September 19, 2019


Many clients ask for investment advice; they have worked hard for their money but are keen to generate investment returns. They often ask where is best to put excess cash? Are stocks and shares what they used to be? Is crowdfunding the thing?

With cash, my advice is that it is not the interest rate that is important, it is simply the short term home for your cash and how you bank that is just as important. The rate on the high street may not be that great, but if you prefer to pop in to the branch and see someone then that is the price of the service you want.

Peer to peer lending can provide greater returns than your high street bank, but it is a greater risk and you should be prepared to lose some, or all, of your capital. Remember that peer to peer lending is not covered by the Financial Services Compensation Scheme (FSCS).

Stocks and shares are still the mainstream for the majority of investors; it provides long term returns for the risk you are prepared to accept. Low cost collective investment funds are a good way to start, and with an asset allocated portfolio you could achieve long term growth for your surplus cash.

A well-known fund manager was recently in the press due to their collective fund being closed to trading; savers are barred from either adding more money or taking their savings out. This is a reminder that even collective investment funds can go wrong and the some of the best known fund managers make mistakes.

A collective investment fund is the often the cheapest method of investing and can achieve a diverse allocation of assets. Annual costs can be between 0.20% - 1.00% per annum depending on the fund and whether you opt for an actively managed or passive fund. Typically there are no costs to purchase or sell the fund.

Some investors like alternative investments such as wine, art, gold bars or cryptocurrency, and these are all about risk; your ordinary adviser will not be able to invest in such things. Think about dealing costs, storage, whether you need to insure the asset and how to sell the investments if you need your cash back. These types of assets would be regarded as high risk and so can provide high returns, but also large losses.

Long term gains come from long term investing and so trying to pick the next best thing is very hard and generally won’t work.

My advice to investors is to start with the basics, build your knowledge alongside your portfolio and start with a low cost diverse portfolio.

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