# Please help, I inherited €850k and dont know what to do...



## finance_noob (9 May 2011)

Hi folks, I was wondering if you could help give me some advise? I am a bit of a financial noob. Heres my story...

Last year I unexpectedly inherited €850k (net). This was a bit of a shock. I am 30 years old, in a relationship but not married. I do not have a house but I do have a good safe job. The only thing I have done with the money so far is make some donations to charity.

I dont spend much in general, I dont care for clothes, houses, cars or other things. I live a reasonably simple life that invloves doing things that dont require money. So this unexpected winfall left me sort of perplexed. I guess my plan someday is just to buy a house and have some money for kids and family down the road. In the mean time I dont really have any use for it. I fully understand that I am 100% the luckiest dude in the coutry right now to have all of this but as I hope you can appreciate I was doing ok before it happened. I earned enough money from my job to keep me in beer and food. 

I am looking for some financial advise. Right now I have €100k in Rabodirect and the rest of it is in Bank of Ireland. €400k is in 1 year term deposit account, and the other €350k is in a 3 month term deposit account.

Note: The only thing I care about is that the money is safe. I dont care about investments or products that try to return big interest etc. I just want to leave it somewhere safe.

1.) Am I crazy keeping it in an Irish bank with everything that is hapopening?

2.) If its is dumb to leave it in a Irish bank, where should I put it?

3.) What are the chances of loosing any of this down the road by leaving it in an Irish bank?

Any advise you can give me would be appreciated. I am worried with all of ther talk in the news that I might be doing something wrong here. I dont think I can stomach talking to any proffessional financial advisors (sorry if you are one) but the ones I have met to date have seemed out for themselves and just tried to sell dumb investment products to me.


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## z107 (9 May 2011)

Maybe you might like to take a year out while you're young and have the means?
If your job allows, you could do something else for a year. (Travel, charity work, research, art - whatever)
Advantage is that at least you are getting value from your money.

Other than that, I'd move from Irish banks, or at least diversify more. Ireland is apparently on the brink of default.


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## aristotle (9 May 2011)

finance_noob said:


> Note: The only thing I care about is that the money is safe. I dont care about investments or products that try to return big interest etc. I just want to leave it somewhere safe.


 
As much as you don't like financial advisors I would really recommend you talk to an independent one who can give you proper advice. 850K is a big sum and you should look at all your options. For example, you might put a lump sum into your pension.

At 850k just a 1% difference in deposit rates would be 8.5 k per year. So you really should find a good independent advisor.

I have no affiliation but I would recommend you look at the likes of Rory Gillens Investr Centre - http://www.investrcentre.com/investment_advice/


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## LDFerguson (9 May 2011)

Hi noob, 

Leaving that amount of money on deposit for a long period of time will almost certainly lose you money, in that the deposit rates you'll get are likely to be less than inflation, so inflation will eat into the spending power of the lump sum.

That said, if you're dead set against any other form of investment aside from deposits, Brendan has a useful list of the various banks and their guarantee schemes here. You could spread your deposit around various of the banks mentioned, to access the protection of the various deposit protection schemes out there, not just the Irish one.

_(Disclosure - I am a financial advisor but the above is a personal opinion based on the information given, and should not be construed as professional advice, which would require a lot more background information.) _


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## BillPosters (9 May 2011)

1. Travel the world.

2. Look out for auction of distressed prosperties like one from Allsops a few weeks back. Buy nice big house. Or maybe two - one to live in and one to rent out.

3. You can share house with some friends. Just like the guy in Bachelors Walk. One friend should be chubby loser-type barrister who has a rich dad. The other should be a quirky happy-go-lucky dude who fails to pay the rent on occasion but you let him off with it because he is fun to have around. Think of the capers you all will get up to and the fun you will have.

_(Disclosure - I am not a financial advisor but the above is a personal  opinion based on the information given, and should not be construed as  professional advice, which would require a lot more background  information.) _


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## finance_noob (9 May 2011)

LDFerguson said:


> Leaving that amount of money on deposit for a long period of time will almost certainly lose you money, in that the deposit rates you'll get are likely to be less than inflation, so inflation will eat into the spending power of the lump sum.



Thanks for the info. I just feel more comfortable in the short term with deposits. I agree long term I need a better plan.

I have been thinking about throwing maybe €200k into a sterling account through Ulsterbank. The sterling is historically weak now and it fells like a good time to do this. This would also spread the risk around a bit. Am I missing anything with this strategy?


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## aristotle (9 May 2011)

Seriously, get proper advice. Once you start saying sentenances like "thinking about throwing 200k into a sterling account" should start alarm bells ringing!

You should not make arbritary, off-the-cuff decisions like this with that level of money. You can set yourself up for a very comfortable life if you do this properly and get the advice you need.

Go and talk to at least 2 or 3 independent advisors and you will have a much better idea on what to do. You don't have to take their advice but at the moment you are shooting in the dark.


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## JoeB (9 May 2011)

OMG!

I defintely think you need professional advice! It's a huge sum of money! Nearly enough to retire on perhaps, if invested wisely. 

EG, if you could achieve a 5% return, after expenses and taxes, that'd be 40K a year.  Shares may provide that return. 

But I'm not a financial adviser, I definitely think you need one.

I'd split it between
gold, silver perhaps - 30K to 100K
shares, diversied. (US, Euro, others, also across many industries, airlines, mines, oil, tech)
other currencies, swiss franc, ozzie dollar, etc.
property in Ireland at the right price, and not an apartment with the legal problems.


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## LDFerguson (9 May 2011)

finance_noob said:


> I have been thinking about throwing maybe €200k into a sterling account through Ulsterbank. The sterling is historically weak now and it fells like a good time to do this. This would also spread the risk around a bit. Am I missing anything with this strategy?


 
This is inconsistent with your previous post where you said you didn't want to look at any form of higher-risk investment strategy for the moment.  What you're describing is currency speculation.  Currency speculation is a fairly high risk investment strategy.  

I'm not saying that I agree or disagree with your opinion on the future movement of Sterling against the Euro; I'm just pointing out that you've gone from keeping 100% of the money on deposit for now, to saying that you're considering putting almost 25% of it on a currency punt.  

My own view is that long-term investing should not be about lobbing lumps of money at ad-hoc strategies because of a short-term view (or a slick sales pitch), but about making a plan that takes everything into account.


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## finance_noob (9 May 2011)

LDFerguson said:


> This is inconsistent with your previous post where you said you didn't want to look at any form of higher-risk investment strategy for the moment.  What you're describing is currency speculation.  Currency speculation is a fairly high risk investment strategy.



Sorry I didn't mean to sound so reckless! I was just throwing some ideas out there. I don't care much for speculating on currency markets but getting some money out of Ireland and out of the Euro sounds like it could be a good idea.


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## LDFerguson (9 May 2011)

finance_noob said:


> Sorry I didn't mean to sound so reckless! I was just throwing some ideas out there. I don't care much for speculating on currency markets but getting some money out of Ireland and out of the Euro sounds like it could be a good idea.


 
Sorry - I didn't mean to sound critical or judgmental!  It's just that I disagree with the general idea of investing without an overall plan and I also disagree with the idea of investing a large sum of money based on speculation on the possible short-term movement of currencies.    

You say that you don't have a plan for this money yet.  Take your time.  As others have mentioned and you undoubtedly already realise, this is a potentially life-changing amount of cash.  Until you do have a plan, I'd be inclined to simply split it between banks for security, notwithstanding my earlier comments about inflation.  It's reasonably likely that interest rates will outpace inflation in the short-term.


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## bryanod (9 May 2011)

Get proper advice, please.


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## aristotle (9 May 2011)

bryanod said:


> Get proper advice, please.


 
Its like watching the beginning of a traffic crash where you just hope someone will listen


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## finance_noob (9 May 2011)

LDFerguson said:


> Take your time.  As others have mentioned and you undoubtedly already realise, this is a potentially life-changing amount of cash.  Until you do have a plan, I'd be inclined to simply split it between banks for security, notwithstanding my earlier comments about inflation.  It's reasonably likely that interest rates will outpace inflation in the short-term.



Ok, the safest thing for me in the short term is to split the cash between some different banks in deposit accounts. If I can earn 2-4% interest on it I will be happy enough that in the short term at least it is growing with inflation. After that I can dedicate more time to learning about the different options I have for smarter investment.

So what banks should I start looking at? I have a rabodirect account with €100k in it. There is also Ulsterbank which I can deposit up to €100k guaranteed. After that its AIB and BOI. 

I guess my biggest worry is Its seems to be like AIB and BOI are relatively safe as they are backup by the Gov. Its the Gov I am worried about, if they default or drop out of the Euro, my deposits in all of these banks including Rabo are going to be under threat.

Should I look at Euro banks abroad? What banks should I be looking at?


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## finance_noob (9 May 2011)

I guess what I mean to say is...

Is having €100k in BOI and €100k in AIB any different than having €200k in just one of them?

Surely if it comes to one imploding the other one goes too.


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## Murfnm (9 May 2011)

A financial advisor is what you need.  Hell, get two of them if you like, you can afford it.


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## Brendan Burgess (9 May 2011)

Start by reading this Key Post "How to Protect Your Deposits" 

It is not a good idea to have money on deposit long-term in any bank. The future is too uncertain and you need to be able to move it quickly if things change.

Brendan


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## bluemac (9 May 2011)

can you do a big one off pension contribution ie all your wages for last year.  as you can get  this at the best tax rate...  think you can do this up till october..


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## Sue Ellen (9 May 2011)

finance_noob said:


> Should I look at Euro banks abroad? What banks should I be looking at?



By investing with Rabo you have availed of the Dutch Deposit Protection Scheme so another option open to you is the UK one - see below.

The web site itsyourmoney.ie is another port of call for advice.



This is from the  section:

*General Notes:*
Links to details on deposit protection schemes:
*Irish Government Bank Guarantee Scheme*
Protects 100% of your deposit regardless of the amount until June 30th 2011.
*Irish Deposit Protection Scheme*
Protects the first €100,000 of your deposit per person. 
*The UK Financial Services Compensation Scheme*
Protects the first €100,000 of your deposit per person. 
*[broken link removed]*
Protects the first €100,000 of your deposit per person. 
*[broken link removed]*
Protects 100% of your deposit regardless of the amount until September 30th 2010.


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## Marc (9 May 2011)

Act in haste, repent at leisure.

If you use a fee only adviser that should deal with the product selling concerns.

You should also seek an adviser who is independently accredited as a certified financial planner or CFP.

Details of the CFP accreditation can be found on the financial planning standards board website FPSB.ie

Although you don't meet my minimum investment I would be happy to recommend some advisers for you to contact to discuss your requirements.

In the end you should work with the adviser you feel most comfortable with.


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## chlipps (9 May 2011)

i suggest that you take a few weeks off work and visit a few financial advisers asap. not that you are stuck for the cash and would be wisely spent longterm. having all the cash in banks that are backed by irish gov is pointless.. suggest you move some abroad where possible and this is where a financial advisor can assist you.

(Note I am not a financial advisor)


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## legoman (9 May 2011)

Would the credit union be a good option for some of it?


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## Lightning (9 May 2011)

finance_noob said:


> Is having €100k in BOI and €100k in AIB any different than having €200k in just one of them?



Very little difference, you are exposed to Irish state risk either way.


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## mercman (9 May 2011)

OP you are in a very lucky position, that with some proper planning and keeping away from leeches you should be well away in providing for your future. 

You should use AAM to learn of the mistakes others have made. There is no easy formula in making fast money or making better returns than what others profess is a 'great' investment. Over the past few years people invested money on he basis of glossy brochures, fancy presentations and exotic meals simply that others could benefit from the handing over of funds. 

I for one was suckered into a complete web of myths, lies, deceit and promises by you guessed it -- Irish Banks. Yeah sure I've lost money by these gangsters operating on greed. They really could not care one piece if a customer's money was performing -- only what was in it for them individually.

There are a few golden rules that you have to teach yourself.

1. No matter what you intend to invest in, get the full details in writing.
2. Check what ever financial product you are sold as to what the full commissions, fees and charges are applicable to the product and to the person that introduced you or within the organisation themselves.
3. Do not be afraid to ask questions and get the answers in full in writing. 
4. Remember anything that looks to good to be true normally is.
5. It's your money - nobody else's. 
6. Do your OWN research.

Get an appraisal from a firm of stockbrokers (at least one) who will give you a professional analysis of where to put your money and the best way in their opinion to invest, denoting the risk, the possible return and the risk.

And finally keep away from the Irish Banks. I can safely say that even with the mess they are in, that they are a bunch of chancers. And in case anybody reading this doubts me, I will if the Mods will allow me to post my occurrences and losses.  

I have absolutely no affiliation or association with any brokers, investment firms or otherwise.

The best of luck to you.


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## Marc (10 May 2011)

Sorry merc agree with most of what you say except one point. 

Don't get an appraisal from a firm of stockbrokers.

Stockbrokers sell shares and Irish stockbrokers sell Irish shares. 

The Irish market is currently 0.07% of the world and owning Irish shares makes no sense globally especially as Irish shares are subject to 1% stamp duty and uncompetitive brokerage commissions.

Furthermore stockbrokers typically recommend active fund management and tactical asset allocation both of which are expensive and add nothing to a portfolio. Most stockbrokers service their clients the way bonnie and Clyde serviced banks!

Finally the traditional brokerage model is based on being paid for transactions and so recommendations to frequently change a portfolio are common. 

As Nobel prize winner bill sharpe says before costs the return on the average actively manages euro will equal the return on the average passive euro. After costs the return on the average passive euro must exceed the return on the average active euro. This is just an adding up constraint. Active management is more expensive and therefore on average does worse.


I have in my career met a few stockbrokers who served their clients well and in each case the biggest contributor to this was leaving their brokerage they used to work for and setting up on their own as a fee based financial planner.

I am not saying all stockbrokers are bad advisers just that virtually all stockbrokers operate a investment model that is flawed attempting to identify mis priced securities or timing the markets when all of the empirical evidence says that this isn't possible to do consistently.

As burton malkiel says in a random walk down wall street a portfolio selected by a monkey with a dart will do as well as one carefully selected by experts.

Merc you may be happy with your adviser but remember you started from a pretty low base as you yourself will admit.

If you ever want a free second opinion I can assure you that you can improve your portfolio.


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## North Star (10 May 2011)

Finance Noob,
There are a range of strategies available to you which would fall under the very low risk "capital preservation" categorisation. This may suit your short term objectives allowing you time to further research your options and conclude as to what overall long term investment strategy suits your needs best. 
I agree with other posters that a fee based Authorised Adviser is probably your best port of call. I would contact several to get a range of options and choose the adviser that feels the best fit. There are many different schools of thought and approaches to managing and growing wealth. A key point is that there is no one "correct" approach, otherwise it would be universally adopted - which clearly isnt the case. Your choice will be influenced by your personal preferences, objectives and situation as well as being influenced by current market developments. 
The Sunday Business Post previously asked me to write an article for them on " How to choose a financial adviser" in which I include a list of questions to ask any potential adviser which you may find helpful. The link is below. For full disclosure I operate as an Authorised Adviser.
Unfortunately for people who are looking for a fee based adviser there is no comprehensive register of fee based advisers. Perhaps this is something AAM could help with though I am veering off your particular post. Good luck with your search.

Regards [broken link removed] 
 [broken link removed]


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## Bronte (10 May 2011)

finance_noob said:


> If I can earn 2-4% interest on it I will be happy enough that in the short term


 
Why would you accept 2% when you can get 4%? Basically you want a no risk return? So post office, prize bonds and deposit accounts are what you need.


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## dam099 (12 May 2011)

Bronte said:


> Why would you accept 2% when you can get 4%?  Basically you want a no risk return?  So post office, prize bonds and deposit accounts is what you need.


All 3 of these are essentially the same risk i.e. the Irish Government unless you move funds abroad or into a foreign owned Irish bank like Rabo, Ulster etc. Even then these are not no risk just likely lower than the Irish govt and banks


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## Bronte (13 May 2011)

dam099 said:


> All 3 of these are essentially the same risk i.e. the Irish Government unless you move funds abroad or into a foreign owned Irish bank like Rabo, Ulster etc. Even then these are not no risk just likely lower than the Irish govt and banks


 
Well under the mattress then is as good a strategy as any.  But then the house might get burnt down.  As long as the OP spreads the money around he should be ok.  If the banks collapse there'll be none of us ok and probably no AAM either.


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