If youre investing for yourfuture, its vitalto get off to a strongstart.
But if you take independent financial advice before deciding where to put your money, you have to accept youre 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 dont 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 ISAallowance for this year. If your money grows at an average annual rate of 6%, it would be worth 86,150 after 30 years.
Now lets 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.
It gets worse. Most advisers also charge ongoing annual fees of up to 1% of the value of your investment portfolio. Thats what does the real damage.
So if your adviser charges 1% a year on top of that 500 initial fee, your 15,000 will shrink tojust 62,670 after 30 years.
You start 500 down but end up an incredible 23,480 worse off.
Pound For Pound
It is worth paying for complexadvice, say, deciding whether to take income drawdown at retirement, or planning your familys tax affairs.
But if youre simply saving for the long term, with a little effort, you can do that yourself.
One easyway is to buya low cost index tracking fund that follows the FTSE 100, such as the Fidelity Index UK. This has no initial charge whatsoever, and its annual charge is just 0.09% a year.
Or you could track the FTSE All-Share through the Legal & General Tracker Trust, which charges just 0.16%.
Alternatively, you could build up a portfolio of blue-chip stocks, trading and cheaply and easily using an online stockbroker.
You wont always get it right, and youve only got yourself to blame if you get it wrong.
But remember, you start 500 ahead. And as my figures show, that could ultimately run into tens of thousands of pounds.
If you wantsome FREE stock tips to get you started, then download this special wealth creation report, top FTSE 100 stocks that could help you retire in comfort.
This report, The Motley Fool’s 5 Shares To Retire On, names five top income-paying stocks that can help you deliver long-term wealth over the years ahead.
If you’d like to find out the identityof these five top companies, and how their shares could fuel yourretirement, simply click here now for instant access.
It won’tcost you a penny. Let alone 500.