… said moron being me. I’ve recently come into a chunk of money (about £30000) and don’t know what to do with it. People tell me I’m crazy to leave it in the bank because the interest’s lousy, but I’m too thick (and, it must be admitted, uninterested) to keep moving it about from fund to fund, or whatever the heck it is that people who invest money actually do. So, advice from a bunch of strangers on the internet seemed to be the way forward. Or am I better just asking for advice at the bank? Paying off the mortgage? Sticking it on Chelsea to win the Premiership? Any pointers very gratefully received.
Oh, it needs to be something relatively safe and boring. My wife’ll kill me if I make her even poorer than she’s used to being. Again, ta for any help.
What is the pay off amount on your mortgage and how much interest are you paying? Do you plan on living in your house a long time or short time?
Don’t go to a bank, they’ll just steer you toward whatever investment “opportunities” they’re trying to push at the time. Talk to the local equivalent of an independent financial adviser, the key being to make sure that they’re not “tied” to a particular financial company by acting as their agent, as specified in the second part of the linked page. That’s from a U.K. page, but I’d expect Hong Kong must have something similar.
I would echo that advice. An independent investment advisor would be the best way to go. Not only because they can help you turn the money into more money, but a good advisor can help you be more tax efficient with your returns. Diversify your money, even 30K.
I don’t know if the CFP or CFA people have referral services to potential clients where you are, but they might.
In the US, I’d advise you to visit a fee-only financial planner, where you pay him a fixed amount, but then he gets no commission on what you purchase. Thus you should get more objective advice.
Also, in the US at least, you could purchase a no-load index fund, such as one that invests in the S&P 500 Index (basically the 500 largest public US companies). The idea is that it’s really hard for any money manager to invest money in the market and beat the averages, so you may be better off just buying the average and avoiding the cost of a money manager. You can buy other index funds that invest in the top 1000 US companies, or the top 500 global companies, along with lots more.
Thank you one and all. Fee-only financial advice it is, then. Any idea what a relatively safe, relatively realistic rate of interest or growth (or whatever the hell you call it) I should look for? God, I’m only now confirming my long-held suspicions that I and my wife are shamefully ignorant about money.
Well, when you say, “it needs to be something relatively safe and boring” that’s pretty loaded.
Relative to what?
I mean, your savings account is “safe & boring”.
Parying off your mortgage is “safe & boring”.
The next “safe & boring” thing is probably a money market account.
The only way you’re going to “lose” money doing those things is by not making more somewhere else.
Personally, I don’t think you should give one cent to a professional. Open up an account at a discount brokerage (even an online one like E*trade or Ameritrade) and purchase something like an ETF (an exchange traded fund) and forget about it.
If you’re not going to use the money until you’re retired then you need to put it in something like an IRA. In the US you can put pre-tax money in an IRA and write it off, or put post-tax money in a (Roth) ira and not pay taxes when you take it out.
These are NOT complicated investment options.
Another vote for paying off any remaining debt first, especially your mortgage, even if your interest rate is low. Then take whatever’s left and buy a nice index fund or something very diversified. I’m sure the UK has an equivalent of an S&P 500 fund. (Or you could probably easily buy an S&P 500 fund.)
As far as safe & boring go, the U.S. Treasury offers bonds with an interest rate a few points above inflation. IIRC, it might be 3%, but I’m not sure. If you apply the rule of 72 (or is it the rule of 70?) your money will double—in real—value in about 72÷3=24 years. Unless we amend the Constitution and re-elect Bush again, that should be as near to riskless as you can get (not including the upside risk, that is).
On the whole, I’d recommend getting the latest edition of A Random Walk Down Wall Street and reading it. It’s not fancy. It’s not how to get rich quick. It’s not how to beat the market on five minutes a day. But it will give you a wealth of information and enough basic knowledge to start asking questions.
Hope that helps.
The biggest thing you want to make sure is that any financial advisor is someone who considers your goals, needs, and constraints. Anyone can tell you to pay off this, pay down that, and invest here. But a good advisor is someone who can take stock of where you are, where you want to be, and how to get there. If you have a couple of kiddies and want to send them to university, you may want to sock that money away at a slightly better return than government securities. If you don’t have an emergency fund, you may want to sock some money away for that before paying down mortgages and cars. A good advisor can help you prioritize those types of things.
You need to shop around and ask a lot of questions. This person will be your employee and you may need to interview more than one person to get the individual that will suit you and your personal needs. There are a lot of financial advisors that I wouldn’t trust with a kids piggy bank.
What you have doesn’t sound like a lot to some, but its still something and you are, by your own admission, not terribly good with money. Not a bad idea to get a bit of professional advice.