equities and bonds?

[Neenee]

OK, any advice is kindly appreciated. Myself and my partner have come into money in excess of 100K. We would like to invest this in the best way possible and gain an income from it. We visited our Bank yesterday, (ABBEY) and were given what we believed to be some interesting advice. However, i am really not clued up on any thing like this what so ever and would like some information or help from people who are not associated with in our Bank. I know an Independant Financial Adviosr would perhaps be a good point of contact, but i have heard of so many unstrusting Advisors , that im not sure if i would be happy investing with someone like that. the Abbey advised us to invest our money into BONDS and EQUITIES, the breakdown being 45% Bonds and equities made up of the remainder, in Europe, the US, Japan, and Pacific Basin. Earning us potentially, a very good return. I would like to know if anyone has any knowledge of this kind of investement and what you would do if you had this kind of money, im sorry if my information hasn't been of much help to assist in any answers, but as i explained my knowledge within this field is very minimum. many thanks

[BigMac]

Please note the important information section.

Having said that, you really should see an IFA. The major concern with IFAs has been that they were more concerned with getting a commission payment than giving the best advice. This has now changed and you can consult an IFA on a fee-paying basis - like a solicitor.

The IFA will want to do a fact check to ensure that the advice given is appropriate to you and your partner's particular situation/requirements. For example, are you approaching retirement age or do you have dependent children? Do you have an outstanding mortgage?

The most sensible investment advice is to clear your debts if you have any, particulary store card debt and credit card debt as they are usually very expensive.

Make sure both you and your partner are making use of your ISA allowance (�3k each in a mine cash ISA and �4k each in a mini shares ISA, or �7k each in a maxi ISA).

The Bond/Equity split you have described may very well be suitable for you. The bond element should provide some income and the equities capital growth. The split between US/Europe/etc is good as it spreads the risk.

Don't forget Premium Bonds - you can each have �30,000 invested in these and although they do not pay interest you should with average luck win 15 prizes each every year (min �50, max �1m) if you do hold the full amount each.

So, in short, clear your debts, arrange to see a fee-based IFA and DO NOT BUY ANYTHING YOU DO NOT FULLY UNDERSTAND.

[Dassie]

If it were me I'd invest it in property abroad ( Spain etc ) and then rent it out to holidaymakers etc.

[Neenee]

BigMac..

Many many thanks for your information. We hadn't considered Premium Bonds at all, so that is perhaps something we will have to sit down and talk about.

We are a youngish couple, i am in my 30's and partner in his 40's. We have no mortgage, as this has already been paid off, however a few very small outstanding loans, which we intend on settling.

We have a six year old daughter who financially is taken care of, from an endowment policy which matures in 3 years, we are going to invest all that into an account for her for when she gets much older.

So all in all the monies in excess of 100K is purely to give us some kind of return and income going forward and naturally to give our daughter the financially security after our days.

One thing i did not understand and i still can not get my head around with this BOND and EQUITY scheme, is that, i know the money will start working for us from day one, and we were told that if i went into the bank and asked for a balance and our money had grown for say example by �8,000 , i could potentially withdraw the �8,000. But on the other hand if the scheme isnt working too well our monies could be less and we may have no surplus to withdraw. So is it the luck on the day , and hope we choose the right day to go into the bank, to determine if the scheme is working for us weather we can withdraw the excess... as one day we could be in a surplus and the next a deficit.

sorry if this sounds confusing, but i am mightely confused by all the above and still can not see how we could potentially make so much money from this. Even though i know we are investing a huge amount initially as well.

[Neenee]

Hi Daissie,

we have looked into buying property both in this country and abroad, but the potential return we can get on our money by doing what i described in my question, far outweighs the return from renting, plus all the hassle that would go with rented property, we could do without.

we have been in the renting game before.....

been there, tried it, got the t shirt.... and i dont think i would like another one!!!!! .

thanks for the info anyway,

[BigMac]

That's why you need to speak to an IFA.

In short, share prices can go up and down so as an example and ignoring dealing costs and stamp duty: you buy 100k shares at �1 today. On Monday they are worth �2, so you could sell them and have �200k. But on Tuesday they might be worth 50p,so if you sold them then they'd only be worth �50k. That's one of the risks of equity investment.

The Bonds are a little like a deposit account. They will pay an interest rate which is usually higher than you can get from a bank or building society, but that's because they carry risk as well. But assuming all goes well you receive interest on the bonds each year and can sell the bonds to get back your capital if you need it.

There are specialist funds which are designed to provide an income, if that's what you particularly want and an IFA is the best placed person to tell you about them. The weekend newspapers' money sections often feature articles about these, or have 'best buy' tables that show you the leading providers.

If you want simplicity, go to a building society and buy a fixed rate one year or five year bond that will give you a guaranteed interest payment on maturity.

If you want to be able to access the money relatively easily, look at the higher interest deposit accounts available, especially the internet accounts or the postal and notice accounts.

Talk to an IFA. If you don't understand the product, you won't understand the risk and so it's probably not for you.

Best of luck.

[themas]

Your attitude to risk is important in deciding what you do. If the stock market bombed the value of your investments could go down considerably - maybe for a long long time. Would you be happy with that?

Don't forget that Abbey are almost certainly limited to selling you their own products. If you see an IFA on a fee paying basis they should be able to look at a much wider range of potential investments.

[dancecaller]

I dont much like the risk of shares, my husband's pension fund has quite enough of them, so our lump sum was split between Building Society fixed and variable accounts and National Savings index linked certificates.
Since NS certs are tax free they give a better interest rate than first glance shows (especially for top rate payers) and when they reach the end of the first term the reinvestment certs are more easily cashed in.
Bank & building society online and phone operated accounts give better rates than branch accounts.

No doubt Abbey will have said - Keep some on easy access for unexpected needs - Keep some that you can transfer into future years isa accounts

The first �35,000/person (I think) with a particular bank is guarenteed, so that if the bank goes bust you only lose 5%. So if you are going for a bank or BS account it maybe worth splitting it between banks (but watch out, Birmingham Midshires is owned by HBOS, Egg by Abbey etc.)