# What should I do with €200,000?



## tripchamp (17 Oct 2018)

29 years old and have 200k cash sitting in the bank.. I was saving this money to buy a home but prices have exploded in these last 2 years so I'm looking away for now - I don't want to end up overpaying for real estate. 

I made this money from an online business and there's no way I can invest any money to grow the business itself. 

Me and my partner are also looking at the option to relocate to another country where we could buy a property in 1-2 years.

I have basic knowledge of investments(index funds mainly) but I also think that the market is overpriced at the moment and is in for a correction soon.

Is it all that bad to just leave the money in the bank without earning any significant interest(.75% yearly)?


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## rob oyle (17 Oct 2018)

For the timeline you have, placing on deposit is the most sensible option.


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## tripchamp (18 Oct 2018)

Okay Rob I understand thanks... So what's the minimum timeline one must have if he wants to invest in the stock market?


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## Zenith63 (18 Oct 2018)

tripchamp said:


> So what's the minimum timeline one must have if he wants to invest in the stock market?


There's no firm number on it and it's also dependent on your risk appetite, how much you want that house etc.

One consideration is that there is a cost to enter and exit the stock market, it varies hugely but if you're paying stamp duty of 1% to buy and sell, then maybe 1% to a broker to buy and sell, you're down 4% immediately.  If you assume the stock market brings an average return somewhere around 4-6%, then investing for one average year would likely bring you to break even, invest for two years and maybe you're a couple of % per annum etc.  So for 1/2/3 years it probably makes more sense to try and find a decent deposit account.

Thinking about risk though, if you had invested in October 2007 your €200k would be worth less than €100k a year later in the stock market or €202k in a bank account.  You would have had to wait until mid 2013 just to get back to €200k in the stock market, while your bank account would have had €212k in it.  Depending on your risk appetite maybe you would have ridden that out no problem, but you may have decided to get out as the markets kept tumbling in 2008 and never got back to €200k.

Thinking about opportunity cost, in the above example, when the market crashed so did house prices, your €100k in stocks would be useless to you as you'd want to let that ride out the dip, but your €200k+ in a bank account could now buy you a house that might be worth €500k today.


One other observation based on what you said - if you think house prices are going to crash, then the market is likely to crash at the same time in which-case investing there would not make sense.  If you think house prices are just too high, but the markets are going to be grand, then the corollary is that you don't think house prices will crash (they'll just go flat say) and maybe you should buy one now and make use of the low(ish) interest rates.



PS. I'm very much in favour of investing in stock markets and would encourage pretty much anybody to do it even in small amounts just to build up experience and investing discipline, so this is not an anti-stockmarket post...


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## Steven Barrett (18 Oct 2018)

tripchamp said:


> I also think that the market is overpriced at the moment and is in for a correction soon.



Why do you think the market is overpriced? 


Steven 
www.bluewaterfp.ie


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## tripchamp (18 Oct 2018)

Zenith63 said:


> There's no firm number on it and it's also dependent on your risk appetite, how much you want that house etc.
> 
> One consideration is that there is a cost to enter and exit the stock market, it varies hugely but if you're paying stamp duty of 1% to buy and sell, then maybe 1% to a broker to buy and sell, you're down 4% immediately.  If you assume the stock market brings an average return somewhere around 4-6%, then investing for one average year would likely bring you to break even, invest for two years and maybe you're a couple of % per annum etc.  So for 1/2/3 years it probably makes more sense to try and find a decent deposit account.
> 
> ...



Wow thanks for the detailed response. That makes total sense, that's how I always thought of it honestly but I think I just needed somebody else to confirm it for me. I do intend to get my feet wet in the stock market very soon, maybe start with 2k for now to see how it goes and what expenses go with that.. The only thing is that the only platforms available to me have custody fees, medium-high trading fees & inactivity fees. Do you think it's still worth my time when you consider those expenses?




SBarrett said:


> Why do you think the market is overpriced?




More than overpriced I feel more that we've reached a peak - which could essentially mean the same thing.

For starters I run an online business catering for consumers and have been feeling the pinch since August. I can compare with 6 years of activity. There were highs and lows in those 6 years but this one feels really different and I'm experiencing a sudden increase in 'lack of money' feedback from my clients - this is happening mainly in the US but also in Europe and other countries.

Apart from that if you see the yield curve in the last 7 years of stock market gains(from the last recession up to this point), you can see that it's the biggest yield curve ever and we won't see anything like it in the near future. This yield curve was mainly experienced(in my humble opinion) due the huge internet/social media/e-commerce revolution that happened in these recent years. If you think about it, this is really the first time in history that the so many international companies had so much global reach - almost 70%-90% of the world's population) and I simply think that we've reached a peak. There's just nowhere to grow as much unless there's a new innovation on the horizon that changes the way we live and that is able to generate as much revenue as these tech companies. Please correct me if I'm wrong but that is my humble opinion from the observations I make.

Additionally we are reaching the decline in the short-term debt cycle very soon and this will slow things down.


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## Jim2007 (18 Oct 2018)

Zenith63 said:


> There's no firm number on it and it's also dependent on your risk appetite, how much you want that house etc.



The general consensus would be at least five years


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## Jim2007 (18 Oct 2018)

tripchamp said:


> For starters I run an online business catering for consumers and have been feeling the pinch since August. I can compare with 6 years of activity. There were highs and lows in those 6 years but this one feels really different and I'm experiencing a sudden increase in 'lack of money' feedback from my clients - this is happening mainly in the US but also in Europe and other countries.
> 
> Apart from that if you see the yield curve in the last 7 years of stock market gains(from the last recession up to this point), you can see that it's the biggest yield curve ever and we won't see anything like it in the near future. This yield curve was mainly experienced(in my humble opinion) due the huge internet/social media/e-commerce revolution that happened in these recent years. If you think about it, this is really the first time in history that the so many international companies had so much global reach - almost 70%-90% of the world's population) and I simply think that we've reached a peak. There's just nowhere to grow as much unless there's a new innovation on the horizon that changes the way we live and that is able to generate as much revenue as these tech companies. Please correct me if I'm wrong but that is my humble opinion from the observations I make.
> 
> Additionally we are reaching the decline in the short-term debt cycle very soon and this will slow things down.



Do yourself a favour and stop listening to the talking heads twaddle!  Replace tech with steam and your analysis would work, replace tech with the .com boom and your alanlysis would work......

[broken link removed]


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## tripchamp (18 Oct 2018)

Jim2007 said:


> Do yourself a favour and stop listening to the talking heads twaddle!  Replace tech with steam and your analysis would work, replace tech with the com boom and your alanlysis would work......



I don't know why you say that, I actually don't read or listen to any investing news/material. These observations are solely made from what I see going on around me, that's all.


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## Easeler (18 Oct 2018)

If it was me i think a semi D as near to dublin as you can ge,t move in to smallist room rent out other 2 or 3 rooms for cash go down stay there one night a week  happy days.


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## moneymakeover (20 Oct 2018)

SBarrett said:


> Why do you think the market is overpriced?
> 
> 
> Steven
> www.bluewaterfp.ie




S&P, Dow, Nasdaq recently have seen all time highs

@tripchamp I don't think it's due to internet advances

It's due to money supply aka quantitative easing


With 14 trillion injected into world economies at a time is unprecedented low interest rates where else would the money be invested?


Is there room for more growth? Probably.

However, next the easing will be reversed which is difficult and unchartered territory

https://www.worldfinance.com/banking/the-qe-reversal

What will happen though is interest rates will increase

Then market investors will be able to get 3% risk free

And why keep their money in the market?


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## joe sod (20 Oct 2018)

@moneymakeover   most of the money invested is not invested in the stock markets but in the bond and debt markets.  Central banks have been buying the debt of governments like Ireland et al, most of the pension funds are also invested in the bond markets. After that the biggest market is the global property markets. The stock market investments as a percentage of global money invested has fallen since the 1990s


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## W123BrL (19 Feb 2021)

tripchamp said:


> 29 years old and have 200k cash sitting in the bank.. I was saving this money to buy a home but prices have exploded in these last 2 years so I'm looking away for now - I don't want to end up overpaying for real estate.
> 
> I made this money from an online business and there's no way I can invest any money to grow the business itself.
> 
> ...


Hi there, I know this post is fairly old but I’d just love to know what type of an online buisness you are in? Thanks


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## bish123 (19 Feb 2021)

Most of the analyst believe market is overpriced as general and correction is due. When it will happen is anybody guess. If you are investing for longer period, at least 5-6 years, it will hardly matter. But if your horizon is next 2-3, you might be caught in the crash and end up selling shares when they are 20-30% less than today. So, yes investing at this stage might be good idea but not short term trading.


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## Steven Barrett (19 Feb 2021)

Funny this popping back up and the OP thinking the market was overpriced and in for a correction. Besides a serious correction this time last year because of Covid, the markets have been going strong. A hunch is never a good reason to invest or not invest. While I wouldn't have recommended that he invest his property money, he would have made €70,000 before taxes and charges if he had


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## Blackrock1 (19 Feb 2021)

yes but he would have had to have the stomach to not act when it hit 165k also....


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## LoveTrees (19 Feb 2021)

tripchamp said:


> 29 years old and have 200k cash sitting in the bank.. I was saving this money to buy a home but prices have exploded in these last 2 years so I'm looking away for now - I don't want to end up overpaying for real estate.
> 
> I made this money from an online business and there's no way I can invest any money to grow the business itself.
> 
> ...


It's all about willingness to committ... How much of those you want to keep flexible (for example for a deposit in 2 years) and how much can be committed for more years? Depending on the answer then the money that can be committed for more years then should be put in a diversified portfolio in stocks...


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## PMU (19 Feb 2021)

SBarrett said:


> Why do you think the market is overpriced?
> 
> 
> Steven
> www.bluewaterfp.ie


 
For certain markets (including IE)  the current price is high relative to historic earnings (i.e. as per Shiller CAPE).  e.g. [broken link removed] .  So if you pay a high price now, you can expect lower returns in the future.


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## AlbacoreA (20 Feb 2021)

What would be the advice today with 200k sitting in the bank??


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## noproblem (20 Feb 2021)

AlbacoreA said:


> What would be the advice today with 200k sitting in the bank??


See original post , No 1.


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## AlbacoreA (20 Feb 2021)

That's a bit cryptic since No1 is the question not answer. 

I assume you mean leave on deposit.


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## joe sod (20 Feb 2021)

tripchamp said:


> If you think about it, this is really the first time in history that the so many international companies had so much global reach - almost 70%-90% of the world's population) and I simply think that we've reached a peak. There's just nowhere to grow as much unless there's a new innovation on the horizon that changes the way we live and that is able to generate as much revenue as these tech companies.


As another poster pointed out this is not true the economic revolution caused by the steam age, the oil age and the electrification of the world have had a much bigger effect. The tech boom is really confined to technology and associated stocks, yes these have garnered virtually all the stock market valuations in the last few years. The tech boom has had virtually no effect on energy generation, agriculture or transportation.


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## AlbacoreA (20 Feb 2021)

It would seem the answer is to diversify. Have some in property, shares and some on deposit. 

I think Covid has people hesitating waiting to see what happens after. 

In terms of tech shares we are seeing a WFH Revolution. Ok it's limited to only some people. But this has an effect on tech and tech shares. As some companies like Microsoft have seen a massive move to their online offerings. Be that for work or entertainment.  We've also seen some substantial leaps in hardware performance. Hardware had been stagnating with only tiny performance increases annually for a while. Interestingly Intel seem to be behind the curve on this. Will they catch up?


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## bish123 (5 Mar 2021)

SBarrett said:


> Funny this popping back up and the OP thinking the market was overpriced and in for a correction. Besides a serious correction this time last year because of Covid, the markets have been going strong. A hunch is never a good reason to invest or not invest. While I wouldn't have recommended that he invest his



When markets crash is anyone's guess. The chances of correction and potential crash are higher when there is dissociation of stock price from its potential to generate revenue and which was the case for last few months. Markets tend to overshoot highs and lows. We were in overshoot category for last 2 quarters and now its time for correction.


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## Johnno75 (5 Mar 2021)

Gold. At a low price now.


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## jim (6 Mar 2021)

We were in overshoot category for last 2 quarters and now its time for correction.

@bish123 Do you only know this with hindsight or did you know it at the time and if you knew it at the time - how did you know it and did you act on it?


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## Marc (6 Mar 2021)

Jayom75 said:


> Gold. At a low price now.


Let me know when it starts paying a dividend


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## Johnno75 (6 Mar 2021)

Marc said:


> Let me know when it starts paying a dividend


Buy low. Sell high.


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## bish123 (6 Mar 2021)

jim said:


> We were in overshoot category for last 2 quarters and now its time for correction.
> 
> @bish123 Do you only know this with hindsight or did you know it at the time and if you knew it at the time - how did you know it and did you act on it?


Hindsight mostly as its impossible to guess the timings but markets were very strong fueled by speculations on Tesla, bitcoin, EV etc. I don't invest much in stock market (apart of pension) so took no actions. An observer mainly but thinking of investing in stock market  if it becomes a serious crash.


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## Marc (5 Apr 2021)




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