hello this is in addition to my previous thread(help with managed funds) same people involved the facts int bond fund margin loan 8.6% entry fee 2.8% management fee 1.68% projected growth 4-6% amount invested $22500 when i quizzed the financial planner why on earth would i do that for he explained that it was part of a balanced portfolio and i probably did'nt understand.he was quite correct! so let's have a poll a- whos the daftest,me for doing it or him for working it out b- should i laugh or cry?,im thinking of laughing,it takes less energy. c-should i sell the funds and donate the money to charity(tax deduction) it may work out cheaper in the long run see ya steve always look on the bright side of life
I love your attitude Steve! I'm getting this mental image of you crucifying your planner and then signing the Life of Brian song... In the past and perhaps at some stage in the future there will probably be a place for fixed interest. Every asset class historically has had its year where it's been the top dog of returns... But NOW is not that time! Why would your planner get you to borrow to invest in a low yielding asset without growth prospects and then hit you up for fees on the way in and fees to manage.... what the???? I don't want to stymie your charitable intentions but maybe an alternative strategy would be to plonk the "fixed interest" component of your portfolio in a nice high yielding at call internet bank account. You can probably get close to 6%pa for no (or almost no) fees. Just my thoughts. But you should of course get financial advice (for another planner!) Cheers N.
Get rid of the fixed interest immediately. Your planner is obviously making recommendations based on your risk profile (well, I hope so at least) but his thinking is really out of whack. Borrowing at 8.6% for a return of max. 6%, taking 2.8% on the way in, then 1.68% every year... Are you sure this guy's name isn't Ronnie Biggs? Mark
Option b Reminds of of the old time insurance policies. These were the ones where the salesman would go to companies to see a client and then encourage the client to give up his co workers. The policies were so good that after 5 years you still hadn't paid off the salesman's commission and had effectively gone backwards in a similar fashion as you describe. (whole of live policies) If you cashed them in early then you ended up owing the salesman his commission and this would be paid before you received the remainder of your money. It is because of these little twists that I suggest you read the small print before simply 'cashing it in' You do have to wander what recourse you have against this financial adviser? Particualrly on the basis that you queried his advise at the outset. Cheers
