# How would you invest €20k now?



## DLD (23 Apr 2018)

Folks

Looking for opinions. I appreciate interest rates are rock bottom at present, but looking for best option.


If you had 20K that you could put away for maybe 5 years, what product/service would you go with?


1) Looking at the Best Buy section here, the highest % rate is State Savings (5yr) at 0.98%.
Which would return €196, or *€39.20 per year*. Pretty rubbish.

2) If I did 1yr with KBC of 0.75%, returns €150 - DIRT of €55.50 = *€94.50 per year*. Admittedly a lot better than the return from State Savings.

3) Alternatively, if I put 20k into the KBC Investment Funds Calculator:
https://www.kbc.ie/our-products/savings-and-investments/investment-funds

And select 5yrs low risk, it returns potential €21600 - €25400.
Now I know this is an investment product (and I could get back less than the 20k I put in) but say it even returned the lowest estimate of around €21500, it would give:

€1500 - DIRT of €555 = €945, or *€189 per year*.

If I was lucky a got somewhere in the middle of their predictions:
€3500 - DIRT of €1295 = €2205, or *€441 per year.*


I might be tempted by the last option. What would the experts on here recommend?

Or is there something else I might look into?


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## dub_nerd (23 Apr 2018)

You've read the State Savings option wrong -- 0.98% is not the total. It's _*AER*_ 0.98%, total return 5%, or €1k on your €20k, €200/year tax free. It's by far the best option of the ones you've listed. (But still rubbish). Also you'll pay a flat rate of 41% tax on the KBC Investment Funds, not DIRT.


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## michaelm (23 Apr 2018)

DLD said:


> What would the experts on here recommend?


Not sure how many expert replies you'll get but my throwaway opinion is that rates are so poor that if I had 20k that I'd probably need to access within 5 years I'd likely just get Prize Bonds.  However if it was an unexpected windfall I wouldn't bolt it into my numbers at all and instead shoehorn it into an AVC (effectively turning it into a 33K AVC, assuming PAYE @ 40%).


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## DLD (24 Apr 2018)

dub_nerd said:


> You've read the State Savings option wrong -- 0.98% is not the total. It's _*AER*_ 0.98%, total return 5%, or €1k on your €20k, €200/year tax free. It's by far the best option of the ones you've listed. (But still rubbish). Also you'll pay a flat rate of 41% tax on the KBC Investment Funds, not DIRT.


You say the state savings by far the best option.

By this I take it you wouldn't condone putting money into something like the KBC investment funds? 

I have done some more searching since I posted, and I see the likes of Zurich, Aviva , Irish life etc all do investment funds too.

Might do some reading into them.

Does anyone actually win anything on prize bonds?


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## lledlledlled (24 Apr 2018)

I'm by no means an expert but my reading of investment options in Ireland is that the fees & taxes involved make it quite difficult to successfully invest outside of pension products.

The investment funds you mention are amongst the worst offenders. 

Do some reading on ETFs and Investment Trusts and how they are taxed, if you are looking for a diversified bundle of equities, although a ten year timeframe should be more effective at smoothing out the bumps along the way. You'd need to get very lucky with any five year equity investment. 

Although Prize bond odds have been hugely worsened in recent years, it might be as good as anywhere else to keep your money if you need it back in five years. At least you have a (slim) chance of winning a few quid.


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## dub_nerd (25 Apr 2018)

DLD said:


> You say the state savings by far the best option.
> By this I take it you wouldn't condone putting money into something like the KBC investment funds?
> ...
> Does anyone actually win anything on prize bonds?


Savings on deposit and investments are not comparable. It's completely down to the aims and risk appetite of the punter. Personally I wouldn't touch a managed investment fund. That's because I don't touch things I don't intimately understand and those things seem to make a virtue out of opacity. The fact that the banks are hounding me to invest is enough to tell me to steer clear. I am just an average person trying to make sense of things but I prefer to make my own mistakes, thank you very much.

Prize bonds do indeed make money but you have to have enough invested to make the return average out in a viable timeframe. In my opinion €20k is not enough.

Again, in my personal opinion, earning 1% or less before tax is not enough to make any savings product worth my while. I would swap that amount of return (and more) for administrative simplicity and security. That's why I had most of my funds on deposit with Rabo until they closed their doors. Their departure is proving to be a right royal pain. I have another portion of funds in UK investment trusts and another portion in high risk equity investments that I manage myself.


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## Jim2007 (25 Apr 2018)

There is no investment funds option if you time scale is 5 years or less.  The return could very well be negative over that time period, so you might actually end up with 17K or 19K or who knows.  Of course it is your money, but you need to appreciate that if you were to go down that road, then you are going for the highest risk option on the table.


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## Palerider (25 Apr 2018)

Avoid the temptation of prize bonds, €20k is not enough to give you a chance of any return, I'm in them for a large sum and occasionally get a €50 but not each week which of course I think I should be getting..;-)


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## Susie2017 (25 Apr 2018)

what is enough to give a chance of a decent return Palerider on the prizebonds ? Or are the chances getting longer given that people are still buying them in large quantities. I know a relative bought 10 k worth lately


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## DLD (25 Apr 2018)

Interesting reading the negative thoughts on investment funds.  They sell them well, you have to admit that, they sound great! I am always weary of financial people telling me something is a great option.

I think I'll probably go with the state savings option. It's not that much, but best of a bad bunch.


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## dub_nerd (25 Apr 2018)

Susie2017 said:


> what is enough to give a chance of a decent return Palerider on the prizebonds ? Or are the chances getting longer given that people are still buying them in large quantities. I know a relative bought 10 k worth lately


I would say €40k is the absolute minimum. That gives you a 50% chance of winning either one or two €50 prizes per year, but returns may still be lumpy. €100k would be a better bet. However, the average return is still only a quarter of a percent (tax free) regardless of how much you invest. Not worth the hassle in my opinion.


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## Palerider (25 Apr 2018)

Susie2017 said:


> what is enough to give a chance of a decent return Palerider on the prizebonds ? Or are the chances getting longer given that people are still buying them in large quantities. I know a relative bought 10 k worth lately



This is a question that has been statistically answered elsewhere on AAM so I'll let you off yourself to go see the maths behind it, in essence several hundred thousand Euro in PB's should get you the average payout of around .8%, I'm a little ahead of that as I got €1000 in one draw, the max per couple is €500k, I'm building towards that....slowly, €10k will get you zero...statistically in an average persons lifetime.

These are not for everyone.


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## dub_nerd (25 Apr 2018)

Hi Palerider, I'm afraid it's much worse than that. The Prize Bond payout was changed from 0.85% in 2016 to 0.5% last year. But this has an even worse impact on _typical_ returns. The prize structure was not changed -- in other words a relatively greater proportion of the total payout had to go towards the higher value prizes that you are almost certain not to win. So the return counting €50 prizes only (the ones you have a chance of winning) dropped from 0.6% to a derisory 0.27%. You can now earn more with Ulster bank's 12 month term deposit even allowing for DIRT. Needless to say you won't get any €1k windfalls from UB ... so enjoy your win.


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## Palerider (25 Apr 2018)

Understood and you are right but I have managed to beat the best one year fixed rates on offer since I went into PB's a few years back, I managed around 1.4% last year when I added DIRT on to my 'winnings', without that €1000 last year that number would have been <1%.

I've just topped up further with an online purchase and am committed until years end, I'm all in almost with liquid assets in PB's, I'm playing the averages whilst still having cash near at hand, fingers crossed, I feel I'm going to bail a biggie...️


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