# Lump sum 100k



## pennies (23 Feb 2009)

Where is the best place to put approx 100k, dont need immediate access but dont want to tie it up either for fear if banks going bust. 
Had it split up in varius banks ie 20k in Credit union, 20k in AIB another at 8% for 18months in BOI etc. Any good deals, have just opened a esavings account with ulster bank at 5.5% with instant access and moved my credit union money into it.
Dont really know so all advise appreciated as I need my money to work as hard as possible for me. thanks


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## iggy (23 Feb 2009)

Northern Rock.


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## North Star (23 Feb 2009)

pennies: If you were prepared to invest some of the amount for a longer period i.e 5years plus, Standard life have a good product called Global Absolute Returns fund. Its not guaranteed i.e returns are variable but it has a pretty reasonable track record:
Pros: 1)all of standard life's defined benefit pension scheme is invested in it so they are sharing the risk with the investors and one would guess they have their best people managing it.
2) They aim to return 6mths euribor +5% (this isnt guaranteed)
3) Because they look to earn a positive return irrespective of how the market is doing they act like a hedge fund by selling markets, doing relative value trades etc
4) Standard life are covered by the UK Financial Services compensation scheme i.e 100% of first 2k fully covered and 90% of the balance. So its pretty secure if you are concerned re the Irish bank guarantee

cons: 1) high annual management charge of 1.35% 
2) Returns are variable.
3) Early encashment charges for first 6 years

Might not be what you are after but worth considering in this environment.
Get full details from your adviser. And whatever you decide to do, dont keep it all in the one investment. Keep it diversified. Good luck


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## Lightning (23 Feb 2009)

pennies said:


> Where is the best place to put approx 100k, dont need immediate access but dont want to tie it up either for fear if banks going bust.



See Best Buys here: http://www.askaboutmoney.com/showthread.php?t=102329

If you exceed 100K in the account the rate on the whole balance drops. 



> Anglo Irish Bank: Premium Demand (Discuss)
> 
> 4.75% (from 29 Sep 2008) (>= ECB+0.5% until 1 Jan 2010) on €1 minimum to €100,000
> 4.00% (>= ECB unti 1 Jan 2010) on €100,001 to €1m maximum (rate applies to whole balance, not excess)
> Interest paid annually.





pennies said:


> Had it split up in varius banks ie 20k in Credit union



What return are you getting? Some CU's are now giving a zero return. 



pennies said:


> Any good deals, have just opened a esavings account with ulster bank at 5.5% with instant access



Keep in mind that although the Ulster Bank account has "instant access" you get just 0.50% interest if you make a withdrawal in the first 6 months. 


If you want to mix your bank accounts I would suggest Anglo Irish, Northern Rock and Investec.


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## OPTIMUM (23 Feb 2009)

North Star said:


> pennies: If you were prepared to invest some of the amount for a longer period i.e 5years plus, Standard life have a good product called Global Absolute Returns fund. Its not guaranteed i.e returns are variable but it has a pretty reasonable track record:
> Pros: 1)all of standard life's defined benefit pension scheme is invested in it so they are sharing the risk with the investors and one would guess they have their best people managing it.
> 2) They aim to return 6mths euribor +5% (this isnt guaranteed)
> 3) Because they look to earn a positive return irrespective of how the market is doing they act like a hedge fund by selling markets, doing relative value trades etc
> ...


 
Sounds like more cons than pros to me! a 1yr fixed at 4% plus of some type is likely to exist in the market as long as banks rely on retail funding and there is competition, IMO, and that could be for another few years so Id go high fixed for 1year and go from there. With fees of 1-2% on most life assurances products, and generally poor returns over the last 5 years Vs 1 yr fixed rates, its hard to get excited about 5yr + products.


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## tomtom (24 Feb 2009)

I'm thinking of opening an account with Investec Bank. Just under 100k, but its the best in the market as far as I can see. 5.5% fixed for 6 months. Have heard good things about them.....


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## Lightning (24 Feb 2009)

tomtom said:


> its the best in the market as far as I can see.



Yes, It is the best buy for 6 month term deposits. See http://www.askaboutmoney.com/showthread.php?t=101813



> 1. Best Buys - Highest Term Deposit Rates
> 
> 6 Months - Investec - 5.58% (Discuss here) Expires March 31st 2009
> 1 Year - Anglo-Irish Bank - 5.25%
> ...


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## bonzos (7 Mar 2009)

fungus said:


> Yes, It is the best buy for 6 month term deposits. See http://www.askaboutmoney.com/showthread.php?t=101813


 is it true that your interest is not subject to DIRT with an post?if this is the case surely it must make it one of the best rates on offer and your money is safe


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## oldtimer (7 Mar 2009)

Yes, because of their DIRT free status An Post Savings Bonds (3 years) and An Post Saving Certificates (5.5 years) are the best, but bear in mind you must leave them on deposit for the full term to get the top rates.


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## NorthDrum (8 Mar 2009)

pennies said:


> Where is the best place to put approx 100k, dont need immediate access but dont want to tie it up either for fear if banks going bust.
> Had it split up in varius banks ie 20k in Credit union, 20k in AIB another at 8% for 18months in BOI etc. Any good deals, have just opened a esavings account with ulster bank at 5.5% with instant access and moved my credit union money into it.
> Dont really know so all advise appreciated as I need my money to work as hard as possible for me. thanks


 
Pennies, what level of risk do you want to take?

Remember that investing in anything other then deposits generally has some element of risk.

Life Companies offer "guaranteed" products were you can take a punt at investing in some element of stocks and shares with the worst return you can get being your original investment. It appeals to many people for differant reasons. 

What you should be aware of is that getting your money back after 5 years could mean a significant devalue of your investment. This is dependent on interest rates and inflation in that period.

Right now New Ireland and Irish Life have products that offer differant levels of capital security, with an exposure to the markets.

So is it a good time to invest money in the markets? It varies from client to client. Its not a one suit fits all recommendation. I refer back to my original question on what level of risk do you wish to take ?

At the moment a majority of people in this country are best served leaving their money on deposit (and shopping around for best deposit rates), mainly because they are already worried enough about how things are going in the economy. 

Many people believe that now is the time to make serious money (ie that stocks and shares are cheap), but since nobody knows how long we will be in this recession or indeed how low things will go, its a gamble that should be considered very carefully before acting on. If you are considering investing anything in a risky venture, you should always do so with the mindset that you are writing off that money (ie you can afford to lose it all) so that you make a well judged opinion on what you should invest in.


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## WaterSprite (8 Mar 2009)

fungus said:


> Keep in mind that although the Ulster Bank account has "instant access" you get just 0.50% interest if you make a withdrawal in the first 6 months.


 
You get 0.5% interest _for the month_ in which you withdraw if you make a withdrawal in the first six months.  You get zero interest _for the month_ in which you withdraw after the first six months.


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## dusmythb (9 Mar 2009)

WaterSprite said:


> You get 0.5% interest _for the month_ in which you withdraw if you make a withdrawal in the first six months. You get zero interest _for the month_ in which you withdraw after the first six months.


 
Good point. I was thinking of going for this product myself until it was pointed out recently that the T&C state no interest will be paid in any month of a withdrawal.


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## Marc (11 Mar 2009)

Re the view that Deposit accounts are a low-risk investment. In nominal terms, yes, your nominal savings are relatively safe. In real terms however, adjusted for inflation, it can be a very different story.

Here is a simple logical argument for all savers to consider:

A simple definition of inflation is "too much money chasing too few goods" 
Governments around the world are now printing money (quantitive easing). 

The quantity of money in circulation is increasing, which all things being equal might be expected to result in higher inflation. 

In the words of the economist Roger Bootle, ‘the umpteen billions of dollars which have been magicked out of nowhere must return whence they came"

For a more detailed explanation of the issues have a look at this:

[broken link removed]

Remember that real interest rates in the 1970s were negative. That is to say the net rate of interest paid to savers allowing for inflation was negative. Each and every year the value of their savings account declined in value.

If real interest rates remain below inflation, the credit crisis will unwind as the burden of debt is reduced in the economy. Those with existing debts will see an improvement in their financial position whilst those with savings on deposit, will see the value of their savings reduce. 

Low interest rates and high inflation will be terrible news for savers.

What should a cautious saver do to offset the risk of inflation?

Ideally, one needs a secure form of investment which offers the potential to appreciate as inflation feeds into the economy.

There are two simple options to consider:

1) Inflation linked government bonds
These offer a government-backed interest payment and inflation protection on the capital invested. However, they have two risks here:
i) Currency risk - movements in currency rates can swamp movements in bond returns so US$ or £ bonds which are un-hedged can create serious problems for a € investor.
ii) Maturity risk - most bonds are issued with very long durations typically 20 or 30 years. Small movements in interest rates can have a very large impact on the movement in prices. The price of bonds moves inverse to the movement in interest rates. So, a low interest yield purchased today, can spell a lot of trouble if interest rates increase.

2) The second option is therefore what was once described by a Professor of Finance as an "inflation hedge fund" 

Savers purchase a euro currency hedged, short-term government bond fund. This offers a high level of security for the cautious investor since they are buying government debt rather than corporate debts. Furthermore this actually offers very good protection against inflation.

The reason is that the bonds are held for a relatively short period of time (sometimes only a few months) they then mature and the proceeds are reinvested into new short-term bonds. Each time the bonds are reinvested, the investor gets to benefit from any changes in interest rates and inflation expectations. 

The result is less volatility in prices (the thing most cautious savers are trying to avoid) but with a higher expected return than a deposit account over time.

Why would we buy a fund rather than simply buying a bund on the German market? Two reasons diversification and tax.

Diversification is the closest thing that an investor has to a "free lunch" 

A government bond purchased directly is subject to marginal tax at up to 41% whereas a bond purchased through a fund is only subject to exit tax.

The solution?
How about a slice invested in a Euro currency-hedged, Irish Domiciled, Global Short-Dated Bond fund with an annual management charge of just 0.25%pa?

This is what we recommend for our cautious clients.


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