Investment?

[Two Acres]

There is usually a trade-off between risk and return. The higher the risk, the greater the potential return, but alongside greater risk of losing the original capital.

 

Savings accounts are effectively zero risk to the capital, and have a guaranteed rate of return for a period, so are very low risk, hence very low return. You can slightly improve things by going for a tax-free ISA, but the rates are lower.

 

Premium bonds keep your capital safe, but have a risk of zero return, which means that the capital can drop in real terms due to inflation.

 

Bonds are fairly secure, but are not paying well at the moment.

 

Stocks and shares investments are higher risk - you can lose the capital, however even within these you can vary the risk. Investing in individual shares is the highest risk, funds decrease the risk. Some funds invest in higher risk areas such as smaller companies or emerging markets, others in lower risk areas such as UK or European blue-chip companies. Any investment of this type is likely to fluctuate - growth isn't continuous like it is with a savings account, however the idea is that over the longer term you see larger levels of growth.

 

The other thing that comes into play is a balanced portfolio - you don't want all your eggs in one basket so the normal approach is spreading it around, based on your attitude to risk, how much of it you can afford to lose in the worst case vs how much growth you want to potentially achieve, and whether you can cope with it going down as well as up.

 

I don't have the time or knowledge to construct a decent portfolio, so I use an independent financial advisor. We use Investment Sense, who are national and I have always found very clear and helpful. They are also free for the first consultation, and their fee structure is declared up front with no hidden extras. They do not simply want your money - they form a view as to how much should be where to achieve balance, ie cash type accounts vs. investments; they want to invest the investable bit. They have also done a good job of identifying which funds should be switched when, and do the lot from an annual meeting, sometimes visiting us, sometimes by Skype, and then by email, with email confirmation from us if we want to accept their recommendations. We have achieved significantly higher returns than you would expect from a savings account - the first time round, enough to step up from our previous small house with small garden to this place with 6.5 acres, and when we had got over the first financial hump, we have started a second time around which is doing nicely.

 

Alec

 

Excellent post that Alec

 

Whats the fee structure with Investment Sense? Do they charge a percentage fee or by the hour?

[Two Acres]

Tell you what, how about buying a small wood, putting a shed in it and selling it on. I found a five acre conifer woodland for sale, near me, yesterday. It has a 'gingerbread house' in it (thats a pretty shed by thw way). The asking price is £100,000

[spudulike]

There is usually a trade-off between risk and return. The higher the risk, the greater the potential return, but alongside greater risk of losing the original capital.

 

Savings accounts are effectively zero risk to the capital, and have a guaranteed rate of return for a period, so are very low risk, hence very low return. You can slightly improve things by going for a tax-free ISA, but the rates are lower.

 

Premium bonds keep your capital safe, but have a risk of zero return, which means that the capital can drop in real terms due to inflation.

 

Bonds are fairly secure, but are not paying well at the moment.

 

Stocks and shares investments are higher risk - you can lose the capital, however even within these you can vary the risk. Investing in individual shares is the highest risk, funds decrease the risk. Some funds invest in higher risk areas such as smaller companies or emerging markets, others in lower risk areas such as UK or European blue-chip companies. Any investment of this type is likely to fluctuate - growth isn't continuous like it is with a savings account, however the idea is that over the longer term you see larger levels of growth.

 

The other thing that comes into play is a balanced portfolio - you don't want all your eggs in one basket so the normal approach is spreading it around, based on your attitude to risk, how much of it you can afford to lose in the worst case vs how much growth you want to potentially achieve, and whether you can cope with it going down as well as up.

 

I don't have the time or knowledge to construct a decent portfolio, so I use an independent financial advisor. We use Investment Sense, who are national and I have always found very clear and helpful. They are also free for the first consultation, and their fee structure is declared up front with no hidden extras. They do not simply want your money - they form a view as to how much should be where to achieve balance, ie cash type accounts vs. investments; they want to invest the investable bit. They have also done a good job of identifying which funds should be switched when, and do the lot from an annual meeting, sometimes visiting us, sometimes by Skype, and then by email, with email confirmation from us if we want to accept their recommendations. We have achieved significantly higher returns than you would expect from a savings account - the first time round, enough to step up from our previous small house with small garden to this place with 6.5 acres, and when we had got over the first financial hump, we have started a second time around which is doing nicely.

 

Alec

 

Pretty good advice here, Shares are a long game - if you are 20-30 and looking towards early retirement then equity ISAs should be high on the list of investments, tax free and it is possible to double your money over five years but no guarantees.

 

My basic advice is to start as early as possible, keep reinvesting even if the markets are not great (the shares will be cheaper:thumbup:) and you will gain over the years. A balanced mix of funds is good and keep an eye on them - easier than property and can be just as profitable!

 

Compound interest is the game and is all about making gains and reinvesting so the gains add to the original stake and then gain some more!

[scraggs]

Bricks and mortar is best bet.

 

Works fine whilst you have good tenants

 

The only good thing with property imo is the way your property value increases unlike other forms of investment, bad tenants will have you pulling your hair out.

 

I have a friend who has had some money in a prudential fund and he has returned some really good figures, far better than most rental returns after repairs and all the other crap involved in them.

[Dryad's saddle]

Buy a house rent it out and save it for your pension

[Goaty]

My experience is no financial investment works long term these days. I've never had spare cash in £0000s. But when I have invested I have rarely gained with the exception of an ING ISA but they don't do it anymore!

 

Pension I have put in for 23 years, I chose to retire at 50(incase of health etc)

Government shifted that to 55. Other goalposts have shifted, Its worth about a years current income now. Pants!!

 

Don't forget the shareholders are to pay, the staff that drive Audis or better etc. It might be your money but its working for other people more than you I think.

[Mortimer Firewood]

Buy a house rent it out and save it for your pension

 

Mate of mine has 60 houses and at any one time he has 10 houses causing problems ie not paying . He is a pawn broker by trade so use to getting his hands dirty. He takes it to court quickest he has had some one evicted is 16 weeks.

 

It's not all it's cracked up to be

[spudulike]

I know someone that had a property converted to a canabis farm by his tenant, smashed the place to bits, messed up the wiring and when the police busted them, made it a crime scene so he lost his rent and couldn't repair the damage for weeks!

[Mortimer Firewood]

I know someone that had a property converted to a canabis farm by his tenant, smashed the place to bits, messed up the wiring and when the police busted them, made it a crime scene so he lost his rent and couldn't repair the damage for weeks!

 

Yep he's had a few of them as well herefordshire is fast becoming the grow capital of the uk.

[mendiplogs]

I know someone that had a property converted to a canabis farm by his tenant, smashed the place to bits, messed up the wiring and when the police busted them, made it a crime scene so he lost his rent and couldn't repair the damage for weeks!

 

HI STEVE i no the same here mate thanks it all mad thanks jon