# About 30k redundancy to invest - dont trust banks



## pinkyBear (20 Sep 2011)

Hi there,
Mr Bear was made redundant recently and at the moment is still looking for work. I am also expecting - so given the goings-on with the Euro etc would rather our money be safe!!!..

Listening to Constantine gurdgiev on the Eamon Dunphy show was frighting on Sunday am!. 

So Mr Bear and I have thought about alternative options. We have thought about spreading our savings and buying stocks issued by cash rich companies - such as microsoft.

Is this a mad idea, if not where would we go if we were to buy stocks?

P..


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## Sunny (20 Sep 2011)

pinkyBear said:


> Hi there,
> Mr Bear was made redundant recently and at the moment is still looking for work. I am also expecting - so given the goings-on with the Euro etc would rather our money be safe!!!..
> 
> Listening to Constantine gurdgiev on the Eamon Dunphy show was frighting on Sunday am!.
> ...


 
First off, stop listening Gurdgiev and any other economist or commentator. You have a baby to think of! 

It is very hard to give advice without knowing the full situation such as your risk appetite and your desired maturity profile. If you do want to invest the money rather than hold it in cash, I would recommend getting some independent financial advice. Personally I would hold it in cash if you think you will need it in the short-medium term.


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## aristotle (20 Sep 2011)

Be careful with investing into shares. There is a rick of losing money but if you are comfortable with that then it is an option.

I would imagine if things get so bad that deposits are lost in banks that your shares will tank anyways so you will lose either way.


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## pinkyBear (20 Sep 2011)

Hi Guys appreciate your response. Can we afford to loose the cash, not really! 
I don't know how long Mr Bear will be out of work, and we do dip into the savings a wee bit on a monthly basis.  While we have no unsecured debt we have a substantial mortgage which takes the bulk of my salary. 

Mr bear and I are getting financial advise that is part of the package he received. I was also going to run this idea by him too. 

When I read about companies such as Microsoft who are very cash rich companies, my logic is they have more to loose in a banking crisis than I do and well they would have themselves protected in some way against a crash... Or would they!!!
Cheers,
P..


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## aristotle (20 Sep 2011)

Putting all your money or big chunks of it into individual shares is risky and you really need to understand the risks.

Microsoft, for example, if you invested 10k into it in December 2007 would see your money worth about 4.5k just 2 years later. Ok, so I am picking a peak price and low price but its a warning.

If you don't understand shares then avoid.


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## Mpsox (20 Sep 2011)

There are costs involved in both buying and selling of shares + tax implications as well, depending on whether or not you make a profit.

There is no such thing as a risk free investment, 5 years ago, you'd have probably been thinking AIB, BOI or Anglo were safe share purchases. 

If you are worried about the €, you could look to put your money with a bank not owned by the Irish Govt (eg NIB or Ulster).


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## Bronte (20 Sep 2011)

Congratulations on the pregnancy Pinkybear. Commiserations on the loss of a job to Mr. Bear.  

Very hard to give advice on a relatively low sum and with no other information.  Would you be better off paying down some of your mortgage so that you would have more disposable income when the baby arrives. 

If the Eamon Dunphy show scares you financially, looks like you are a non risk person.  Post office perhaps.  Failing that gold bullion under the bed.


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## pinkyBear (20 Sep 2011)

Hi Bronte, many thanks for the congrats.. 

I even fear the PO! The reality is all currencies are linked, and if things did go wallup - the Irish government (who is at Junk Status) while they have guaranteed the savings we all know they cant afford to pay!! 
P..


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## farmerette (20 Sep 2011)

pinkyBear said:


> Hi there,
> Mr Bear was made redundant recently and at the moment is still looking for work. I am also expecting - so given the goings-on with the Euro etc would rather our money be safe!!!..
> 
> Listening to Constantine gurdgiev on the Eamon Dunphy show was frighting on Sunday am!.
> ...


 

if the euro crumbles , what do you think will happen stocks and shares , they will crash like they did in 2008 after lehmanns bank collapsed , im not saying you shouldnt invest in rock solid blue chip companys but you would need to view it was a relativley long term investment , at least five years if an armageddon situation is round the corner


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## Bronte (20 Sep 2011)

pinkyBear said:


> I even fear the PO! ..


 
Oh dear, then all I can suggest is you invest in a field and start to grow your own vegetables to become self sufficient and maybe invest in tins of beans and tuna that will get you over a year or two because with your vision of what is going to happen is so dire that it doesn't bear worrying about.  I was thinking the same way myself a year or so ago, but I've gotton over it.  

On a serious note, have you any debt you could pay down.  And forget shares.


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## pinkyBear (20 Sep 2011)

bronte Wouldn't that be a nice life!!!!  You know you're right and for ages I have not worried about these things at all, as it was my moto "Europe has more to loose than I do"!!! So I just let them get on with it..... 

I did think of putting something off the house as that was something the advisor suggested.

While we don't need the money right now, in that we can survive, just about on the dole and with my salary the longer Mr Bear is on the dole the more at risk we are.


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## sean.c (20 Sep 2011)

Forget about buying gold, shares or any of that rubbish.

Gold is peaking - how much higher can it go?  People forget that capitalist economies work on a cycle, they see something going up and think it's going to up and up and up and up... like the housing bubble.  

A few years ago I bought a couple of gold coins for £60 each, now they're worth £260 each, in a few years they'll be worth £60 again.

As for shares, they're a fools game.  With the markets driven less by logic and more by panic and herd-mentality, it's anyone's guess which way they are going to go.

Don't bother paying down your mortgage.  First reason - screw the bank, you think they'll appreciate you more if - God forbd - you get into arrears down the line?  They won't give a damn that you paid £30k off the capital.  

Secondly, what's your mortage interest rate?  See if you can get a better interest rate with a deposit account.  If you can, shove the money in there.

Sure, you'll save in the LONG term by paying down the capital, and save quite a bit too.  But you have immediate and short-term issues that may require access to ready cash.  

That money will be a lot more useful sitting in a high-interest account than stuck as equity on your house.

What you should do is look at your outgoings and figure out how many months that £30k will keep you going if worse comes to worse.

The safest bet is probably An Post bonds.  They pay no interest (unless I'm mistaken) but you might win something, I believe that they're easily redeemable and it's better than having the cash sitting under your bed, waiting to get robbed.

The next best thing is some high-interest accounts - but watch out for problems getting access to it.  Maybe stick half of it in a fixed-term deposit account, and the rest in a 30-day account.

What you don't want is to fritter it away with a new car, holidays, expensive baby stuff and all that stuff.


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## pinkyBear (20 Sep 2011)

Hi Sean, you are going through all options I have thought about. 

We are a tracker 1.5% above ECB - not great but not the worst either. If we put 20K off the mortgage we would save about €100 pm - as per the advise we were given. While I know it is a way of saving money if Mr Bear does not get a job for a while, we could be in trouble and we wont get much sympathy from the bank! Our mortgage thankfully is the only (however large ) debt we have..

Cheers,
P..


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## sean.c (23 Sep 2011)

*Options...*



pinkyBear said:


> We are a tracker 1.5% above ECB



So that's what, 3.75% overall?  You can get fixed term accounts in the bank paying more than that.

You could always keep some of the lump sum (3-months of outgoings) and put the rest into your mortgage, if that's what you really want.

But it looks like ECB interest rates are going to be on the way back down again (Germany is having growth problems).

For me, if my wife was expecting (we had our 1st child last Dec) I'd want the warm feeling of a big chunk of money sitting in the bank.  Nothing speeds up the Irish medical system better than saying "I can go privately..."


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## sean.c (27 Sep 2011)

For example, if you'd bought gold just 3 days ago, you'd have already lost 9% of your €30k.

[broken link removed]Look [broken link removed].


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## joeysoap (28 Sep 2011)

sean.c said:


> So that's what, 3.75% overall? You can get fixed term accounts in the bank paying more than that.
> 
> You could always keep some of the lump sum (3-months of outgoings) and put the rest into your mortgage, if that's what you really want.
> 
> ...


 

ECB is at 1.5% so =1.5 is 3%.
While there are deposit accounts paying in excess of that, take into consideration DIRT and its not simply a question of anything >3% is good.

Taking 20K off the capital of a mortgage at 3% realises an immediate reduction of 100 per month according to the OP, so in year 1 would return 1200.  Saving that 20K at 4.5% gross would yield  900 gross in year 1, and then deduct DIRT at 30% reduces that return to 630. 

However one must consider the value of cash. I agree with you that having the money to hand with a new born on the way is prudent. So its a question of long term value versus short term availability.


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## pinkyBear (29 Sep 2011)

Hi there,


Many thanks to all for their time, Sunny you're right I'll stop listening to Gurdgiev ! We have decided to put the money into the PO for a while as it has the highest interest rates for on demand accounts.

P..


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