Foolish Advice (12th Nov. 2014)?
Interesting Article (Harvey Jones: Motley Fool)
This article, by Harvey Jones (Motley Fool), struck a chord with me as it shows the effect of compound interest applied to fees paid to advisors. Something that, if you’ve read my book “Picking Winning Shares”, you will recall I mention in some detail.
I’ve abstracted part of the article below…
If you’re investing for your future, it’s vital to get off to a strong start. But if you take independent financial advice before deciding where to put your money, you have to accept you’re starting with a handicap. New figures out this week show that the average independent financial adviser charges £150 an hour.
- Somebody seeking advice on a £200 monthly pension contribution pays £500.
- And if they wanted advice on investing a £50,000 inheritance, that would rise to a whopping £1,500.
The new figures are courtesy of ‘find an adviser’ site Unbiased.co.uk, which helps people find three named advisers in their area. If you don’t have the competence or confidence to manage your own money, by all means, take advice. But first, understand exactly how much it will ultimately cost you.
Say you are investing your full £15,000 ISA allowance for this year. If your money grows at an average annual rate of 6%, it would be worth £86,150 after 30 years.
Now let’s say you pay your adviser a £500 fee, and therefore only invest £14,500. After 30 years, your money would be worth just £83,280.
So that initial £500 fee will ultimately cost you £2,870.
If you’re interested in DIY-Investing, then read the full article HERE.