There is normally a 1% performance fee with the funds. But it is worth paying this if you are getting a very good manager. The Total Expense Ratio (TER) will give you a good idea how expensive it is.
What to Do with £5k or what to invest it in
- Thread starter Stinky
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There is normally a 1% performance fee with the funds. But it is worth paying this if you are getting a very good manager. The Total Expense Ratio (TER) will give you a good idea how expensive it is.
I thought we were having a debate instead of dismissing other people's opinions by calling them rubbish. Perhaps you should be more modest and if you don't agree with what I say then put your argument forward so that at least I can learn?
I stand by my position that diversifying a 5k sum into multiple stocks/instruments will have too high transactional costs to make any decent return feasible.
The lowest brokerage costs I know of to buy shares are about £7 per trade + 0.5% stamp duty. If someone was to diversify 5k then we are talking of quite a few trades, which would be around 10 buys as an absolute minimum (portfolio diversification theory suggests circa 30 as an optimum number to de-risk your portfolio). 10 different transactions to buy and then sell = £7x10 + £7x10 + £25 = £165. That is about 3.3% cost on his capital. So he has to make a return well over 6.15% (assumind a savings account interest rate of 2.85% that can be had if you shop around) just to get his capital back.
Now can you explain to me why am I talking rubbish and I have no idea what I'm talking about?
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Then you're opening yourself up to a world of hurt when it comes to exiting the funds, each of which will I'm sure have a required duration or participation that breaking will expose you to early exit penalties. Splitting 5k into £250 blocks then makes extracting your money a right bloody palava in administrating it all.
Index tracking ISA is bloody simple to do and requires no effort, has ZERO cost. I'm guessing you're an IFA or something, great, but proving that you can invest in a wealth of funds, unit trusts and OEICs just for the sake of it isn't particularly useful. OP said he wasn't great with money, how the hell is messing around with these funds making his predicament any easier??
The kind of funds TheDean is suggesting have a typical initial charge of 5%xCapital + 1.75% annual management fee. Which means you need more than 6.75% return to make any profit at all (tie-in period excluded, nevermind that). Not an easy return by any means. I'm not sure why TheDean is so passionate about them, I can only assume he has had good returns with them but that can be misleading for the future.
EDIT: I forgot, the TER is typically 2.5% (not 1% as TheDean mentioned) which means that you need to consider that too, as it will be subtracted by any returns (but it will typically include the management fees). This means that my 6.75% figure is actually 7.5%.
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Because passive funds returns have outperformed active funds' (once you take fees into consideration) any way you look at it in the past 50 years with the only exception of recession periods. Actively managed funds outperform passively managed funds only during recession periods.
You will find active funds that outperform indexes at any given time but there is no set criteria to identify them and they are by no means consistent. Hence, there is no method by which to consistently beat the index that can be replicated.
Do you mind telling us what qualifies you to give better advice than the rest of us? Do you hold any academic or professional qualification related to finance or asset management or is it purely down to your personal studying of the subject?
If there is any conflict of interest perhaps it's appropriate to disclose it.
Deleted member 651465
Deleted member 651465
I bought £5000 of Apple shares, at 105$.
I'm in similar situation to OP (kinda).
What are good websites to get started in investments?
I have so far invested in a couple of multi-asset type growth funds, as ISAs, through Fidelity. Good idea? What else would you recommend?
What are good websites to get started in investments?
I have so far invested in a couple of multi-asset type growth funds, as ISAs, through Fidelity. Good idea? What else would you recommend?
Over the past few months I have been, unwillingly I might add, thrown into the world of investing. I certaindly do not know it all, but I have had to closely look at anything to do with fees inc IT's, hedge funds, direct equity holdings, bonds, guilts, Trusts etc. I do wonder if I know too much now to be honest with you. I wish I knew nothing and just plodded along, but sadly, this isn't how my brain works.
I am not a professional in this field, as as stated constanty, I wish to convey nothing as advice. Merely, I express my thoughts & experiences thus far in a world which delights in hidden charges, fees etc etc
I'm in similar situation to OP (kinda).
What are good websites to get started in investments?
I have so far invested in a couple of multi-asset type growth funds, as ISAs, through Fidelity. Good idea? What else would you recommend?
Have a read of trustnet & citywire etc. I'm not going to give specific suggestions.
Thanks. Bookmarked them when you mentioned them before.
With investments, only invest what you are prepared to lose !
As most these days that guarantee return on capital tend to lock you in for 3-5 years and you get a low return which is of course subject to income tax.
Better off in an ISA !
As most these days that guarantee return on capital tend to lock you in for 3-5 years and you get a low return which is of course subject to income tax.
Better off in an ISA !
It printsu money!
Caporegime
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My dad runs some shares frp, some fleet street investment guide. he generally follows these suggestions and so far has done pretty well with the majority of investments...
I on the other hand threw some money at the lucky dip at my local petrol station... now to see who wins?!
I on the other hand threw some money at the lucky dip at my local petrol station... now to see who wins?!
You've already answered your own question - you don't want to lose it, it will be saved towards a deposit....
If you're saving it towards a deposit then yes - shop around, find a good ISA - job done.
%k is not a lot to invest really, so you can not expect a high return, unless you want to risk the 5k capital on a venture.
That is the problem you have !
So either on E saver a/c which give from 2-3.2% less Income tax, or ISA which I thing average return is 2.5-3%, which is tax free.
Remember you need to keep the 5K in the a/c for a full year to benefit from the ISA return.
That is the problem you have !
So either on E saver a/c which give from 2-3.2% less Income tax, or ISA which I thing average return is 2.5-3%, which is tax free.
Remember you need to keep the 5K in the a/c for a full year to benefit from the ISA return.
E Savers are rubbish atm... not even close to 2% think mine got around £3 last year in interest with a not inconsiderable amount in there - I've just moved most of my money into a cash ISA which is about as safe as you can get atm with any kinda return (about 3%).