Question
Your website is very informative and I really do get a lot out of it so first off thank you for setting it up.
I'm a qualified accountant and work in financial services, but even myself at times I get very confused with a lot of the jargon and investment rules out there.
I currently have a portfolio comprising of a property, some shares, some NSI index linked certs and also wanted to diversify by looking into commodities fund and also some other funds to invest in such as (invesco high income, small companies UK). I'm also keen to start investing into the BRIC countries, particuarly Brazil and China.
I have a execution only account with TD waterhouse, but im trying to understand how I can start investing in these funds and how to avoid the layers and layers of management fees (which ultimately erode any investment money I put through).
Finally and most importantly Im keen on finding out how to setup my will having recently got married and expecting my first child. im 31 and keen on getting all my financial affairs sorted but everytime I contact an IFA (paid or unpaid) im getting sold lots of waste of time insurances and assurances.
Any tips on decent reading I can perform other than on your website?Answer
Glad you like the site.
Let's start with fund charges. Fund providers normally build sales commissions (typically 3% initially and 0.5% annually) into fund costs, so if you buy directly from a fund group or via a commission based financial adviser then you'll likely pay fund charges of up to 5% initially and about 1.5% annually.
If you buy via a discount broker, you can get some, or all, of these commissions rebated, potentially cutting costs to zero initial charge and about 1% annually (note: if all sales commissions rebated expect to pay a small admin charge).
So using a discount broker can be significantly cheaper, the main drawback being they won't provide advice.
Whether or not you need advice is down to you - it can be worthwhile, but equally, it's not that hard to pick some sensible funds (either actively managed or tracker). If you opt for advice then bear in mind the majority of IFAs are not investment specialists, so choose carefully.
Rather than cover discounts in detail here, take a look at our Guide to Discount Brokers for a comprehensive list of brokers and levels of discount/service offered.
When choosing funds your first decision is whether to opt for active or passive management, i.e. whether to buy a tracker. Tracker funds are usually cheap (they seldom pay much, if any sales commission - annual management charges typically 0.5% or less), and generally fare well versus active in certain areas (notably the UK and US stock markets). The downside is that they're not practical in certain areas (e.g. physical commercial property) and the very best active managers generally (but not always) outperform longer term.
If you want to invest in tracker funds you could consider buying exchange traded funds (ETFs) via your existing TD Waterhouse account.
As for researching actively managed funds, there are a number of good websites with detailed performance and holdings information - see my answer to this previous question for a list. My answer to this question discusses the factors to consider when analysing past performance.
You could also take a look at the fund research published by discount brokers like Bestinvest, Hargreaves Lansdown and Chelsea Financial. Bear in mind they also sell the product, so might have a vested interest to sell certain funds - but from experience they seem to be fairly impartial.
As for a will, the main priority is that it's straightforward and ensures your assets and possessions are handled according to your wishes in the very unlikely event the worst happens before your child becomes financial dependent.
Assuming your situation is straightforward then a low cost DIY or online option will probably suffice (there are plenty to choose from via quick search on the web). Just remember that both you and your husband will need one.
If you and your husband's combined assets exceed £650,000 (i.e. 2 x £325,000 nil rate bands) then you might want to consider some inheritance tax planning, although for the vast majority early thirties is probably too young to be worrying about such things.
When starting a family it's usual to review insurances, although whether you want any is obviously a personal choice.
If you don't have any life insurance (e.g. via your employer) and want some, then take a look at low cost term assurance policies. They're very straightforward and generally cheap. Buying through a discount broker will cut costs - see our Guide to Buying Life Insurance for more details.
You can buy income protection policies to protect against long term illness, but they're expensive and generally unaffordable for many.
Other than the above, I'd review your pension provision (i.e. check what you have and how it's invested) as well as your savings to ensure you're getting a good deal.
As for more reading, hopefully the above links will help re: fund research. You might find magazines like Money Observer and Moneywise helpful for more general personal financial guidance, while Investors Chronicle is usually a good read for specialist investment content.
Hope your pregnancy goes well.
Your website is very informative and I really do get a lot out of it so first off thank you for setting it up.
I'm a qualified accountant and work in financial services, but even myself at times I get very confused with a lot of the jargon and investment rules out there.
I currently have a portfolio comprising of a property, some shares, some NSI index linked certs and also wanted to diversify by looking into commodities fund and also some other funds to invest in such as (invesco high income, small companies UK). I'm also keen to start investing into the BRIC countries, particuarly Brazil and China.
I have a execution only account with TD waterhouse, but im trying to understand how I can start investing in these funds and how to avoid the layers and layers of management fees (which ultimately erode any investment money I put through).
Finally and most importantly Im keen on finding out how to setup my will having recently got married and expecting my first child. im 31 and keen on getting all my financial affairs sorted but everytime I contact an IFA (paid or unpaid) im getting sold lots of waste of time insurances and assurances.
Any tips on decent reading I can perform other than on your website?Answer
Glad you like the site.
Let's start with fund charges. Fund providers normally build sales commissions (typically 3% initially and 0.5% annually) into fund costs, so if you buy directly from a fund group or via a commission based financial adviser then you'll likely pay fund charges of up to 5% initially and about 1.5% annually.
If you buy via a discount broker, you can get some, or all, of these commissions rebated, potentially cutting costs to zero initial charge and about 1% annually (note: if all sales commissions rebated expect to pay a small admin charge).
So using a discount broker can be significantly cheaper, the main drawback being they won't provide advice.
Whether or not you need advice is down to you - it can be worthwhile, but equally, it's not that hard to pick some sensible funds (either actively managed or tracker). If you opt for advice then bear in mind the majority of IFAs are not investment specialists, so choose carefully.
Rather than cover discounts in detail here, take a look at our Guide to Discount Brokers for a comprehensive list of brokers and levels of discount/service offered.
When choosing funds your first decision is whether to opt for active or passive management, i.e. whether to buy a tracker. Tracker funds are usually cheap (they seldom pay much, if any sales commission - annual management charges typically 0.5% or less), and generally fare well versus active in certain areas (notably the UK and US stock markets). The downside is that they're not practical in certain areas (e.g. physical commercial property) and the very best active managers generally (but not always) outperform longer term.
If you want to invest in tracker funds you could consider buying exchange traded funds (ETFs) via your existing TD Waterhouse account.
As for researching actively managed funds, there are a number of good websites with detailed performance and holdings information - see my answer to this previous question for a list. My answer to this question discusses the factors to consider when analysing past performance.
You could also take a look at the fund research published by discount brokers like Bestinvest, Hargreaves Lansdown and Chelsea Financial. Bear in mind they also sell the product, so might have a vested interest to sell certain funds - but from experience they seem to be fairly impartial.
As for a will, the main priority is that it's straightforward and ensures your assets and possessions are handled according to your wishes in the very unlikely event the worst happens before your child becomes financial dependent.
Assuming your situation is straightforward then a low cost DIY or online option will probably suffice (there are plenty to choose from via quick search on the web). Just remember that both you and your husband will need one.
If you and your husband's combined assets exceed £650,000 (i.e. 2 x £325,000 nil rate bands) then you might want to consider some inheritance tax planning, although for the vast majority early thirties is probably too young to be worrying about such things.
When starting a family it's usual to review insurances, although whether you want any is obviously a personal choice.
If you don't have any life insurance (e.g. via your employer) and want some, then take a look at low cost term assurance policies. They're very straightforward and generally cheap. Buying through a discount broker will cut costs - see our Guide to Buying Life Insurance for more details.
You can buy income protection policies to protect against long term illness, but they're expensive and generally unaffordable for many.
Other than the above, I'd review your pension provision (i.e. check what you have and how it's invested) as well as your savings to ensure you're getting a good deal.
As for more reading, hopefully the above links will help re: fund research. You might find magazines like Money Observer and Moneywise helpful for more general personal financial guidance, while Investors Chronicle is usually a good read for specialist investment content.
Hope your pregnancy goes well.
Read this Q and A at http://www.candidmoney.com/questions/question544.aspx
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