Top 10 Frequently Asked Investing Questions
Posted by: Swindells FP, on April 16, 2015.
We’re always being asked questions, which is great. There are a number of questions that seem to crop up again and again, so we decided to compile the top 10 most frequently asked investing questions
Q 1. Can I have high returns with low risk?
A: NO and don’t believe anyone that says otherwise!!
Q 2. How much income will my investment portfolio produce?
A: Focusing exclusively on income and ignoring an investments potential for growth as well, commonly leads to poor choices. Additionally, it can be considerably more tax efficient to receive regular “withdrawals” of both income and capital.
Q 3. What is the total cost of this investment?
A: If you’re dealing with a Private Bank, Stockbroker or a fund that seeks to actively buy and sell the “best” investments, quite probably an awful lot more each year than you imagine, in excess of 2.5% per annum.
Q 4. Isn’t stock market investing just like betting on the horses?
A: It might be if you decided to only invest in a handful of companies, but if you invest across Global stock markets your investments will never just disappear without trace or value.
Q 5. Shouldn’t I just concentrate my investments in the UK?
A: Only if you and your adviser know with absolute certainty that UK listed investments will outperform overseas investments consistently in the future, which is highly unlikely.
Q 6. Should I bother using my ISA allowance?
A: If, by reducing your tax liability, and without increasing costs, we can increase your investment return, why wouldn’t you want to do this?
Q 7. Investing is uncertain, shall I wait until the economy or world politics looks more certain?
A: Usually, this is a sure-fire way of buying investments at the very worst time i.e. at their highest valuation.
Q 8. How can I get a guaranteed 5% per annum investment return?
A: You can’t, unless you are prepared to believe someone has a magical crystal ball or you are prepared to pay sky high costs for some unnecessary guarantees.
Q 9. Property investing is safer and property always increases in value doesn’t it?
A: Is it? What about the cost of repairs/renewals, tenants defaulting, increasing regulatory landlord costs etc. Have a look at Nationwide House Price Index data, in many parts of the UK it is quite common to actually lose money when investing in property.
Q 10. Shouldn’t I invest in property and not in an investment portfolio?
A: If you want to flexibly fund your future lifestyle, will you be able to sell the kitchen or one of the bedrooms of your buy-to-let property to go on that once in a lifetime holiday? Take a look at Property v Pension Portfolio.
If you have a question that has not been answered here call us on 01825 76 33 66 or send us an email via the Contact Us page