Investing with the help of an IFA or self-investments?

[roselune]

I have approx £200k to invest shortly (currently as cash in the bank in instant access savings) and I'm finding it hard to decide if I should go with an IFA to advice and manage the investment for me, or just go for a mix of "ready made" platforms (like Hargreaves Lansdown or Vanguard) and S&S ISA, high interest savings account/fixed term bonds etc.

I'm partly investing with the long term in mind (at least 10 years and into retirement - I'm in my early 40s now). But there is also a likelihood I will need access to some of the money sooner (3-6 years) and would of course like to gain the most interest on it but not risk losing too much of it in the short term (don't we all...)

I've spoken to an IFA and his fees feel quite high but then perhaps he could get me better returns too as he'd know much more than I do? (He charges an initial fee + 0.5% of the investment value on an ongoing basis.)

Has anyone used an IFA and not felt it was worth it? What happens if I use his services initially and then decide I want to do it alone later on? Is it easy to change?

I have some knowledge about investments but clearly not lots. Have been doing more research lately.

Anything you want to spend in under 5 years you should keep out of investments. There are good high-interest savings at the moment, so stick it in one of those and/or Premium Bonds.

People tend to look at financial advice purely through the prism of getting the best investments.

That's obviously important but a good IFA will also talk you through things like tax both during your lifetime any IHT together with mitigations. They should also talk you through pensions and options while working and post 55.

It's an expensive mistake if you get it wrong.

I would suggest somewhere that offers financial planning and investment management, as they are two distinct areas and sounds like you could do with advice on both.

Financial planning will help plan your finances throughout your lifetime as regards retirement, pension contributions, protection needs, intergenerational planning (best way to pass your wealth on to dependents). Will make best use of tax shelters such as ISAs and pension wrappers.

Investment management will asses your attitude to risk, desired return, income needs, structure investments to make use of your CGT allowance to avoid/reduce capital gains tax. They have huge amounts of knowledge and experience in financial markets that it would be very hard and very time consuming to attempt to replicate yourself.

Well use your isa allowance this year and next in shares or cash isa, so that's 40k. Then I'd split between a high interest 2 year fix and shares personally. I don't like someone taking a percentage each year of my money!!

Don t go for an IFA for 200k, not worth it.

Why not?

For 200k, unless you are a company owner, freelancer or in specific circumstances that can benefit from astute financial planning

1/ you can t really diversify into a super-complex portfolio

2/ as a budding investor, you re probably going to be risk adverse and go for mainstream products anyway
3/ most of these products now offer user-friendly platforms to retail clients, it s not the hassle it used to be
4/ also, for shares, if any of these products is based on automated trading, like a Smart Portfolio, an algorithm will do the trading, why would you pay a commission to an IFA for it?

An IFA will probably tell you to max your ISAs, and to go for at least 2 of the following options: shares/bonds/real estate/gold and will recommend you safe products for each (and you can trade almost all these sectors directly via ETFs on a single share accounts). Nothing you can t learn by googling/reading around.

I would recommend OP to investigate by herself, make up her investment strategy, go as far into research and numbers as she can, then go to a few IFAs and play dumb. If the IFAs tell her nothing new or not much, she doesn t need one.

Women should trust themselves more for money and wealth management.
They tend to be better investors than men.

(I work in the City, not in IFA/retail investment)

What about full financial planning & using other tax allowances?

Full financial planning?
As explained, for 200k, not quite the scale to diversify beyond main markets and mainstream products, due diligence can do

Tax allowances?
As explained, if OP is an employee, not a company owner or freelancer, possible tax allowances are pretty straightforward, due diligence can do
Also, considering the political climate and the elections coming up, everyone and their dogs is going promise tax breaks for this, roll out last minute special measures for that, I d wait to know the direction of the wind of the next government/budget