Fees on Investments

H

Hillwalker1

Registered User
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Tried to post this already so sorry for the double post.

I'm somewhat of an investment novice. Just a query re fees. Looking at investing €100,000 with Acorn. The fee structure is 5% up front with an AMF of .5%. I cant get my head around a 5% up front fee. I know other investments have penalty reducing charges if you leave a fund before its end of duration.
Or is this 5% a fee that most investment companies are currently charging?

Thanks
 
Is the 5% just for placing this investment in isolation or is this part of a wider financial plan?

I take it the 0.5% is just a trail for them and doesn’t include the fund manager fees?

What type of investment is being recommended? Is it just a fund or something more complex?
 
There's also 1% government tax taken from your €100k before anything else.

Only tied agents used Acorn, they can't recommend anyone else, only Acorn products.

The 1% govt tax and 5% contribution charge is seriously handicapping you. The management fee is reasonable. If you held you money for 5 years, your fund would need to return 1.73% a year just to get you back to €100,000.

Is the €5,000 up front charge usual? Depends which type of advisor you talk to. Unfortunately there are still lots of "advisors" who are nothing more than salesmen who want to maximise the commission available to them.

There are plenty of other advisors out there who will charge you for the advice and work that they do for you and not try to fleece you for as much money as they can get away with.

There are plenty of other options out there that will reduce your costs and give your money a better chance to grow without having to return 1.73% a year just to break even.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
Acorn products are closed to their own direct sales team i.e. you will be dealing with a tied agent of Acorn. As a tied agent they cannot provide you with impartial information on your full range of options for your investment. That being said Acorn funds appear to have quite strong past performance however be mindful of the normal “past performance...” caveat.

All Acorn products typically have front loaded charges. With this Acorn are guaranteed to earn 5% of your initial investment whereas with the other life offices reducing penalties generally apply if you withdraw from the fund in the first 5 years. Nearly all of the companies have products with no penalties for early encashment so that’s worthwhile investigating.

If you choose to invest in the Acorn product I’d recommend that you find out if any growth on your fund after deduction of the 5% charge is subject to exit tax at 41% or does exit tax only apply once your fund is in excess of €100k. For the purposes of the following I’m ignoring the 1% levy which presumably applies in addition to the 5% product charge.
100k invested @ 95% = 95k
Fund grows by 2% = 95 * 1.02 = 96.9k
If you were to encash exit would be due on growth @41%
net encashment would be €96121
So in summary will you be charged exit tax on growth on the fund between 95k & 100k?

If you are incurring exit tax in this situation perhaps consider some alternative options.
 
Smoneen said:
If you choose to invest in the Acorn product I’d recommend that you find out if any growth on your fund after deduction of the 5% charge is subject to exit tax at 41% or does exit tax only apply once your fund is in excess of €100k. For the purposes of the following I’m ignoring the 1% levy which presumably applies in addition to the 5% product charge.
100k invested @ 95% = 95k
Fund grows by 2% = 95 * 1.02 = 96.9k
If you were to encash exit would be due on growth @41%
net encashment would be €96121
So in summary will you be charged exit tax on growth on the fund between 95k & 100k?

If you are incurring exit tax in this situation perhaps consider some alternative options.
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That's not correct. The Revenue have stated that the gain to be taxed is "the policy proceeds less the premiums paid". If it is worth less than €100k on encashment, no tax is payable.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
Hillwalker1 said:
He said it’s a bid offer investment?
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Not sure what words he used, but there's a difference between the price you can buy units for (i.e. invest), and the price you can sell them for.

Search the forum for Acorn. There's not much positive said, and a lot negative about their fees.

Personally I'd much prefer to be talking to someone that can offer me options from different providers, and with different fee structures, and tell me why option a is better than option b, etc. An advisor rather than a sales person. I know they all make their living out of commission, but there's a difference when they've only got 1 product to sell you.

I'd suggest you talk to someone else about your Investment options, and see how you feel.

I've never had any dealings with Acorn, because I don't talk to tied agents, so can't offer any personal experience of them.
 
SBarrett said:
That's not correct. The Revenue have stated that the gain to be taxed is "the policy proceeds less the premiums paid". If it is worth less than €100k on encashment, no tax is payable.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
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I didn’t say anything about it being correct. I said I’d recommend that the OP check it out.
 
Just to ask the stupid question: is there any chance you can put this money into your pension or pay off part of your mortgage before looking to an investment like this?
 
We have paid our mortgage off and both have reasonable pensions. A few years ago I felt better able to take risks financially but feel like I would now prefer to invest in something low risk
 
There's a list of the Acorn fees and charges here

Looks like there's a policy fee on investments of 0.0625% in addition to the 0.5%.

Partial encashment fee only other one that's relevant to Investment plan.

Government Levy not included as it's not an Acorn charge, presumably.
 
Hillwalker1 said:
Thanks everyone
Spoke to guy a little more. He said it’s a bid offer investment?
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I though the Bid Offer spread was dead. That is where you buy a unit for €1 and sell it for €0.95. There is always a 5% difference between the buy and sell price on any given day. It has the same effect as taking 5% of your money. Investments should have this anymore.

Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
GSheehy said:
There's a list of the Acorn fees and charges here

Looks like there's a policy fee on investments of 0.0625% in addition to the 0.5%.

Partial encashment fee only other one that's relevant to Investment plan.

Government Levy not included as it's not an Acorn charge, presumably.
Click to expand...

Wow, it's like going back to the old days (before my time too ;) ) . Nil allocation period, 50% initial commission on pensions!
 
Hillwalker1 said:
Tried to post this already so sorry for the double post.

I'm somewhat of an investment novice. Just a query re fees. Looking at investing €100,000 with Acorn. The fee structure is 5% up front with an AMF of .5%. I cant get my head around a 5% up front fee. I know other investments have penalty reducing charges if you leave a fund before its end of duration.
Or is this 5% a fee that most investment companies are currently charging?

Thanks
Click to expand...

Stay away from any of these type of investments. Back in the day 2007 I invested in this type of nonsense with Zurich/Irish Life/New Ireland. A lamb to the slaughter.
Invest in shares or funds directly or through your pension.
Only today and over the past two days emergency meetings are been held by the big companies in relation to their commercial property funds. Huge write downs on their portfolios. Here we go again.
 
I was sent this as I am looking to put money away for my kids education in 10-15 years. The rates look really good but, for those in the know, are am I missing something as it seems too good to be true?!
 

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SBarrett said:
I though the Bid Offer spread was dead. That is where you buy a unit for €1 and sell it for €0.95. There is always a 5% difference between the buy and sell price on any given day. It has the same effect as taking 5% of your money. Investments should have this anymore.

Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
Click to expand...

I just noticed that my wife's occupational pension scheme with Zurich has a BO spread. They will effectivity collect 5% of the fund on retirement!

I'm happy with the fund and it's charges but it looks this change can be eliminated through one of the discount brokers
 
Itchy said:
I just noticed that my wife's occupational pension scheme with Zurich has a BO spread. They will effectivity collect 5% of the fund on retirement!

I'm happy with the fund and it's charges but it looks this change can be eliminated through one of the discount brokers
Click to expand...

The change can be made with anyone. There's no reason to have the bid/offer spread these days.

Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
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