Dr Hu

Hi All,

We inherited a fair chunk of cash a couple of years ago & it is currently invested with Halifax in a Bond which tracks a few things (its broken down in segments) but I'm really worried about it now, as the FTSE has gone **** shaped and speculation is that its going to get a hell of a lot worse....

Should I move it urgently?

My 2 very young Kids also inherited a smaller amount & we've just had the statement - last year £10K invested made sweet FA - in fact it lost £100......our chunk is a much bigger, i'm dreading the statement!

I need UNBIASED help on what to do here.
I'm worried that if I go somewhere I'm not going to get a genuine 'you need to do this' talk - rather a 'I get paid **** loads if you do this' advice.

I'm no investor - I know a bit, but this cash is my wifes pension in effect - she doesn't work & her father had to die a horrible painful cancer related death to give it to us - so its quite special in a way!

HELP US PLEASE!
Any (sensible - well this is ScoobyNet!) advice gratefully recieved!

EddScott

If your that worried and really can't cope with the risk of the markets then put it all into cash. You crystilise your loss thus far but it will stop the rot - assuming theres further to go. To be fair your better of talking to an IFA - not the bank IMO.

Check any charges you may incur by making changes to the existing investments. And if you are ever given further investment recommendations check ALL the charges.

Butkus

Maybe it would be better in a high interest account if you don't want too much risk. Make sure you get the highest rate possible so it keeps up with inflation, and put your allowance into an ISA each year too?

If you do this, you might also want to spread the money across a couple of accounts so you're protected by the FSA rules in case the bank has trouble. I can't remember the level to which you're protected, but I think it's around £30,000. It sounds like you might have more than that, so this might be an idea.

I'm not a financial adviser so I expect there are better suggestionsd to come...

warrenm2

trouble with cash is its being eroded by inflation right now, but maybe thats the least bad thing at the moment!

Shark Man

Have a look at the Pru-fund investment plan from Prudential. Gauranteed investment on the initial paid in sum, so fairly low risk. And only a 5 year period to keep the money in the fund to get maximum gain without incurring a penalty charge (which can be extended afterwards for another five years with a guarantee on the new amount). It seems to be the IFA's favourite at the moment.

Obviously max out your cash ISAs, not forgetting yours, your wifes, your grans (i.e anyone who doesn't currently have an ISA you can trust to save the money for you ), your kids etc. I would not use a stock+shares ISA without good solid advice on current markets, as you can lose money if you get it wrong.

And look at some of the current account interest rates; Northern Rock (Britains most stable bank at the mo - government owned ) Birmingham Midshires, Yorkshire Bank are all offering inflation beating savings accounts. These are handy to keep cash in whilst you sort out a better investment plans.

Either way, you need an IFA. And not one affiliated with a high street bank or building society.

EddScott

I would have thought the money invested for the children is generally quite safe. £10K losing £100 in the last 12 months isn't bad going - a 1% drop in 12 months considering the market you should be happy LOL

As the kids won't be needing the money for a long time, they will also benefit when the market turns round. It sounds like you've only had this money in the last 12 months when everything has been in freefal. Your going to suffer for the time of your investments but time is on your side.

Its good yes, but you have encashment charges to consider and Pru are currently charging a Market Value Adjustment to their With Profits fund. No problem if its for a long term but costly if you have to pull it out. Plus bond charges are high compared to OEIC or Unit Trust investment. Absolute and Total Return funds are quite popular right now - JPM and Blackrock have good ones.

The OP really needs someone who knows what they are doing to perform a proper risk analysis to determine what investments are suitable.

john banks

Many "guaranteed" products mean that you lose inflation, interest or dividends. Much of the real (ie after inflation) returns over time come from dividends (Barclays Equity Gilt Study). Expert advice/management is often no better than market average, and can be worse after costs Compare ISAs - ISAs: Index Trackers vs Managed Fund? - Fool.co.uk .

You asked for UNBIASED help. You could try IFA – Find an Independent Financial Adviser but also read up on commission bias as well and decide if you want to pay an IFA by their time or through commission Need unbiased financial advice? You'll be lucky - Money Week .

Shark Man

Of course, that is why I mentioned the five years in my post. one should not invest in these plans if the intention is to take money out on a regular basis or personal circumstances means that you will likely to need doing so.

al4x1

I take it you don't have a mortgage?

If you do your best return would be paying a chunk off or getting an offset mortgage so its linked directly and so no tax on it and a return at the equivalent mortgage interest rate.

EddScott

Although paying off some of your mortgage is always a good idea, I would be happier having the money in my hands rather than locked in my house.

Also I think theres a benefit to having a very small mortgage - i.e. the bank is responsible for the deeds or something - I can't remember exactly what it is.

john banks

Solicitor or bank can keep the deeds for you once the mortgage is cleared, although some of them like to charge.

Dr Hu

Thanks for the comments guy's

No - we don't have a mortgage - the deeds are in my bottom drawer at home! lol
(I appreciate we are *extremely* lucky)

What do you think is going to happen to the overall world economy then? .....should I pull most of it out of stocks & share linked segments and whack all the money into a Gilt segment or something? (all the money is split between 7 or 8 'segments' of risk)

If the FTSE or whatever is going to nosedive for the next 2 years (or however long it takes) surely its better to re-allocate the money into segment that will at least track bank base rate rather than watching it lose money?

I know it's all crystal ball stuff, but is the economy only going one way....?

It is all long term stuff - this is money that won't be touched for years and years - should we just ride out the storm.....

Deep Singh

No one can really answer these questions for you mate because its your money and for you to decide where you think things are going. For what its worth I think cash is king (even taking into account high inflation) at the moment. Put in high interest accts, preferably tax free waiting for buying opportunities at a later date.
Stock market opportunities will come sooner than property buying opportunities. With this new cycle there will be new rich class created from those that have stayed out of equities and property over the last few years and have a wad of cash waiting.

All imho or course!!

OllyK

It's going to have to be a fookin small mortgage to be better than just paying the £25 a year direct to the bank for looking after your deeds.

When MIRAS was still around there was a tax benefit to having a mortgage, that's long since gone.

al4x1

leave it till the housing market hits bottom and buy a buy to let and watch the value go back up would be my move,

Otherwise you may be best getting an IFA to look into investing it in a SIPP then you get the tax breaks and get to make your own decisions on it while tying it up for your wifes pension

Petem95

Property?............

I would say obviously fill your ISA's first - Leeds BS are offering a fantastic 'inflation buster' ISA at the moment which is RPI + 2.5%, so currently paying 6.8%, and if RPI hits say 5.5% (which is likely this year) then you're looking at 8% tax free!! They also allow transfers in (I've just transfered all my ISA's in) - pretty sure its still available as well.

After that NS&I index linked bonds are hard to beat if you're a higher rate tax payer especially. After that plenty of instant access accounts paying 6.5%, fixed at 7%+. Gold looks like a good bet too - will almost certainly rise are worldwide economey gets even more in the ****.

With the easy-money rug being suddenly pulled out from under everyone there's going to be lots of opportunities for people holding cash, so invest well and it'll be rich pickings in a year or two.