You can download this post here Personal Investment Planning 2016
As is traditional I have shown below my top financial planning tips for 2016 and shown how my tips for last year have fared.
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Investment Charges – Review Your Plans!
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Investment Returns – How Have Yours Fared?
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Fund managers – Still Not Delivering Be Warned
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Investing For Income – Is Still Working!
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Cash Investments – Still Low….but
Investment Charges
Just about the only thing you can predict when investing your hard earned is the level of charges within the investment wrapper.
Based on my (internally collected) stats average industry charges on an annual basis are still well over 2.5% per annum. This equates to 25% of your investment every ten years; using the MoneyTrainers list of providers you could reduce this by at least half to 1.25% (probably more). Given that all Financial Advisers have the old style commissions removed in April 2017 you can expect them to review any plans they manage for you.
Just don’t rely on them doing it. You should take charge and review all of your investment plans today.
Those of you that follow me will know the approach we teach over at Moneytrainers:
- Don’t put all your eggs in one basket
- Reduce charges to nil where possible
- Investment for income
- Pensions – with caution
Investment Returns
Those of you that follow me will know the approach we teach over at Moneytrainers:
So how did that fare in 2016
The returns from the Vanguard range are linked below note the level of charges within these funds. The highest is .25% which is considerably less than you will get from most of the market places.
https://www.vanguard.co.uk/uk/portal/investments/all-products?productType=etf
As predicted last year the returns from the European market has been good, thanks to the quantitive easing introduced.
Fund Managers
With fund managers still not delivering returns anywhere near where those you would expect it’s time to consider carefully if you should continue to or ever invest in managed investment funds.
According to Trustnet (link below) only half of the funds listed managed to get a positive return in 2015, and a good number managing to lose over 20% of your investment, oh and they charged you for that.
The MoneyTrainers approach has been a winning one for 2015.
Investing For Income
A direct investment into the FTSE 100 index (Vanguard) from Jan – December 2015 would have shown a small loss, however with an of roughly 3% pa and low charges (.09%) you may have seen a small profit over the year.
Some of the specialist funds have performed at a better rate, however, the charges would have been slightly higher.
Cash Investments
No sign of returns from cash increase yet. But with the MoneyTrainers ‘spread it around’ strategy you could have been around 8 times better off (that’s a yield of 4%).
Pensions.
These still look like poor value, given charges and the very long term nature of these funds.
If you have credit card debt, personal loans or mortgages; then pensions look even poorer value when compared with clearing debt. Importantly, with some of the further options for alternative investments pensions seem to be even more user unfriendly. Bear in mind that pensions are not tax-free, just tax-deferred; and because of charges are more a gift to the provider/adviser than they are to you (subject to a comparison)
Summary.
Review your existing investments and pensions, find out how they did last year. Work out what you paid in charges. If you they did well and the charges overall were lower than 1.5% you are doing well please make sure you share the strategy with us. If it’s a good one we’ll publish it.
With effect from April 2016 you can benefit from the new ‘dividend’ allowance, which means you could own around £140k in shares and investments outside of a tax-free wrapper (Pension/ISA) and very little tax, provided of course you are basic rate taxpayer.
Combined with the £1,000 tax-free ‘interest’ amount and some of the other changes making some longer term plans with your investment has never been more attractive.
Pension Freedoms and the associated advice charges are still a problem, however, the MoneyTrainers guidance is available (link below) it could be worth several thousands to you.
http://www.moneytrainers.co.uk/product/moneytrainers-pension-freedom-training/
Don’t forget, you can get the Free – Money Course at no charge below. I don’t share your data or your personal data. It remains with us and no other.