Starting out in Lucky Position

L

Lucky123

Registered User
Messages
3
Hi All,

Looking for a bit of your wisdom pretty please.

Current situation is:
Age: 22
Starting work September with salary of 25k up to 45k in 3 1/2 years (*Guaranteed as Graduate Program).. Big 4 accounting so can expect to go up post training contract (fingers crossed)
Cash: 120k
Living and Renting in South Dublin (yay....)

To keep it short and sweet I'm looking for a way to make the 120k cash work over the next 5-10 years but I'm unclear where to start! Open to all suggestions!

Appreciate any advice you can offer!

Cheers,
 
The starting place is what do you want the money for? If you know what you want to use it for, you can figure out what kind of return you need to generate.
How much of it do you want to dip into while you are training?


Steven
www.bluewaterfp.ie
 
Hey Steven,

Thanks for the reply, the main goal would be to jump on the property ladder at some stage in the short to medium term as it would be nice not to be paying Dublin rents into a black hole. Obviously there is an issue with earnings and getting a mortgage until salary increases a bit!

Cheers
 
If that is your goal, I would play it safe and leave the money on deposit.

You have to ask yourself, if there was a market crash in 2 years time and it took 3 years to recover, what would that do to my plans to get on the property market? With €120k, you will be in a great position to get a mortgage with a lower loan to value which will mean a lower interest rates and less money going out of your pocket each month.

Interest rates are pretty bad at the moment, so the return isn't great. The regular saver accounts offer the best rate with EBS paying 3% fixed for 12 months. The most you can put in is €1,000 a month though. KBC and Nationwide offer decent rates with the same limit. For a lump sum deposit, KBC offer 0.7% on demand.


Steven
www.bluewaterfp.ie
 
Take a punt on prizebonds?? As others have pointed out, with interest rates so low, you are not losing much if you win nothing.
 
What about a capital guaranteed structured product?

Something where you participate 50% in the upside of a broad index.

Worst case scenario, you get your €120k back. Best case scenario, you make a few quid.
 
Any links? Aren't they generally thought to be fairly pointless products that only invest about 1% and put rest on deposit? How else can they guarantee capital return? All while charging probably 1.5% fees......
 
Gordon Gekko said:
What about a capital guaranteed structured product?

Something where you participate 50% in the upside of a broad index.

Worst case scenario, you get your €120k back. Best case scenario, you make a few quid.
Click to expand...

They are awful products. Money locked in for the entire period. Even if market goes up 100% during the term of the product, it is irrelevant. The only value that matters is that on the maturity date.

Very complicated structures. If you don't understand the investment, don't give them your money.

You are better off putting 20% - 30% of your money in equities and leaving the rest in cash than one of these products.



Steven
www.bluewaterfp.ie
 
I'm not a fan either in general terms.

However, what about in circumstances like this, where someone has €100k and absolutely needs it five years from now?

They stick €100k in.

Market falls by 50%, they get back their €100k which is more or less what a deposit will give you.

But say the market goes up by 40%.

They get €120k.
 
Many thanks for the replies folks, will keep things on easy access deposit until something with a better interest rates comes up (if it ever does).

Will be coming youe way looking for help with mortgage sometime in the future Steven. Cheers!
 
Gordon Gekko said:
I'm not a fan either in general terms.

However, what about in circumstances like this, where someone has €100k and absolutely needs it five years from now?

They stick €100k in.

Market falls by 50%, they get back their €100k which is more or less what a deposit will give you.

But say the market goes up by 40%.

They get €120k.
Click to expand...

I still don't see how they can give capital guarantee but still have invested enough of said capital to return 20% nett growth from market growth of 40%? Surely with capital guarantee they only invest about 5% of it, meaning 40% market growth would result in nett growth of about 1k, which is comparable with normal deposit account?
 
Maybe put the max you can on deposit in a credit union I think the limit is 40,000 the dividend from the credit union is generally better than a deposit account in the bank and just as easy to access when you actually need it.
 
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