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wellington womble

Investments

I'm hopefully going to have around 6k to invest shortly. Anyone got any interesting ideas to invest it? It's part of my pension, so it will need to be within the pension rules (it can't buy depreciating assets, domestic property or pay any of my own personal expenses like a mortgage). I have no clue about investments, but it's not money I can access otherwise and it's doing nothing where it is, so I'm up for a fairly short term, medium risk option. Ideally I'd like to reassess in about three years and I don't really want property as this is partly to balance things up a bit.

I'm not taking any replies as financial advice. I'm just looking for ideas. Also, it's not money I will need to meet basic living costs when retired. I have that covered otherwise, so I can be a bit creative with it.
baldybloke

Triodos Bank can offer a 3 year fixed rate ISA and your money will be helping to support ethical initiatives.
Falstaff

You seem to know rather more about pension rules than your modesty allows.

Are you using a SIPP as a wrapper ?

http://www.moneysavingexpert.com/savings/cheap-sipps

It seems very odd to me that you can't buy residential property to rent out for example, but you are perfectly able to gamble on shady Bonds and shares. (Provided you pay your annual fees and trading "costs")
Rolling Eyes

Start a pawnbrokerage perhaps - that should be a fairly good yield and the added advantage that you could start it small.
Pilsbury

You are now allowed to buy gold as part of a pension plan if your interested in shiny stuff, bullion coins and bars are available easily enough and I use www.bullionbypost.com who have a section on their website about it I beleive

For a less interesting idea many current accounts pay pretty high interest rates, tsb offer 5% on balances of up to 2000, Lloyds and santandar also have good rates at the moment.
Falstaff

Gold comes in two forms :-

a) - rings, coins, bars, chains and bracelets which you keep in a cupboard or drawer. Or in a safe if you're posh !

b) "paper gold" which you can buy and it is held somewhere else. You get some form of "receipt" saying you own some "Gold". Presumably this is what you can "Now keep in a sipp" ?

This latter is reckonned to be "Gold" held by many to the tune of several times the entire world stock of physical gold and as such cannot actually exist in a way that you can actually touch it or take it home with you.

One of the expectations for the future is that sooner or later, people are going to realise this and the ensuing scandal could destabilise the world economy again.

http://goldsilverworlds.com/tip-2-be-sure-to-have-physical-gold-silver-avoid-buying-paper-gold/
Hairyloon

b) "paper gold" which you can buy and it is held somewhere else. You get some form of "receipt" saying you own some "Gold". Presumably this is what you can "Now keep in a sipp" ?

This latter is reckonned to be "Gold" held by many to the tune of several times the entire world stock of physical gold and as such cannot actually exist in a way that you can actually touch it or take it home with you.

What a wonderful idea. I suggest we call it "banking".
Falstaff

b) "paper gold" which you can buy and it is held somewhere else. You get some form of "receipt" saying you own some "Gold". Presumably this is what you can "Now keep in a sipp" ?

This latter is reckonned to be "Gold" held by many to the tune of several times the entire world stock of physical gold and as such cannot actually exist in a way that you can actually touch it or take it home with you.

What a wonderful idea. I suggest we call it "banking".

You are exactly right HL - "paper gold" is following the exact same route that the "Goldsmiths" took in pre-history.

The route which caused "(B)ankers" to write on their receipts "I promise to pay the bearer the sum of 1" or similar.

However, amusing though the gullibility of the masses might be, most people, told they have bought an ounce of gold, believe that and could get quite upset when they realise they have bought absolutely nothing at all, but have paid for it as though it was really an ounce of gold !
john of wessex

Do you have to keep it in a pension?

The reason I ask is that given current low rates you might be better off either paying off existing debts/mortgages or keeping it outside a pension to use as needed.

Bear in mind that while you wont get tax relief on it, if you get to pension age & then use it to buy an annuity part of the annuity will be treated as a refund of capital so not taxed, unlike an annuity bought via your pension.

Also the fees charged by many investment managers are huge and can wipe out any profits made.

Failing that there are a lot of community renewable schemes eg Abundance Generation

https://www.abundancegeneration.com/
vegplot

Is this the type of restricted invested that keeps your retirement funds in the hands of financiers rather than say art, property, or some other tangible asset? Falstaff

Is this the type of restricted invested that keeps your retirement funds in the hands of financiers rather than say art, property, or some other tangible asset?

When we start thinking thoughts like that vp - like why do banks charge 20% odd interest on a credit card but can only pay 0.5% interest on savings ?

It takes us down lines of thought which lead to dark places !

Logically the Savers should lend direct to those who need money and charge an interest rate around the 10% mark perhaps ?

But we are not allowed to do that because we're not "Regulated"

We have just had to "bale out" those who ARE Regulated due to their fraudulent actions and greed and we are now going through the throws of "austerity" as our punishment for Not being "in the club"
Treacodactyl

I think you would be better to seek some independent advice or look at some of the financial web sites. It's more than possible to get a fund that only charges 1% fees and many will charge much less. There may well be a trade off, I'd rather pay 2% fees on an annual return of 10% than 0.1% on a return of 5%. There's also no need to buy an annuity now.

Personally I would be wary of putting in a lump sum into the stock market at the moment, many of the markets are at the highest they've been for several years so quite likely to fall. You normally get advised to make monthly deposits to smooth out rises and falls. You should be able to put the lump sum in to a pension but invest the amount over several months.

6k isn't a large amount so I wouldn't bother with the extra expenses of a SIPP but look at the low cost options from a normal pension provider. Make sure the charges are what you expect and there's no transfer penalties, then you can always move to a SIPP or similar later.
Hairyloon

Invest it in Grass-fed meat futures... Pilsbury

Gold comes in two forms :-

a) - rings, coins, bars, chains and bracelets which you keep in a cupboard or drawer. Or in a safe if you're posh !

b) "paper gold" which you can buy and it is held somewhere else. You get some form of "receipt" saying you own some "Gold". Presumably this is what you can "Now keep in a sipp" ?

This latter is reckonned to be "Gold" held by many to the tune of several times the entire world stock of physical gold and as such cannot actually exist in a way that you can actually touch it or take it home with you.

One of the expectations for the future is that sooner or later, people are going to realise this and the ensuing scandal could destabilise the world economy again.

http://goldsilverworlds.com/tip-2-be-sure-to-have-physical-gold-silver-avoid-buying-paper-gold/

Yep its physical gold I was talking about, paper gold will become a problem as the central bank around the world increase there stocks of physical gold and suddenly realise there is not actually enough to go round, that's when I would expect to see a big rise in the price of physical gold but as to if that will happen in my lifetime we will havevto see, regardless if you have somewhere to store it safely it's not a bad mid to long term investment I don't think.
and it looks pretty lol.
john of wessex

Bear in mind though that every time they buy or sell shares in a fund they also charge for that, its not included in the management charge Rob R

Invest it in Grass-fed meat futures...

Laughing Thanks for the plug HL, but the conventional banking system is more trustworthy in such matters. Wink
Treacodactyl

Bear in mind though that every time they buy or sell shares in a fund they also charge for that, its not included in the management charge

Many funds, especially lower risk ones, will not change most of their underlying investments that regularly. So while there will be some dealing charges they will be tiny and taken into account in the performance tables anyway.
Falstaff

Td I sat with several IFAs last year to try to find somewhere for 150k plus which I am trustee for and none was able to show me a managed fund anywhere near 10% gross. Basically they charge you 2% "set up fee" and between 1 and 2% "Annual fee" A "middle of the road risk" package one was able to show me had a yield over the previous 12 months of slightly over 4%. The shape fo the graph clearly showed it to be connected to the vaccilations of teh FTSE and it underperformed a straight tracker by around 2% (Gross).

They refused to show the fees on the chart, so you could see what was the true performance, insisting instead that you kept "30,000 in a current account to cover fees and incidentals"

The upshot was that even at the 4% claimed - there was NO income in the first year because the fees ate it all. there would (on their figures) have been a percent or so in year 2 except that the fund lost significant value last year and the 150k would now be worth around 120k. [Edited to say this figure is out of date, I have just checked and the FTSE is now back to the same level it was - so much of that loss will have been recovered - That however is simply due to the movement of the underlying Index - nothing to do with the Fund managers.]

Go to the financial industry entirely at your own risk (and expect to regret your decision)

http://www.amazon.co.uk/Where-Are-Customers-Yachts-Investment/dp/0471770892

Note also that irrespective of any other fees the EU propose to add a levy to all financial transactions, which will undoubtedly devastate the managed funds although exactly how is not possible to say as yet !
john of wessex

My father worked for what was then the Midland Bank Executor & Trustee Company.

I'd sometimes ask him for an investment recommendation opinion.

Basically it came down to '.....if I knew what to put my money in, I'd be on a yacht in the South of France.......'

and/or

'Try the bookies, at least you will know one way or another pretty quickly'

Basically no fund managers beat the various indices over any length of time. All they do is make money for themselves
vegplot

The revisions, announced last year, to pension fund schemes have if you believe Money Box Live resulted in an opportunity for fee charges that benefit the financial sector rather than providing greater flexibility for the investor.

Regulated the system maybe but fair?
Treacodactyl

I think some people are on a different world sometimes. Before i posted one of my replies I checked a basic managed pension fund and it's charges were 0.25%, growth for each year over the last five years was 5%, 15%, 10%, -4%, 11%; so over the whole five years 48%. This isn't a particularly great fund either.

If you think you can't find a manager who'll beat an index then buy a tracker or an exchange traded fund.

The new regs will benefit many private investors and don't go far enough for those who know what they are doing.
wellington womble

I've a good idea of pension rules. I've no clue about investing (although I spent all day yesterday learning!) I don't know why you can't buy domestic property. You can buy commercial property. I would also have thought property would be a sound investment, and more sound than many equities, at least. It's academic anyway, as I wouldn't buy property with this particular sum, and there isn't enough anyway.

I'm using a Small Self Administered (pension) Scheme (SASS) which should give more freedom than a SIPP. There are fees and hoops, of course, but it will be worth balancing for me (not for everyone, I admit, but for me). The money is currently in an NHS pension. If I can get the buggers to give it back (no easy feat, I'm told. I'm working on it) I can put it in a SASS and lend half to my business as start up capital. It's a very small pension, with a transfer value of about 12k. It's won't be worth much when I retire, and I can't put any more into it to make it worth more than pocket money. So I may as well play with it. I will not need it to meet basic living expenses, as I am already meeting those with non-salaried income streams.

The rules on pension investments are very clear that you cannot buy residential property or depreciating assets such as cars or antiques. Technically it isn't even even really 'mine' so it cannot be used to meet debts, mortgages or expenses now, even if I had any. It must stay in a pension, but I'm free to choose where to invest it. I can't get at it for another twenty years anyway.

I'm not sure if I can invest a pension in an ISA - I'm guessing not as they both attract tax relief at different points, you'd get the tax relief twice over (when you put into the pension, and then when took out of the ISA. Naughty!) I could put it the bank, but it barely covers inflation, and I could keep other cash funds in there for the recommended 'emergency fund' so that wouldn't seem the best use. Gold is similar in many respects, and I would not (at present) be comfortable having it in the house. I'm guessing any storage fees would also quickly negate the profits.

I can invest in equities. I wouldn't use a managed fund myself. But I could invest in all sorts of other things. I could make a personal loan. I could invest in a start up. I could buy land. I am not sure about beef futures. I did wonder about solar, but that would seem unwise at present. I wonder if I could build a wind turbine? That would annoy the neighbours! As I said, I can be creative, because this is 'spare' money. I'm not a gambler, but I'm comfortable with a medium level of risk for this particular sum, because while it's not exactly Monopoly money, it's money I can afford to lose without needing it to live on when I'm crumbling, and I'm young enough to ride out a few bumps.

Ideally I'd want something with a dual benefit. So for example, if the scheme bought land and rented it to me, I'd be paying rent which I would pay anyway and the money would be increasing my pension, rather than going to a landowner. Or if I bought shares in the channel tunnel, the money would potter along, but I'd get free travel. I need to check out the legality of some of these bright ideas, but I'm still considering lots of options. Too many, really. Not sure where to start. Unless something interesting comes up it's likely to go into a tracker, probably Vanguard.
Treacodactyl

I'm not sure if I can invest a pension in an ISA

A pension and an ISA are just wrappers that go around investments. So, you can't invest a pension in an ISA and there would be no reason to do so. Not all investments that can be held in a pension can be held in an ISA and vise versa.
Falstaff

I think some people are on a different world sometimes. Before i posted one of my replies I checked a basic managed pension fund and it's charges were 0.25%, growth for each year over the last five years was 5%, 15%, 10%, -4%, 11%; so over the whole five years 48%. This isn't a particularly great fund either.

If you think you can't find a manager who'll beat an index then buy a tracker or an exchange traded fund.

The new regs will benefit many private investors and don't go far enough for those who know what they are doing.

Greetings "from another world" Very Happy

Please find below a link to the FTSE chart for "5 years" - It is hugely important Td to know the exact starting point of your "Managed fund" since as you can see the FTSE plummetted to c4800 in June/Jul 2010 and now stands at 6900 which is an increase from an artificially low level, very closely approaching the overall level of increase which your fund is claiming, without fees and without any skill involved.

You don't say whether your "48%" is Gross or net - but I assume it's gross - since none of the fund managers ever incorporates their fees into the figures.

However I accept that "this wasn't a great fund either" I think you'll find that they have just chosen a starting point for their figures to show to their best advantage.

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=ftse100&insttype=&freq=2&show=&time=12

Now consider the same chart expanded to "maximum time" and see what "they" are NOT telling you !

If they're really "having your leg up - they will have started the time running at Feb 2009 at a level of 3800 on the FTSE !
Wink

So please do say when the figures start and at what level ?

Then looking at the chart below (the blue dot moves to value and time ) consider what those "fund managers results" would have been had they been honest enough to start their figures at December 1999 (FTSE at 6930) or at October 2007 (FTSE at 6721)

The fact of the matter is that the FTSE has been Range trading between around 3800 and around 6900 since 1996 ! - ie for twenty years. Since that date it has been around 3800 three times, developing majors structural support there and has topped around 6800/6900 three times developing a pretty huge resistance just below 7000 - exactly where we are NOW.

Look at the chart below and even without any knowledge whatsoever just say whether you feel this is an appropriate time to bet your life savings on that little moving dot at the "hard right edge" of those charts. Cool

http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=ftse100&insttype=&freq=2&show=&time=20



...........The new regs will benefit many private investors and don't go far enough for those who know what they are doing.

True enough - but there are some who shouldn't be allowed out in the street on their own too ! Laughing

Edited because yahoo finance requires a sign in before it will let you view charts. Big Charts does not ! Very Happy
Treacodactyl

I'm not sure what your issue is but please don't make assumptions and then have a go at them. The dates were five years from today (as you would expect when you look for online prices and performance) and you will note my comments about the state of the market in my first reply to this thread. You will also note that 5 years goes back to before the low point you mentioned, in fact the market fell 10% before rising during the period.

I can't remember if the fees were net or gross, but there are so low it's not a big issue for me, again see my previous comments.

Again, if you have issues with fund managers then don't use them. Simple.
Falstaff

You seem remarkably knowledgeable WW Cool I thought there was rather more to your abilities than you were letting on !

Fascinating world, gambling on the Stock market ! Smile [Investing - is a misnomer, as you will find out as you progress !]

There is a myriad of books out there, you will have to read quite a lot of them if you're to succeed and it will take you a good many years to "get a feel of it" (PS - they invariably do NOT "contain the secret" but you glean a little knowledge from each)

Have fun ! Cool

Interesting to know that you can make loans to yourself for business purposes. I like that idea !

As to residential properties, I think the feeling is that the new pension rules about to be unleashed will see a big increase in "Buy to let" spending, which I think will cause a major imbalance and may well damage the property market as a whole.
john of wessex

What about investing in this??

You might get a free ticket out of it and its a rather nice certificate

http://www.lynton-rail.co.uk/page/all-aboard
wellington womble

It was really more that it doesn't have to be the stock market. It could be anything. I thought there might some unusual ideas from here (I will see a financial advisor, but they will be boring!) wellington womble

What about investing in this??

You might get a free ticket out of it and its a rather nice certificate

http://www.lynton-rail.co.uk/page/all-aboard

Only on my phone at the moment, but can't see the returns.
john of wessex

What about investing in this??

You might get a free ticket out of it and its a rather nice certificate

http://www.lynton-rail.co.uk/page/all-aboard

Only on my phone at the moment, but can't see the returns.

If they extend the line and you buy enough shares you get a free ticket
wellington womble

Ah, I'm not sure that would be an adequate return!
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