# 200k - Safe place for proceeds of house sale



## bbc (22 May 2010)

Hi

Sold my house - net'd 200k, moved abroad. Hope to return in 5 years will need the 200k to buy a house then.

Money on deposit with AIB. Want to put it somewhere safe and if possible getting a return.

Current plan is to break it in to 5 x40k (Gold, Euro Stocks ETF, Sterling ETF, Cash deposit, Blue Chip Stocks fund).

Given that I need the money back in 5 years, is that mad ? 
Bill


----------



## jpd (22 May 2010)

That depends - here is a scenario to clarify the question

If you were told that with an allocation like the one you propose

There is a 10% chance of having 150k or less
There is a 25% chance of having between 150K and 180k
There is a 30% chance of having between 180k and 220k
There is a 25% chance of having between 220k and 250k
There is a 10% chance of having 250k or more

how would you feel about the risk of losing some of your money?

If this thought bothers you, then leave it on deposit.

The % are only for illustrative purposes but give a flavour of the unpredictability of the returns. 

Forecasting is very difficult, especially about the future!


----------



## Brendan Burgess (22 May 2010)

JPD

Excellent way of putting it, but a bit incomplete



jpd said:


> If this thought bothers you, then leave it on deposit.



Should read 

If this bothers you, then leave it on deposit, where 

There is a 95% chance of having around €215k
There is a 5% chance of having nothing


----------



## z107 (22 May 2010)

The Irish bank guarantee is due to expire in Sept 2010.
Make sure your money is covered by the new guarantee if you leave it on deposit


----------



## ottobock (22 May 2010)

Brendan Burgess said:


> There is a 5% chance of having nothing



sounds scary..


----------



## mtk (22 May 2010)

ottobock said:


> sounds scary..


 
and irresponsible?


----------



## Brendan Burgess (22 May 2010)

I don't think that it is at all irresponsible to point out to people that deposits are not risk-free. I have been pointing it out for years. 

I am just applying JPD's scheme to deposits. 

I rate it at 5%. Morgan Kelly rates the chances of the Irish government going bust  at 100% in today's [broken link removed]



> IT IS no longer a question of whether Ireland will go bust, but when.  Unlike Greece, our woes do not stem from government debt, but instead  from the government’s open-ended guarantee to cover the losses of the  banking system out of its citizens’ wallets.



Brendan


----------



## ringledman (23 May 2010)

Brendan Burgess said:


> I don't think that it is at all irresponsible to point out to people that deposits are not risk-free. I have been pointing it out for years.
> 
> I am just applying JPD's scheme to deposits.
> 
> ...


 

And the potential for your cash to be destroyed by government inflation theft. It may not happen in Ireland for a while as cash is maintaining it's purchasing power in what is a deflationary environment. 

Give it time and it will. The ECB will have to implement quatitative easing soon and so the purchasing power of the Euro will fall at some point especially against what a bank will pay you in interest. Negative interest rates are likely to remain in the West for some time I feel.

There is no such thing as a 100% safe investment.


----------



## bbc (24 May 2010)

Thanks for the replies - I keep learning on this site. 

This thread neatly summarizes my concerns namely:
- Investment risk (my capital may rise - it may fall)
- Inflation risk (I'm on deposit when inflation rockets)
- Catastophic default risk (Morgan Kelly "I told you so") i.e. the 5%

No investment choice can overcome all these hurdles in the short term, over the longer term, diversification can help.

If I put the 5% out of my mind, then keeping it on deposit seems best. 

If I absolutely had to remove the 5% risk of irish banking collapse/default - is that possible (I guess I can move the money to Norway or something but that has risks too) ?

Thanks again.


----------



## round1 (25 May 2010)

You might consider Post Office Saving Certs and Bonds. May not sound exciting but safe, Dirt free and  a reasonable return.


----------

