Investing a lump sum

Whether you have accumulated cash over time, inherited a lump sum or even won the lottery, one thing is certain……if you have a lump sum to invest, you need to think carefully about what you do with it. The most important thing is to do something, because doing nothing, will simply mean your money is likely to be eroded by inflation over time.
There are countless lump sum investment options available and it’s often difficult to know where to turn. And so many people simply don’t do anything for fear of making the wrong decision.

Getting advice on your lump sum

At Wealth Horizon, we believe in the value of good financial advice. But, we don’t believe in paying over the odds for it, and we don’t think it should be difficult to do. Getting lump sum investment advice is important but it doesn’t always mean you have to see a Financial Adviser face to face. These days, you can get advice and invest online, without having to pay the high fees often associated with Financial Advice.

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Where to invest a lump sum 

No two companies are the same when it comes to the services and charges they offer.  The idea that paying more leads to a better service, is simply not true.  But it’s a minefield and it’s hard to know where to turn.

At one end of the spectrum you can take responsibility yourself and make all the decisions, and at the other end someone can do it all for you. There are services in between too.

At Wealth Horizon, we believe in good financial advice and we think it’s important you put your money in an investment that’s suitable for you, when considering where to invest a lump sum.

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Lump sum investment options

Here is a summary of the lump sum investment options that are available to you.

Execution only: or ‘do-it-yourself’ investing means you do all the investment research and decision making yourself.   It is generally a low cost option but often involves the most work. It’s primarily provided online, but also by telephone.

It’s good for people with an interest in investing, and who have the time and expertise to make their own investment decisions.

Online advice e.g. Wealth Horizon: a service whereby you receive regulated financial advice in relation to your lump sum investment. This means your personal circumstances and risk attitude are assessed to ensure your money is invested and managed in the right way for you. With this kind of lump sum investment advice, you generally do everything online with the option of telephone support from an adviser. It is quick and simple to arrange.

It’s good for people who want value for money, simple lump sum advice and someone to manage their investments for them.

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Financial Adviser: a service that involves meeting a financial adviser in person. You will receive regulated financial advice which covers all aspects of your finances, not just investing a lump sum.  It tends to be a more expensive choice and takes time to set up.  While an online account may be offered, it is mainly a personal service that will be provided.

It’s good for someone who wants or needs their whole financial situation to be assessed, prefers a face-to-face service and wants someone to make the decisions for them.  In most cases, clients will need to have a significant lump sum to invest to warrant this type of service.

A ‘do-it-yourself’ investor is likely to pay a similar cost to Wealth Horizon. However, it’s important to remember that if you ‘do-it-yourself’, you don’t get regulated financial advice or on-going investment management on your lump sum.

If you choose to use a Financial Adviser or Wealth Manager to do it all for you, the chances are, you’ll be paying quite a lot more; around 2-3% a year when you allow for all the fees.

So, it’s important you understand the charges you are expected to pay and make sure you’re getting value for money.

DIYNo adviceWealth HorizonSimplified adviceFinancial AdviserFull advice
Personal advice
Ongoing support
Managed for you
Quick to set up
Minimum InvestmentNone£1,000 or £100/month£50,000
Typical costs*0.98% – 1.75%1%2.16% -2.70%

 

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Any news and/or views expressed within this article are intended as general information only and should not be viewed as a form of personal recommendation. This article is not directed to, or intended for distribution or use in, any jurisdiction where such distribution would be prohibited. To the extent permitted by law, Wealth Horizon accepts no duty of care or liability for loss occasioned to any person acting or refraining from acting as a result of any material contained within this article. Where past performance is shown, this should not be taken as a guide to future returns. Investment in the stock market is not a suitable place for short term money. The value of investments and associated income may go down as well as up and you may not get back the full amount invested.

 

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