Genuine independent financial advice

[gl20]

Originally Posted by tspill

Maybe start by explaining exactly what it is that you want to achieve with the money that you have? That is the starting point. Making any decision (either with or without an IFA) without fully understanding this will almost certainly result in a big mistake being made. This is the first question you need to answer clearly. If you don't know the answer to this, you aren't really ready to move forward.
Every investment you make needs to have a purpose.

Some examples
1. I need £x to buy a house in y years.
2. I need the investment to return £5000/year from age 60 and keep up with inflation from that point until age 67 when the state pension kicks in.
3. I am 20 years old with 45 years before I need the money, so I want the highest growth possible and am happy with the high risk involved. But am OK as in 45 years it will all be OK.
4. I have £1000 and want a bit of fun - invest in Bitcoin.
5. I have £5000 and fancy a week in Vegas learning to play the tables.

Everyone will have different objectives. You need to define yours. When you know this, then the next step is to look at options as to how achievable/realistic this is. And if it is, then what investment strategy might achieve this and what risk there is and what would you do should things not pan out as expected.

So I think you need to take a big step bach and define what you want to achieve.

You talk about options. But options to do what? That's where to start. Once understood, options can be considered. The other thing you need to understand is your tolerance to risk. How would you feel if your investments dropped 50% the week after you invested? Many, many people are invested way beyond their tolerance for risk. Things go bad and they sell as they get scared. That is the worst possible thing they can do, but they emotion takes over and they make vary bad decisions. This happens the time.

I will give you the basics of mine. I use a "bucket" approach.
My wife and I are retired (early at 53 and 54).
1. I needed to cover 2 years with zero income. Solution I had 2 years expenditure in easy access savings. Inflation risk is OK as short term and inflation is low.
2. My DB pension kicks in at 55. OH's DB pension will be at 60. I need cash to top up my pension to meet expected expenditure for 5 years. Solution - I have 5 years cash top up in savings. Inflation will hit this, but I accept that risk.
3. 60 to 67 - Need top up money until state pension kicks in. Solution - I have reasonably low risk investments - I use Vanguard Lifestrategy 40 for this pot.
4. Beyond 67 - DB and SPs will cover our main expenditure. Solution is I have a set of higher risk investments that I know I can cope with.

My strategy is to always have 5 years need in cash so will sell investments each year to top this up. If investments have failed to grow by inflation I won't sell and sell double the next year. I can do this for 5 years without being forced to sell and hence massively reduce the risk of having to sell at a loss.

I will review and adjust each year. Things go well and maybe I can spend more (another holiday). Or things don't and we need to tighten out belt for a bit.

I have a lot more detail behind this, but this is my strategy and what I am doing to meet this plan.

I have completely redone this strategy as we both retired a bit earlier than expected. And we are now in a decumulation phase where as previously we were in accumulation. I didn't start to change my investments at all until I had completely locked this strategy and plan down. I have now started moving my investments and savings around to meet this plan. This process will take a year to complete.

Every one of my investments and deposits has a defined and clear purpose. I know what I need each to do to achieve what I require. And I can therefore measure each against this and adjust as needed if they do worse/better than expected (or than I need). And I fully understand the risk profile of each.
This allow me sleep at night.

I considered other strategies, but these weren't for me. For example, a non-bucket strategy where you say invest in equities and bonds with a particular split (e.g. 60:40). And you sell from the side that has increased the most to get the cash you need. Or invest 100% in equities and accept the risk. And that you sell when you need - even if prices drop, the theory being that the majority remains invested in the long term and the growth will more than cover short term losses from selling low.

But the first things any advisor is going to ask you first are -
1. What are your objectives
2. What is your tolerance to risk.

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Really helpful as I’m about 5 years behind you but was thinking on similar lines to this. I have a fair bit more homework to do (in terms of transition of current investments as w get closer to retirement) but then planned to get some independent advice, more with a view to them checking and challenging whatever strategy I come up with, rather than leaving them a blank sheet. I’m of the view that there’s less value an IFA can give if you’re clear on your risk tolerance and investment options since all that’s then left is investment risk, where there’s not much they can say. Where I think there’s more chance they can help me is ensuring I’ve not messed up with any tax assumptions.

Btw - on the investment side, you recommended a good book in another thread. Could you remind me of the title?

[disney332]

Originally Posted by gl20

Really helpful as I’m about 5 years behind you but was thinking on similar lines to this. I have a fair bit more homework to do (in terms of transition of current investments as w get closer to retirement) but then planned to get some independent advice, more with a view to them checking and challenging whatever strategy I come up with, rather than leaving them a blank sheet. I’m of the view that there’s less value an IFA can give if you’re clear on your risk tolerance and investment options since all that’s then left is investment risk, where there’s not much they can say. Where I think there’s more chance they can help me is ensuring I’ve not messed up with any tax assumptions.

Btw - on the investment side, you recommended a good book in another thread. Could you remind me of the title?

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I think it was...

‘How do you invest a lump sum’

Started by the same OP.

Disney332

[FlorayG]

Originally Posted by tspill

Maybe start by explaining exactly what it is that you want to achieve with the money that you have? That is the starting point.

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Thanks for your detailed and useful answer. I DO know what I want from it but none of those IFA's really asked
For example; I don't have any people I want to leave anything to in my will so I don't need to have anything left when I die - as long as it lasts me until then. Surely this is a very important consideration for any adviser to ask about? I don't want to die rich, thank you

[disney332]

Originally Posted by FlorayG

Thanks for your detailed and useful answer. I DO know what I want from it but none of those IFA's really asked
For example; I don't have any people I want to leave anything to in my will so I don't need to have anything left when I die - as long as it lasts me until then. Surely this is a very important consideration for any adviser to ask about? I don't want to die rich, thank you

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If you want nothing left when you die that immediately rules out property and land from your wish list.

Your conundrum just got easier ...

Disney332

[Tweety1]

I think these threads are great - beats talking about coronavirus

[FlorayG]

Originally Posted by disney332

If you want nothing left when you die that immediately rules out property and land from your wish list.

Your conundrum just got easier ...

Disney332

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Not necessarily - I could buy land or property, rent it until I feel 'past it' and then sell it and live on the proceeds for my remaining years. Could give me a nice little nest egg to pay for my care home...
Or, I could buy a property cash. Get a BTL mortgage on it to buy another. Income from both and both sold to pay off the mortgage when I die

[disney332]

Originally Posted by FlorayG

Not necessarily - I could buy land or property, rent it until I feel 'past it' and then sell it and live on the proceeds for my remaining years. Could give me a nice little nest egg to pay for my care home...
Or, I could buy a property cash. Get a BTL mortgage on it to buy another. Income from both and both sold to pay off the mortgage when I die

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Wouldnt it be simpler if we knew when we were going to meet our maker !

I would not rely on the continued availability of BTL mortgages, a risky strategy imho

Disney332

[FlorayG]

Originally Posted by disney332

Wouldnt it be simpler if we knew when we were going to meet our maker !

I would not rely on the continued availability of BTL mortgages, a risky strategy imho

Disney332

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Exactly my original point - I need advice on all these options because I'm not sure of the risks involved. But they are all possibilities

[gl20]

Originally Posted by disney332

I think it was...

‘How do you invest a lump sum’

Started by the same OP.

Disney332

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Thanks. Will take look

[disney332]

Originally Posted by FlorayG

Exactly my original point - I need advice on all these options because I'm not sure of the risks involved. But they are all possibilities

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Ok so my suggestion is..

Property Purchase - Estate Agent

Regulated Investments - IFA

Un-regulated Investments* - Internet

*The reason they are not regulated is they are highly speculative and not recommended by the UK regulator as suitable for investment

If you are hoping to find a one stop shop for the above, I think, with great respect to you, you have a better chance of finding Father Christmas.

Disney332