Question
I want to invest £200 per month into fund ISAs. I'm now 51 yrs old and looking to boost my savings for possible retirement at 60. I have looked at various fund of fund schemes with e.g. Hargreaves and Bestinvest but am not sure whether this is my best option. If I were to take a more active role myself can you possibly give me some ideas where I could allocate my monthly savings?Answer
I’ve mixed feelings about fund of funds.
On the one hand they provide a straightforward way to get exposure to wide range of investments with modest sums of money. For example, for £200 monthly contribution could access maybe 20 or more underlying funds via a single fund of funds. And you should, in theory, benefit from a skilled manager who monitors the portfolio and buys and sells funds accordingly so you can get on with more interesting pursuits.
The downside is that funds of funds are more expensive than conventional funds because there’s an element of double charging. You’ll pay an annual charge (typically 1.5%) to the fund of funds manager as well as annual charges (typically up to 1%) to the underlying fund managers. So fund of funds tend to have total annual charges of between 2-2.5% - quite expensive.
If you have a portfolio of around £20,000 or more I think it’s probably more flexible and cost effective to use conventional funds via an investment adviser who provides good advice in return for the trail commission received. Otherwise I think a good fund of funds is likely to be a worthwhile and practical option.
Whether you use a fund of funds, or build your own portfolio of individual funds, I think the key is to ensure a wide spread of investment. Trying to accurately predict the top performing investments of the future is very haphazard, so it makes sense to hedge your bets across areas including stockmarkets, fixed interest, property, commodities and absolute return style funds. The optimal mix will depend on how much risk you’re comfortable taking and whether you require an income.
Both Hargreaves Lansdown and Bestinvest run fairly well regarded funds of funds, but there’s plenty of other choice too – for example the Jupiter Merlin range of funds managed by John Chatfeild-Roberts, who has a very strong track record.
Once you’ve decided which fund(s) to buy take a look at our ISA/fund discounts comparison to find the cheapest way to buy.
I want to invest £200 per month into fund ISAs. I'm now 51 yrs old and looking to boost my savings for possible retirement at 60. I have looked at various fund of fund schemes with e.g. Hargreaves and Bestinvest but am not sure whether this is my best option. If I were to take a more active role myself can you possibly give me some ideas where I could allocate my monthly savings?Answer
I’ve mixed feelings about fund of funds.
On the one hand they provide a straightforward way to get exposure to wide range of investments with modest sums of money. For example, for £200 monthly contribution could access maybe 20 or more underlying funds via a single fund of funds. And you should, in theory, benefit from a skilled manager who monitors the portfolio and buys and sells funds accordingly so you can get on with more interesting pursuits.
The downside is that funds of funds are more expensive than conventional funds because there’s an element of double charging. You’ll pay an annual charge (typically 1.5%) to the fund of funds manager as well as annual charges (typically up to 1%) to the underlying fund managers. So fund of funds tend to have total annual charges of between 2-2.5% - quite expensive.
If you have a portfolio of around £20,000 or more I think it’s probably more flexible and cost effective to use conventional funds via an investment adviser who provides good advice in return for the trail commission received. Otherwise I think a good fund of funds is likely to be a worthwhile and practical option.
Whether you use a fund of funds, or build your own portfolio of individual funds, I think the key is to ensure a wide spread of investment. Trying to accurately predict the top performing investments of the future is very haphazard, so it makes sense to hedge your bets across areas including stockmarkets, fixed interest, property, commodities and absolute return style funds. The optimal mix will depend on how much risk you’re comfortable taking and whether you require an income.
Both Hargreaves Lansdown and Bestinvest run fairly well regarded funds of funds, but there’s plenty of other choice too – for example the Jupiter Merlin range of funds managed by John Chatfeild-Roberts, who has a very strong track record.
Once you’ve decided which fund(s) to buy take a look at our ISA/fund discounts comparison to find the cheapest way to buy.
Read this Q and A at http://www.candidmoney.com/questions/question266.aspx
No comments:
Post a Comment