Managed Funds help with managed funds

hi
new member to the forum any wondering if anyone with more knowladge than me can look at my porfolio.its going backwards at rate of knots.fee's?

my cash $165000
loan $247500 maquqrie 8.9%
total $412000
+ $3000/ month


at the end of 7 months it looks like this

total invested $433000

admin fee $3726 mentor

deposit fee $12205 mentor

income $31765 all reinvested

closing balance $412000

and ad the interest of approx $11200

my investments are normally in property,this package was set up by a financial planner.

if anyone can look at the figures and make any suggestions i would be gratefull

also why would i borrow money at 8.9% to invest in bonds that return 5%

many thanks in advance if anyone can help

 

steve,

By the looks of things, you're getting jacked. Big time. For starters, that interest rate is really high for the amount of money you've borrowed. I can tell you I have clients who are getting rates at least .5% lower with other lenders.

Also, what's with all these 'mentor' fees? $16,000 to place some investments into shares and/or managed funds! Jesus holy god! To me, that is clearly over the counter robbery.

Personally, I'd be looking to at the very least move everything to a planner who isn't going to steal from you like that and be negotiating a MUCH lower rate with Macq Bank. If they don't want to come to the party, let me know and I'll make some enquiries for you elsewhere. Just cut your losses, chalk it up to experience and move somewhere else.

Mark

 

Steve,

Something dodgy is going on with your money.

You've paid 3.8% of your borrowed money for your financial adviser to spend 10 minutes filling out a few forms and putting you into a few different funds. So it appears anyway.

You've been set up with Macquarie Bank at 8.9% whereas Citibank are offering 8.05% on $247 500 (source: www.infochoice.com.au).

Can I suggest that you get out of your expensive, fee-ridden retails managed funds and invest in listed investment companies, which are similar to managed funds expect they're a company entity, listed on the stock exchange and instead of costing 3% per year cost 0.3% per year. Look at Argo, Streettracks ASX200 Fund and Australian Financial Investment Company (AFIC).

Argo: http://www.asx.com.au/asx/research/...s.jsp?searchBy=asxCode&allinfo=on&asxCode=ARG
http://www.argoinvestments.com.au/

Streetracks:
http://www.streettracks.com.au/

AFIC:
http://www.afi.com.au/


Secondly, I wouldn't be borrowing on margin anything that I thought would return less than the cost of the money. So borrowing at 8.9% to invest at 5% in bonds is rediculous. I'd instead borrow less and put the money in ING Direct. Ask your financial adviser if he is making a commission on the amount of money you borrow. Sounds like it to me.

 

thanks for the replies

mentor is the fund manager and the fees are2.8188% entry and 1.65% ongoing.i made a mistake with the interest rate,its8.6% not 8.9% as i quoted.

i will looking at taking them elsewhere were hopefully they"ll have a chance to grow.
thanks again for the advice,as now i know it stink

thanks

steve

 

Hi Steve


http://www.investsmart.com.au/my_trailcap/

These people cap trailing commssions at $396 pa. Any further commissions are remitted to you. Similarly the remit all entry fees.

You can move your current holdings to them and cut out all those trailling commissions immediately.

Cheers

 

thanks again

been on their web site and that sounds like a plan to me.

i've invested in property by myself for a few years and
done quite well,the first time i had a financial planner involved
it got expensive.

my fault for taking my eye off the ball

see ya
steve

 

Steve,

You also have the option of working with a financial planning firm that understands and encourages people to invest in property.

Consider your options, determine what it is that you want from your investments and decide form there who is best to work with. Just because one group caps their trails at a certain point doesn't automatically make them the best people to work with.

If you'd like to discuss your options with a planner that not only understands but encourages property investment, then send me a private message.

Mark

 

I think Mark has a good point here. Don't throw the baby out with the bathwater.

Some architects, doctors, lawyers, accountants, sparkies and plumbers are better than others. Same with financial planners. Shop around a bit.

One approach is to outsource certain aspects of your investing. If property is the thing you know best then focus on that, but get help with shares/funds.

Alternatively if you were a gun share trader then getting say a buyers' agent to find you property (because you recognise the leverage and relatively stability it provides is an important part of an efficient portfolio) would possibly be a good idea because it lets you concentrate on share trading.

Horses for courses. Just thought I'd throw that out there to help your decision.

Cheers
N.

 

You don't 'work' with these people. You just use the vehicle to minimise the fee's payable.

I posted this info on the basis that Steve already has managed funds on the go with a lot of commissions already paid. All he needs to do is understand what he has become involved in and move any that he consideres worthwhile to the lowest cost umbrella.

Any further 'financial advice' will cost you again as no one works for nothing and each one wants another bite of the cherry.

Cheers

 

handyandy,

You may think that planners just rest on their laurels and do nothing for their clients, but I can tell you - and I'm sure our clients would agree - that we do 'work' with them to ensure they get the best advice possible.

We have very few clients who simply come in with money, hand it to us and say 'invest this for me' and walk away. Because many of our clients are primarily property investors, they are already 'hands on' and they like to keep it that way when they come to see us.

Mark

 

This is something that you may be somewhat sensitive about. At no stage have I said or implied anything of the kind.

My reference to 'work' is in relation to the 'investsmart' link I posted. As far as these people are concerned they do not do any value adding and simply take your investments under their umbrella thus minimising the commissions.

I must admit that I do not have a high regard to financial planners. Every plan I have ever see or discussed, with people who have received them, appear to be very biased toward the products that the planner is involved with and unfortunately from appearance, where the planner gets the biggest and fattest commission. One particular plan that I read even had the wrong names in places and had obviously been 'cut and pasted' with very little of the investment advice changed.

Unfortunately it appears that Steve has fallen prey to one of these unscrupulous planners and as a result has potentially spent a lot of money which will be hard to recover.

Cheers

 

handyandy,

You need to get out and meet some more financial planners

I agree that many financial planners do little more than cut and paste, and that is not good. However, a good financial planner can be an excellent resource. Last year I enlisted the help of a financial planner for the first time as I wanted to spread some of my manged fund investments. I was (and still am) very time poor so I was willing to pay (via commissions etc) for her to provide me with information and recommendations on a number of funds. I then had the choice of following her recommendations, ignoring them completely, or a mix of the two. I also chose this financial planner as she understands IPs (and is an active property investor herself), and I had some recommendations for her as well.

Also, becasue she had a good overview of our finances and our goals I asked her to help set up some insurance for us (income protection and death). Again, this was something that I needed to do but just didn't have the time.

John.

 

hi guys

thanks for the input you've put in

I'm a tradesman myself so i appreciate the difference between a person thats conscientious about the way they they go about their work,and they would expect to be well paid for the service they provide.the same will carry across every spectrum of the community at large.

I've no issue with the choice of funds Ive been directed to(except the bonds)
with the distributions far higher than i anticipated so i was trying to place the funds in a lower cost environment where the can grow with minimum of fees.

after paying out in exess of$12000 i have no problem with switching elswhere


on a lighter note i install air-cons,and if anyone hase questions in this field please ask

thanks

steve

 

I'll pass on that

I am glad that your expectations were met and that it is working well for you. The important thing is that whatever you do or participate in brings you close to your goal and it certainly sounds that you have achieved this.

Steve, I am confused where the $3000 per month goes?

Based on my calculation simply by switching to the people I mentioned you should save in the vacinity of $6200 pa (400000 at 1.26% less the $396 less with less money in managed funds).

Regarding the bonds you will need to check if there is a time frame during which you are locked in. Don't just move hese funds without first checking as there could be penalties and after your run sofar you need to preserve as much money as you can.

By the way, what was the logic, in the financial plan, for using bonds?

Apart from the original link I posted here is another site which seems to perform similar services.

http://www.selfinvest.com.au/ (only rebates the entry/exit fees keeps the trailing comm)

I did come across another site which does a similar function but can't seem to locate them presently.

Cheers

 

handyandy

the $3000/month is $1500 of my own money and $1500 of the margin loan so invest an extra $3k per month into the various funds.
out of this 2.8% is deducted as an entry fee($84)
then the management fees 1.68% are deducted($47) leaving $2869 invested.

had them for 7 months now,just printed the balance out and is as follows

admin fee $3725
funds deposited $433000
entry fees $12205
income $31765 (re-invested)
investment growth -$36663

really surprised by amount of income,so if i switch i am looking at saving
the entry fees and the admin fees.the fees I've paid already have gone so theres not much point worrying about them

thanks
steve

 

guys

just thinking about the bond fund thing and will start a new thread,a little bit more light hearted



thanks

steve