then I'd use up this years ISA allowance (£15k) and in two months time I'd use up next years ISA allowance (another £15k) both in a stocks and shares ISA and either pick a couple of funds or just use a tracker...
I would invest in a S&S ISA. As above you have missed the tax benefit of investing in pension so unless you can top up an outstanding company pension I wouldnt bother. Plus if your pension is very good you will be over the tax threshold when you retire and paying it back in tax! At least income from an ISA is tax free.
You should diversify a bit but remember funds are already a diversified package of shares anyway. I can recommend Fundsmith and all of my other funds have provided miserable performance only Fundsmith has provided strong growth over the last 2 yrs.
I use III btw for managing my ISA/SIPP they are quite good
Very high risk, funds do fold and the investors lose everything
Most of the good VCTs - Puma, Northern, Downing etc have been going for donkeys.
I looked at VTCs a while back, the up front tax relief (30%?) sure is tempting... however this is usually surreptitiously bled off via a complex + usurious fee structure during the time you're locked into the investment (5 years?), after which you're left with an illiquid investment trading at a big discount to it's dodgilly-calculated NAV.There are only one or two VCT managers worth bothering with, and they've not been fund-raising for a while. So draw your own conclusions about VCTs!
Fair point, I'd probably agree (though most of the funds will do buy backs IIRC). Having done some more reading, I'd wait for the new rules affecting VCT's to flush through
You won't be able to put more than £15k into an ISA wrapper during the same year, but could put £30k in a short time period: £15k now and £15k after April. That would leave £20k to invest otherwise, or pass on to your partner to do same with ISAs in their name.
Most of the good VCTs - Puma, Northern, Downing etc have been going for donkeys.
Doesn't mean their funds don't fold, or turn a profit. One of the VCs who invested in the Company I work for, had their Tech fund fold completely and wiped out all the investors. The fund management company is still going as are their other funds.
I've been thinking along similar lines, but can't get away from the idea of simply paying off against the mortgage. It's currently costing 2.5%, so seeing as I have a marginal tax rate of 45% on interest, anything not in an ISA would have to earn ~4.5% [i]after[/i] management fees just to break even and that's far from guaranteed. An ISA wrapper obviously helps but still not guaranteed. If I need to get the cash back again I can re-borrow it from the overpayments I've made so in that way it's more flexible than putting it into a pension. And absolutely zero risk, obvs.
Apart from that, I'm thinking some kind of tracker (FTSE250 probably) with minimal fees would be a safe bet.
The vast majority of money raised for VCTs has very little to do with VCs despite the government's best efforts.
Doesn't mean their funds don't fold, or turn a profit. One of the VCs who invested in the Company I work for, had their Tech fund fold completely and wiped out all the investors. The fund management company is still going as are their other funds
VCs are not the same as a VCT. VCTs are unlikely to have individual 'funds' they can fold. Out of interest, what was the name of the fund?
The vast majority of money raised for VCTs has very little to do with VCs despite the government's best efforts.
Quite.
IMHO the VCT talk isn't really relevant or appropriate for the OP.
Previously, I didn't really mean "random" as in pick with a pin, more like varied, ie a deliberately diverse spread. 10 blue-chips, 5k each, is unlikely to go far wrong. Bear in mind that investments can go down, don't do it if your future happiness depends on knowing you'll absolutely definitely get 50k back, but if you want to maximise your chances of a decent return, you could do a lot worse.
(My relevant experience: I have done this and retired on it, obviously I accumulated a lot more than 50k though.)
I'd pay the mortgage down or off, plus any other debts. It was one the best days of my life when we paid off the mortgage.
Pensions are an expensive fiddle in my opinion, am I right with the following?
You put £250k in a pension, you die say 5 years after you retire, your wife or nominated other gets half your pension, she/he dies say a year later, the pension company keeps the rest of your money. Is this how it works?
Also you get tax relief putting money into pensions now but they tax it when you draw it don't they?
You pay tax on what you get out, but probably not at 40%, cos your income won't be that high. That's the massive perk of pensions, especially for higher rate taxpayers. Also, these days you can take the money out when you retire and do what you want with it, you don't have to buy an annuity so it doesn't necessarily disappear when you die. OTOH if you blow it all on c&h you'll have nothing left to live on, you don't have that risk with an annuity.
I'll invest it in forex for you. I guarantee to give you 95% of all profits.
Mike P is right.
do not use your bank or any bank. just Don't!
either SIPP or ISA depending on age, needs and tax rates.
CS Direct is another good one and much cheaper than HL.
my tip for a winning yet relatively reliable fund is Fundsmith. well worth reading up for 15 minutes.
paying off mortgages and other debts is another option of course.
Lego. Average return on an out of print set is 12% per year
Some myth busting:
Trackers are cheap for a reason - good in periods of upward markets, not so great in volatile times like now. Check out what the FTSE100 has done in the last year - probably negative.
Investing in stocks and shares is not easy. The experts have to sit some serious degree level exams to provide advice on this. Your average bank adviser will not have the permissions to do so. You're probably thinking of an investment ISA which allows you to invest in a fund.
A beta of 1 is not a good thing! It simply means that your investment is just exactly as risky as its benchmark - if that benchmark is up and down like the proverbial knickers, your investment will be too.
I agree with the point on charges, I'd expect to pay no more than 1% initial charge these days and I'd not use a bank adviser as they are restricted to one provider usually.
You need to know what your attitude to risk is and capability for loss. A good adviser will work this out and ensure you're invested in a fund or funds which match this attitude. If you pay for ongoing advice (usually 0.5%pa) they'll also check this periodically to ensure that it remains within your particular bracket of risk.
Fund performance is only one part of the overall decision - you need to understand how the fund managers will make decisions in particular scenarios and what that will do for your investment. The alpha, beta, sharpe and std deviation will give you some idea of how the fund is likely to perform in periods of stress - but you need to know what they mean.
One last point - it may be a good idea for 40% tax payers to make payments up to the maximum of £40k pa (for those who earn less than £150k) before the budget in March as there are a lot of commentators who reckon higher rate relief is going in the budget.
My guess is that juizm is an IFA
I'll say it again, bricks and mortar.
Safe as houses!
A follow up to @Stoner's post, yes these sort on tracker funds at low fees are thr best way imho to invest in the "stock market". You might want to consider some European and Asian funds too. That being said Asia looks weak and Europe could react badly to a Brexit
Pensions. Difficult area as they've been a target for the tax man for years and who is to say being able to take a lump sum will remain in place ? If you are a higher rate tax payer and don't mind locking the money up for longer then a payment into a scheme makes sense and with a SIPP you can do the same low fee index tracker
@mefty no I'm not an IFA but I do have the qualifications that would enable me to invest stocks and shares so know what it takes and understand the markets etc. I also know a lot of advisers whether IFA or bank based don't understand about funds and their behaviour, so if these guys who do it every day don't really get it, how would the average man in the street claim to understand it.
You can't buy a fund based on performance and price is not everything. You need to work out the value element, I.e. What's important to you and how does it fit with your objectives, then how much are you left with after charges. I would be very wary of investing in a tracker fund when the markets are behaving as they are currently. Too much irrational behaviour affecting prices IMO.
There is a reason why it's illegal (wi a jail term if convicted) for unqualified people to provide advice.
Invest in something that you know about or is close to you. BTL House, classic car etc. Funds, shares etc are all a massive punt in a complex and rigged game.
Interested in Northwinds suggestion. So what's my Technic Unimog, unopened, going to make? Can I put in my notice Monday? Considering bulk purchase of Ghostbusters and Doctor Who sets to spread the risk a bit.
Its the upfront charge of 2.75%,or a minimum £960,that i'm unhappy with.
The bank already probably receives commission each year from my ongoing investments and i receive no advice or reviews.
The adviser recommended opening a new pension fund even though i have ones running that i could add to.I can only place £2880 in this and it would cost me the £920.
To make it easy for myself i could just add to the bonds and open ended investments i have for no cost,but they are not in Isa wrappings.I do really want a little bit higher return than the present cash Isa's but also to make use of my allowance.
I also know a lot of advisers whether IFA or bank based don't understand about funds and their behaviour, so if these guys who do it every day don't really get it, how would the average man in the street claim to understand it.
Which begs the question, why pay 0.5% if many of them are incapable and how easy is it to find one who isn't? The ones I have met have been pretty unimpressive.
I have less of a downer that you on trackers, I think very few people consistently time the market, you hear alot about superstar fund manager's successes but not their failures - it is a bit like hedge funds - you hear about the super successful ones but hardly anyone mentions the many that get wound up each year.
Funds, shares etc are all a massive punt in a complex and rigged game.
Not really, long term (10+ years) they have always done very well and will almost certainly continue to do so. As long as you don't mind the short term ups and downs and accept that every few years there will be a big correction.
That's a crazy charge joeegg. You really are better just doing it yourself. It's not as if the charges actually get you anything in terms of performance, let alone performance guarantees.
Good article on shares vs cash vs property:
FWIW >95% of my savings are in stocks and shares, it's my pension, so I only care about it's value in 20+ years time.
What mefty said.
I wouldn't trust an IFA to time a boiled egg properly let alone trade out volatility across a fund.
Long term tracker exposure excl distorted markets like the 100 are a reasonable position to take for non-geographic diversity.