# Where to invest small lump sum and monthly additions?



## colly (27 Aug 2007)

I have about 7-8k currently spread between a deposit account and also in some US Shares which are not doing much and I want to get out of.

I want to put them in a decent investment, one which I can add to on a monthly/quarterly basis - and not have to wait an age if I want to withdraw.

I have not done a huge amount of research but I think index funds are probably a good start.

Some options:

[broken link removed]
[broken link removed]
Irish Life

Any advice further than this?
Thanks


----------



## South (27 Aug 2007)

Quinn Life and Rabo would also be contenders maybe also Friends First...other than that, you have already picked out the main contenders for this type of savings vehicle.


----------



## F. Kruger (27 Aug 2007)

Colly,

How long do you intend investing for?


----------



## messyleo (27 Aug 2007)

Quinn life are probably your best bet if you don't want exit charges. Otherwise by going through a broker and with a minimum lump sum of €7,500 I think Eagle star have an offer of 1% annual management charges which is a good deal charges-wise imho.


----------



## South (27 Aug 2007)

gravitygirl said:


> Quinn life are probably your best bet if you don't want exit charges. Otherwise by going through a broker and with a minimum lump sum of €7,500 I think Eagle star have an offer of 1% annual management charges which is a good deal charges-wise imho.


 
There would be no exit charges on any regular savings plan set up on a nil commission basis with any of the providers listed above.

Also, the 1% fund management charge from Eagle Star is available even if there is no lump-sum just a regular saving plan.


----------



## gonk (27 Aug 2007)

South said:


> There would be no exit charges on any regular savings plan set up on a nil commission basis with any of the providers listed above.


 
You should be aware, however, that some may have early encashment charges if you cash in your investment within, typically, five years.

For example, Eagle Star have a tapering charge of 5% in year one, reducing to 1% in year five on their 5*5 funds.

This may not be a problem if you are investing for the medium to long term, but if you want to be in a position to cash in without penalty should unforeseen circumstances arise, watch out for these types of charge.


----------



## South (27 Aug 2007)

On nil commission policies that I have seen with ES, there is no such penalty, I guess it depends on how the policy is set-up...


----------



## LDFerguson (27 Aug 2007)

> Quinn Life and Rabo would also be contenders maybe also Friends First...


 
Friends First's Saver First product has a €3.75 monthly policy fee, 2.5% annual management charge for the first five years and early exit penalties in the first six years.  

It's worth pointing out to colly that any "nil commission" deals mentioned in this thread will typically involve paying a fee to the agent.  This may be obvious to those in the know, but not so to those outside that circle.  The exception to this is Quinn Life but you would typically deal directly with them.


----------



## South (27 Aug 2007)

The Friends First policy has a 106% allocation in the first three years and 104% allocation thereafter, the fund management fee dips to 2% from year 6 onwards and to 1.5% from year 16 (if a saver makes it that far!!).

Remember also that some apparently nil commission deals are not nil commission at all.


----------



## LDFerguson (27 Aug 2007)

Annual management charge of 2% and more for the first 15 years is expensive.  



> Remember also that some apparently nil commission deals are not nil commission at all.


 
Do you mean over-ride commission, where many brokers get paid a commission from insurance companies based on the volume and quality of business done with them?  This is not deducted directly from individual policies.

Or do you mean something else?


----------



## South (27 Aug 2007)

An allocation rate of 106% and 104% is, by contrast, very generous.

Yes, I have seen some advertising of a lump-sum and regular savings policy as nil-commission whereas there is in fact an over-ride commission payable.


----------



## LDFerguson (27 Aug 2007)

Minimum realistic term on the Friends First Savings Plus is 6 years as penalties apply before then. 

Assuming €250 level contribution with €8,000 lump sum at the start at 6% growth the projected value after 10 years is €45,863 after tax on the Friends First plan on a "nil commission" basis. 

Exact same projection using the same assumptions on [broken link removed] of the Eagle Star Savings Plan gives a projected value of €48,610. And that includes commission for us, so a client wouldn't be paying a fee. 

Do you still believe that Friends First's 106% allocation for 3 years, 104% for subsequent years is generous? 

On the other point, nil commission is a bit of misnomer, although the industry and those working within it have yet to come up with an alternative that best describes the practice. Traditionally "nil commission" has been used to describe the allocation rates and charges where a broker chooses to forego all policy-level commission so that the client can get the highest available allocation rates / lowest annual management charges. A broker cannot forego over-ride commission for the benefit of the client and whether or not a broker receives over-ride commission has no bearing on a client's charging structure. "Reduced commission" would suggest that a broker has the option to reduce further, which they don't. We need a good superlative term.  

Obviously over-ride commission must always be disclosed.


----------



## F. Kruger (27 Aug 2007)

106% Allocation ? 104% Allocation?

If it sounds too good to be true, it probably is.


----------



## South (27 Aug 2007)

I would think that the ES deal which refunds the 10% commission and charges a flat fee of €200 would be a far better deal than the ES package that you mentioned...so long as the annual premium is over €2,000 - which it clearly is once the monthly premium goes €167.

If the lump-sum were very large, the FF deal with 106% allocation would obviously have a better chance of being the better deal...each case would need to be reviewed on its own merits.


----------



## LDFerguson (27 Aug 2007)

> I would think that the ES deal which refunds the 10% commission and charges a flat fee of €200 would be a far better deal than the ES package that you mentioned...so long as the annual premium is over €2,000 - which it clearly is once the monthly premium goes €167.


 
Can you point me to a link where such a deal exists?



> If the lump-sum were very large, the FF deal with 106% allocation would obviously have a better chance of being the better deal...each case would need to be reviewed on its own merits.


 
If the lump sum were very large, this product would represent awful advice - you'd get far better terms on a lump-sum only product.


----------



## South (27 Aug 2007)

My family's firm provide such a product, a few people on this site have already taken advantage of it, feel free to PM me if you want further info.

In relation to the lump-sum, as I have already told you, each case would need to be reviewed on its merits I was merely disproving your theory that the FF deal could not match the ES deal it clearly could...


----------



## LDFerguson (27 Aug 2007)

> My family's firm provide such a product, a few people on this site have already taken advantage of it, feel free to PM me if you want further info.


 
This represents an excellent deal.  I'm curious as to why it can only accessed via PM through yourself.  



> In relation to the lump-sum, as I have already told you, each case would need to be reviewed on its merits I was merely disproving your theory that the FF deal could not match the ES deal it clearly could...


 
You misunderstood.  I didn't have such a theory.  I was merely disproving your original statement that for the original poster, "Quinn Life and Rabo would also be contenders maybe also Friends First..."


----------



## South (27 Aug 2007)

Because its their firm and that is the way they wish to control traffic to the firm's resources.

If FF could match ES (as you seem to be admitting above) - then how could it _not_ be a contender?


----------



## LDFerguson (27 Aug 2007)

Because the only situation where Friends First might beat Eagle Star would be where the lump sum was large.  This is irrelevant because the original poster says their lump sum is 7K - 8K.

Let's start again - for the original poster's stated requirement, do you still think Friends First may be a contender?


----------



## South (27 Aug 2007)

I have reworked the figures and the FF fund in your example is out a bit, it should be €47.3K after tax so...as I said originally, there are a number of contenders, FF could be one (depends on term of investment).

As I said at the outset, I would review each case on its merits, the size of the monthly premium and the timeframe are unknowns at this stage so there should be a number of contenders considered in my view including all those that I mentioned initially.


----------



## LDFerguson (27 Aug 2007)

My figures were obtained from Friends First's own website. As they're the product provider, I'm happy to use them. 

If you still want to even shortlist a product as a "contender" for the original poster with the following charging structure, I've nothing more to add.


Monthly policy fee €3.75 (indexing)
Allocation rate 106% in years 1, 2 and 3, 104% thereafter
Annual management charge 2.5% for 5 years, 2% from year 6 to 16 and 1.5% from year 16 on
Fee to broker for setting it up


----------



## South (27 Aug 2007)

There would be no policy fee under our arrangement with FF.

Perhaps FF uses a different methodology on its website to ES - I was able to match your ES numbers so I am happy that my own spreadsheets (I assume you are just taking numbers from a website) are working correctly and therefore my FF number is quite correct and consistent with the ES number.

A number of funds should be considered - and those with hidden commissions avoided.


----------



## LDFerguson (27 Aug 2007)

As I said, my figures were calculated using Friends First's own website. Either (1) you're wrong in your own calculations or (2) Friends First's own system is making a mistake when performing projections. Either one wouldn't exactly have me rushing out to invest in this product. 

The removal of the policy fee doesn't affect my opinion that this is not a good product to be shortlisted for the original poster.

Of course hidden commissions should always be avoided. As I said earlier, all commissions should and indeed must be diclosed. Does this Friends First product pay over-ride commission?


----------



## gonk (27 Aug 2007)

South said:


> A number of funds should be considered - and those with hidden commissions avoided.


 
How can you avoid them if they're hidden?


----------



## South (27 Aug 2007)

Projections froma  fund manager are just that - projections, they would usually not be a deciding factor in recommending a product to a client.

I think it is one to be considered - amongst others - the range of funds available through Friends First and the investor's specific circumstances would be the most important factors once the most suitable fund managers and products have been shortlisted.


----------



## ClubMan (27 Aug 2007)

South said:


> Projections froma  fund manager are just that - projections, they would usually not be a deciding factor in recommending a product to a client.


They are useful when comparing the effect of changes on returns when comparing different products which use the same assumed return rate in projections/illustrations.


----------



## South (27 Aug 2007)

Gonk - if something is hidden a good advisor can earn his/her fee by removing them, I would never have guessed that the product LD is referring to has a commission of 10% if I was not good at finding things.

Club - of course it is useful, as I said it is not decisive.


----------



## LDFerguson (27 Aug 2007)

> I think it is one to be considered - amongst others - the range of funds available through Friends First and the investor's specific circumstances would be the most important factors once the most suitable fund managers and products have been shortlisted.


 
The Reduction in Yield figure (the effect of all charges expressed as a reduction in annual % return, for the benefit of those outside the industry) for the Friends First product is sufficiently high for me to remove it from any short-list, as there are a sufficient number of other products out there with a wide choice of funds and lower charges. 

While certain Friends First funds may well recoup the extra charge by out-performance in the future, I certainly wouldn't use this as a selling point for obvious reasons. 

I suppose the answer to this will be that Friends First have a choice of funds that may be more suitable to certain clients and this justifies the extra charges.  The same argument can be used to justify any high-charge savings, investment or pension product that you care to mention.   



> Gonk - if something is hidden a good advisor can earn his/her fee by removing them, I would never have guessed that the product LD is referring to has a commission of 10% if I was not good at finding things.


 
 I object to the incorrect inference that our Savings Plan product has hidden charges, by being mentioned in this, grammatically incorrect sentence. 

All charges that apply to a customer's savings are detailed on our website *and* in *five* different places on our information pack. Full commission disclosure (including over-ride commission) is made *twice* before a customer applies and a *third* time afterwards. No charge or commission is hidden.


----------



## South (27 Aug 2007)

If I were you, in the interest of clarity, I would put the override commission on the website, so that it can be compared with a nil commission product.

The FF fund may be suitable, as I have already said the reduction in yield is not as dramatic as your figures suggest because your figures are questionable and were based on a different charging structure to the one I proposed.

Are you unable to verify the FF figures independently in the way that I have done?

*My final comment on the Op's question:*
Consider Eagle Star, Quinn Life, New Ireland, Friends First and Irish Life.
There may be others - the most suitable would need to be assessed by looking at the full detail of the investor's circumstances.


----------



## LDFerguson (27 Aug 2007)

> If I were you, in the interest of clarity, I would put the override commission on the website, so that it can be compared with a nil commission product.


 
Thanks but I'm not about to start taking business advice on "clarity" from an anonymous poster on a website, whose suggested route to a fee-based, nil commission financial service is via a PM.  



> Are you unable to verify the FF figures independently in the way that I have done?


 
I've already answered that question in this post.  I note you never replied to the query on whether or not the Friends First product pays over-ride commission.  

Now are you going to withdraw your incorrect inference that our product contains hidden commissions?  If not, it will certainly give me and anyone else reading this thread an insight into your character.


----------



## LDFerguson (27 Aug 2007)

*Included in South's short-list for the Original Poster*
*Friends First*

Allocation rate 106% in years 1, 2 and 3, 104% thereafter 
Annual management charge 2.5% for 5 years, 2% from year 6 to 16 and 1.5% from year 16 on 
Fee to broker for setting it up

I don't need to even make a comment here.


----------



## South (27 Aug 2007)

It is false advertising at best.

There is absolutely no override commission on the deal from FF.

I think you should be able to verify figures produced by ES and FF, if you cannot do so, then how can you spot weaknesses in them.

Your last post above is of no substance, as I have said too many times, every situation should be assessed on its own merits.


----------



## colly (27 Aug 2007)

Wow, thanks for all the replies guys. I will need to have a good read over all the replies again and get back to you with more questions, but for now:

I don't think it will be a long term investment, more short to medium. Basically I'm 27 and want to start investing because:

A) I am now earning enough money so I don't spend all of it every month,
B) I will be more encouraged to save more each month if I can actively see my money growing. At the moment I'm saving about €500 p/m. However I work in sales which is largely commission based, so it's irregular. Sometimes I might not save anything but others I might be able to put away 2k or more.
C) I own an investment property but want to in the coming years buy a place of my own to live in myself so need to save for deposit and stamp duty; or
D) I will most likely start my own business one day (probably not for 5 years or so) and want to save for that.

However, who knows I might need it sooner, but I hope not.

Small charges don't scare me much, I'm looking for greatest capital appreciation (aren't we all..). I've looked at the Quinn Life Freeway ones before and that looks excellent.

I'll need to take time to research them all, but any particular pointers would be appreciated.

Thanks for your help.


----------



## LDFerguson (27 Aug 2007)

To South - First you infer that we have hidden commissions. When I disprove that you make an accusation of false advertising. I took the first one seriously, but now you've just lost any credibility - I don't even have to reply to that one. 

Face it, South - you've been proven wrong and you're just not big enough to admit it. 

Keep on arguing that we engage in false advertising. Keep on arguing that the Friends First product deserves to be on a shortlist of products, with those charges. Keep on arguing.


----------



## Bez (27 Aug 2007)

Colly you will find it hard to beat Quinn Life, especially when it comes to low fees and charges and no commission payments.


----------



## colly (27 Aug 2007)

Thanks. Looks good alright. I'm also looking to invest in China, and their fund seems to be doing very well.


----------



## Bez (28 Aug 2007)

Hi LDFerguson

Your savings deal looks interesting - is that a 0% commission product or do you take commission on it?


----------



## LDFerguson (28 Aug 2007)

In total we get 12.5% of the first year's savings and nothing thereafter.


----------



## Bez (28 Aug 2007)

Thnx LD I will have a look at Quinn Life as well, 12.5% seems a big high.


----------



## LDFerguson (28 Aug 2007)

Should clarify - the commission gets paid to us by Eagle Star and is already incorporated into the charging structure. The only charge you pay is 1% of the fund per year or 1.5% if you choose a Protected of Threadneedle fund, assuming you're starting your plan with a lump sum of €7,500 or more. Eagle Star pay us our 12.5% out of this - effectively they pay us up-front on the assumption that you will continue your plan for at least five years. You don't pay an additional 12.5% charge or anything like that.


----------



## Bez (28 Aug 2007)

I would pick my own funds and I am looking at about €1,000 each month so you would be getting €1,500 in the first year is that right?


----------



## LDFerguson (28 Aug 2007)

Bez said:


> I would pick my own funds and I am looking at about €1,000 each month so you would be getting €1,500 in the first year is that right?


 
If you keep your plan at that level for five years, yes we would receive €1,500.  €1,200 in the first year and €300 over-ride commission which is payable at the end of the business year.  The level of over-ride commission is dependent on the quality and persistency of our overall book of business with Eagle Star so it might be <>€300.  If you cash in or reduce your contribution before five years, our commission would be clawed back.  

Of your contribution, 100% would be invested without deduction.  Thereafter the only charge would be 1% of the fund per year, or 1.5% if you choose a Protected or Threadneedle Fund.  This assumes you start with a lump sum of at least €7,500.


----------



## Bez (28 Aug 2007)

Thanks for being so open about the commissions I think I will have a look at Quinn Life funds


----------



## RaboDirect (28 Aug 2007)

Bez,
If you're considering a China Fund you could also consider the Robeco Chinese Equity fund offered by RaboDirect. [broken link removed]
It is an actively managed investment fund. Entry fee is 0.75%. Minimum investment is €100. Monthly investments are possible. Fund provider's annual management of 1.50% is included in the daily price of the fund. 

Regards,
RaboDirect


----------



## Bez (28 Aug 2007)

thank u Rabodirect i will have a look at that...


----------



## capall (28 Aug 2007)

The Quinn Life funds are tracker funds following certain market indices.

Be very careful investing in an index like China at the moment where you're investing in dollars and you're investing in a market which has seen massive growth and is regarded as being in bubble territory
You could do very well or you could get creamed,just be aware of the risks


----------



## Bez (28 Aug 2007)

I like the look of the P/E multiples of a number of Chinese Stocks, I also feel that their currency is undervalues so should benefit from the continued strenght of the Yuan, not to mention the Beijing Games in 2008, it looks a reasonable place for some of the investment...


----------

