# 100 thousand euro to invest?



## guzzler (2 Jul 2014)

Hi,

I am mid 40s, married with 2 kids (teens) and have 100 euro to invest but not sure where to start. I have 180,000 left on a tracker mortgage, should I pay off some of that?. Have no other debt. Reasonably risk adverse. Any advice appreciated.


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## dub_nerd (2 Jul 2014)

You KNOW someone's going to ask you what your investment objectives are?


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## Eithneangela (2 Jul 2014)

Without knowing what your short/medium/long term strategy is for access to funds, I would immediately advise that you maintain your tracker for the duration of the mortgage term. You are unlikely to get a better return on any investment than a tracker at the current time.


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## west_bound (3 Jul 2014)

guzzler said:


> Hi,
> 
> I am mid 40s, married with 2 kids (teens) and have 100 euro to invest but not sure where to start. I have 180,000 left on a tracker mortgage, should I pay off some of that?. Have no other debt. Reasonably risk adverse. Any advice appreciated.



stocks have been going up for five years straight yet the dividend on a global index fund is still above what you can get in interest in the bank

look up vanguards international website , they have etf funds which cover the usa , europe and the globe , you can buy them on the amsterdam exchange if you want to stay in euro , cost is no more than .25% per anum


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## arikv (3 Jul 2014)

Eithneangela said:


> Without knowing what your short/medium/long term strategy is for access to funds, I would immediately advise that you maintain your tracker for the duration of the mortgage term. You are unlikely to get a better return on any investment than a tracker at the current time.



How is Paying say 1% interest on Mortgage better option than recieving say 1% on even the lowest savings?

If he can keep the tracker and say inject 50k into it is there not at least 2% savings to be made there?
Or am I missing something (such as losing Tracker due to lump sum payment or any 5% guarneted return on investment)?


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## dam099 (3 Jul 2014)

arikv said:


> How is Paying say 1% interest on Mortgage better option than recieving say 1% on even the lowest savings?
> 
> If he can keep the tracker and say inject 50k into it is there not at least 2% savings to be made there?
> Or am I missing something (such as losing Tracker due to lump sum payment or any 5% guarneted return on investment)?



You are double counting, there is no saving to paying off 50k if both rates are 1%

Savings 100k @1% = Receive 1k
Tracker 180K @1% = Pay 1.8k
Net interest 0.8k 

Savings 50k @ 1% = Receive 0.5k
Tracker 130k @ 1% = Receive 1.3k
Net interest still 0.8k 

(Excluding effects of DIRT and TRS)


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## sector_001 (24 Jul 2014)

As dub_nerd said you gotta understand your objectives.... 
You also have to understand your tolerance to risk, and you have to consider this €100K wad and your €180K remaining mortgage in the light of all your assets.
You also have to set aside a certain amount of liquid or near liquid assets for emergencies - that could be 6-12 months of living expenses in case your job goes.

I'd begin if was you by tabulating your net wealth: cash, property (net), pension accumulated value (if DC), stocks, bonds, commodities....
You need to get reasonable diversification across your wealth.

I certainly wouldn't be jumping to pay of a tracker... it's the lowest cost debt you'll likely ever have. 

Let's see what others have to say.


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## Steven Barrett (24 Jul 2014)

Hi Guzzler

In order to give advice, a lot more information has to be given. 

What do you want at the end of it? 
What kind of emergency fund do you have? 
How long are you willing to invest for? 
What return are you looking for? 
What is your risk profile and your capacity for loss? 


Steven
www.bluewaterfp.ie


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## Orga (24 Jul 2014)

SBarrett said:


> What is your risk profile and your capacity for loss?



A fine (and required question) but I believe few people really understand themselves well enough in a financial sense to know what their risk profile is and they over-estimate their capacity for risk, exactly because they don't understand risk. 

So, if you are thinking about your appetite for risk, consider what investments you have made in the past and what their nature was, think about your experience of financial products and your depth of understanding, reflect on the consequences if you were to lose specific amounts of your investment, how would that affect your lifestyle, your family?

An example: my dad received a cheque from a broker for a product that returned about 5k, which was less than the capital he put into it day 1, 5 years previously. So, he was feeling sore and determined not to make a similar mistake, so this time he wanted my advice. We were chatting about risk and he was describing himself as open to moderate risk. I asked him if he would invest the 5k in a product which had a 50% chance of doubling his money but also a 50% chance that he would lose all his capital. He thought about it and said that he wouldn't risk the 5k but he'd risk 2k of the 5k (obviously this doesn't change the risk of the investment, just reduces exposure). OK, I said. I pulled out a coin and told him that I'd toss him for the 2k. You should have seen the look of understanding cross his face as he realised that he actually had no appetite for risk and no understanding of risk.


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## Steven Barrett (24 Jul 2014)

I agree Orga

Assessing someone's risk profile is something that requires a lot of work. 

Guzzler said he is "reasonably risk adverse". To me that means nothing as I don't know what his perception of reasonably risk adverse is and it most probably differs from what my perception of it is. I wouldn't want to give investment advice unless we had established that we both had the same understanding of risk. 

A lot of life companies are now providing their own "risk profiling" questionnaires. Some of them are rubbish, some are alright. The danger is some advisors base their advice solely on the results of this test. So if someone comes out of the questionnaire as a risk taker, they get an equity based portfolio without asking whether they can afford the potential losses that come with equity investing. 

I find the whole area very interesting and it is something that evolves constantly so you have to keep on top of things. 


Steven
www.bluewaterfp.ie


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## Fella (24 Jul 2014)

I agree with Orga 

I gamble professionally and people often ask me for tips. I generally don't give tips. Anyway a few people over the years have asked me can they just trail my bets , give me like 1k and  just split it up over a load of my bets for the week , I have explained to them similar that you could either lose it all or probably double it. They swear blind that they want to take the chance but are never happy if they lose all the money.

The average person doesn't seem to understand Variance or Value or the fact that a good investment/gamble can still lose , standard deviation is another one most people don't get. 

Its a hard one alright defining someones risk level , maybe the coin flip is a good way to show someone.


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