# Best place to invest 100K



## fidgetspinner (10 Jul 2018)

We recently sold our investment property due to the crippling rent rules. We were achieving less than 60% of market rate and barely breaking even between mortgage, agent’s fees and tax. If we could have achieved market rate we would not have considered selling but like many landlords, our loyalty to long standing tenants meant we had kept rents low and were then trapped by rent rules for RPZs.

We reluctantly decided to sell earlier this year. However, the sale netted us €200K, half of which we have used to clear the mortgage on our family home. We are now completely debt free which is an amazing feeling but the loss of the security of a good investment property (albeit a poorly performing one) is something we’re still getting used to.

As the investment property was meant to be our pension we are now looking for a good way to invest the remaining 100k.  A nurse and garda with 3 young children, we would like to put some away for their future (college, weddings etc) and realise that this is probably the only time we will ever have the opportunity to invest such a large sum of money and we’d like to invest it wisely. 

We had mortgage protection policies on both properties. These are now cancelled and we would like to take out some insurance which would pay a lump sum to our children in the event of either of our deaths. 

Any advice appreciated. Thank you.

PS If anyone knows of a good financial adviser in the Munster area we would be happy to hear from them.


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## Sarenco (10 Jul 2018)

It is impossible to say in advance what will turn out to be "best place" to invest €100k over your time horizon.

However, on the basis of what you've told us, I would probably do something along the following lines if I was in your shoes:-

Keep €25k in an instant access deposit account;
Invest €25k in 5-year State Savings Certificates; and
Invest €50k in a widely diversified investment trust like Foreign & Colonial Investment Trust plc (FRCL).
Incidentally, it seems a shame that you cancelled the mortgage protection policies - they would have provided cheap life cover.  In any event, don't Gardai have a pretty generous death in service benefit?


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## spondulix (3 Aug 2018)

Sarenco said:


> Invest €50k in a widely diversified investment trust like Foreign & Colonial Investment Trust plc (FRCL).



Sarenco what do you see as the advantage of investing in FRCL vs an accumulating UCITs etf like eg IWDA?

The etf would have a lower TER. Obviously there are other highly diversified ETF options also.

Just curious about this.


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## moneymakeover (3 Aug 2018)

What kind of fund is frcl?
I can see it's an investment trust
And has large holdings in apple, msft etc
If it's a closed fund can its value exceed the value of the underlying assets?


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## Protocol (3 Aug 2018)

fidgetspinner said:


> As the investment property was meant to be our pension we are now looking for a good way to invest the remaining 100k.  A nurse and garda with 3 young children, we would like to put some away for their future (college, weddings etc) and realise that this is probably the only time we will ever have the opportunity to invest such a large sum of money and we’d like to invest it wisely.
> 
> We had mortgage protection policies on both properties. These are now cancelled and we would like to take out some insurance which would pay a lump sum to our children in the event of either of our deaths.



Note that your occupational pension has a death benefit that will pay out if you die in service.

Your trade union may also offer additional optional insurance.


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## moneymakeover (3 Aug 2018)

To answer my own question it seems yes the "value" and the price of closed end funds can diverge

In the case of frcl

*Estimated NAV 710.00

Share Price 728.54
*
http://citywire.co.uk/money/investment-trusts/investment-trust-factsheet.aspx?FundID=2915
Does that suggest it's a bargain at 710?

Ps, i would have edited my above post but that option was missing


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## jpd (3 Aug 2018)

The NAV is what the managers of the fund think the share is worth. The Share price is what someone who wants to buy thinks it is worth. Unless the fund only holds shares/securities that are easily traded and thus readily priced then the divergence of the two prices is a judgement call. It means that the funds hold assets that the managers think are worth more than Mr Market thinks - and who knows who is correct? Is Apple worth a trillion $s - a lot of people think so but mightn't mean much in a few months time


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## Bronte (3 Aug 2018)

Well you could always go back into property. And you know the business.  I second the point about not cancelling the two policies. The older you are the more expensive it is to get it back.

Figure out how much you will need for the children's education and how much for each wedding.  Good health cover is a must in Ireland.

As regards the sold house, you may feel you were just breaking even but you've managed to pull 200K out of it. That's pretty good.  Plus you've been able to now free up the home mortgage money - which you can now also save.


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## moneymakeover (3 Aug 2018)

I would have said the Nav is the value based on the price of individual shares. So if the fund holds 100 Apple shares, then multiply by current Apple share price to give the Apple component of the Nav. Easy enough. No real contribution by managers.

On the other hand the frcl price is the market attached value.

By the way which currently exceeds the Nav.


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## PMU (3 Aug 2018)

jpd said:


> The NAV is what the managers of the fund think the share is worth. The Share price is what someone who wants to buy thinks it is worth. Unless the fund only holds shares/securities that are easily traded and thus readily priced then the divergence of the two prices is a judgement call. It means that the funds hold assets that the managers think are worth more than Mr Market thinks - and who knows who is correct? Is Apple worth a trillion $s - a lot of people think so but mightn't mean much in a few months time


Sorry, the NAV is the shareholders' funds (i.e. total assets less total liabilities) per share. If you go to the last annual report you can see how it's calculated. It's not what the managers think a share is worth. You need to look at the gearing or total debt, which is a liability on the fund. A highly geared IT may have a low NAV. It's not that you're getting assets worth X at a bargain;you're getting assets worth X less debt of Y; it's an indicator of how much debt the IT is carrying.  (And this, of course, is in addition to any debt the individual securities are also carrying.)


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## Sarenco (3 Aug 2018)

spondulix said:


> Sarenco what do you see as the advantage of investing in FRCL vs an accumulating UCITs etf like eg IWDA?


IWDA is subject to exit tax @41%, with a deemed disposal every 8 years, whereas FRCL is subject to the usual income tax/CGT regime.

There are a few other reasons why I often recommend FRCL for retail investors but the relative simplicity of the tax treatment is probably the main one.


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## jpd (5 Aug 2018)

PMU said:


> Sorry, the NAV is the shareholders' funds (i.e. total assets less total liabilities) per share. If you go to the last annual report you can see how it's calculated. It's not what the managers think a share is worth. You need to look at the gearing or total debt, which is a liability on the fund. A highly geared IT may have a low NAV. It's not that you're getting assets worth X at a bargain;you're getting assets worth X less debt of Y; it's an indicator of how much debt the IT is carrying.  (And this, of course, is in addition to any debt the individual securities are also carrying.)



What I meant was that if some of the assets are not quoted assets, then the valuation is a matter of opinion or an educated guess or estimate. This "estimate" is initially calculated by the management of the fund, or it's employees, and then has to be assessed and approved by the auditors. But at the end of the day, it is still an guess/estimate. The same goes for the liabilities. Most managements will have an optimistic view of the value of the assets which may not be shared by the marketplace.


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## moneymakeover (9 Aug 2018)

Is there any way to buy into frcl and avoid the sterling exposure?
And inconvenience of sterling dividends


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## RedOnion (9 Aug 2018)

moneymakeover said:


> avoid the sterling exposure


You're not really exposed to GBP.

Only about 11% of their investments are in the UK. And even some of those aren't really exposure to GBP - for example BP is 0.7%, so you're more exposed to the price of oil than the FX risk.

If the market behaves correctly, the GBP value should reflect FX movements back to the underlying share investments.


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## moneymakeover (9 Aug 2018)

I agree the underlying asset is not sterling
It's mostly dollar
But entering/exiting and collecting dividends would require foreign exchange


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## moneymakeover (9 Aug 2018)

@Brendan Burgess 
@Leo 
Is there a reason the "edit" option is no longer available?
Is it just me/everyone?


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## Zenith63 (9 Aug 2018)

I'd say it may be time related, I seem to be able to edit replies I made less than two days ago, but not older.


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## moneymakeover (10 Aug 2018)

I would say avoid frcl due to the whole Brexit/sterling for now
At least while sterling has more to fall

In addition it's overpriced Vs the Nav

Also @administrators
Can please fix the "edit" option
Thanks guys


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## settlement (12 Aug 2018)

Sarenco said:


> IWDA is subject to exit tax @41%, with a deemed disposal every 8 years, whereas FRCL is subject to the usual income tax/CGT regime.
> 
> There are a few other reasons why I often recommend FRCL for retail investors but the relative simplicity of the tax treatment is probably the main one.



Any chance you would expand on / tell more about FRCL? I am a passive investor but don't know much about it. All my money is in UCITS funds that would be subject to the 41% exit tax


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## Sarenco (12 Aug 2018)

settlement said:


> Any chance you would expand on / tell more about FRCL?


Here's a link to a fact sheet with the key details for FRCL.
[broken link removed]


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## Chips15 (13 Aug 2018)

moneymakeover said:


> I would say avoid frcl due to the whole Brexit/sterling for now
> At least while sterling has more to fall
> 
> In addition it's overpriced Vs the Nav



What's your recommendation in this instance on where to invest if not in FRCL?


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## moneymakeover (13 Aug 2018)

For all I know FRCL could be a good idea.
I was put off by the sterling
But I don't have any alternative


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## Sarenco (13 Aug 2018)

moneymakeover said:


> I was put off by the sterling


FRCL has a fairly modest exposure to UK equities and most of those companies would be multi-nationals  with revenues from across the globe.

In any event, how can you be so certain that the market has not already priced in Brexit-related risks to the FX rate?


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## moneymakeover (27 Aug 2018)

I was thinking more along the lines of sterling falling versus euro and then would get more shares in frcl?

Can't see how the fall in sterling can be already priced into a fund which is mainly US based?


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## Sarenco (27 Aug 2018)

moneymakeover said:


> I was thinking more along the lines of sterling falling versus euro and then would get more shares in frcl?


What difference would that make?  More shares with less value in Euro terms.

Again, your currency exposure relates to the underlying securities - not the currency in which the trust's shares are denominated.


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## LoveTrees (29 Aug 2018)

Put quite a bit in Amazon shares imho... That algorithm is amazing...


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## locknbarrel (26 Feb 2020)

Sarenco said:


> IWDA is subject to exit tax @41%, with a deemed disposal every 8 years, whereas FRCL is subject to the usual income tax/CGT regime.
> 
> There are a few other reasons why I often recommend FRCL for retail investors but the relative simplicity of the tax treatment is probably the main one.


Hi @Sarenco
Do you have any particular strategies in hedging agains't sterling risk when investing in a sterling trust like F&C?


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## Sarenco (26 Feb 2020)

locknbarrel said:


> Hi @Sarenco
> Do you have any particular strategies in hedging agains't sterling risk when investing in a sterling trust like F&C?





Sarenco said:


> FRCL has a fairly modest exposure to UK equities and most of those companies would be multi-nationals  with revenues from across the globe.





Sarenco said:


> Again, your currency exposure relates to the underlying securities - not the currency in which the trust's shares are denominated.


FRCL is not. “Sterling trust”.  

Its shares are denominated in Sterling but that does not determine an investor’s currency risk.


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## locknbarrel (26 Feb 2020)

Sarenco said:


> FRCL is not. “Sterling trust”.
> 
> Its shares are denominated in Sterling but that does not determine an investor’s currency risk.


@Sarenco But the fact that you have to transfer your money into sterling to buy it. If sterling falls will that not affect your holding? Or is it that the counter balance of it's holdings being worldwide will mitigate this? Is there a strong evidence that this balance will hold?


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## jpd (26 Feb 2020)

If the Investment Trust is 100% invested in $s then the fact that is is quoted in £s is irrelevant - your foreign exchange exposure is to the $

If FRCL holds a worldwide selection of shares, then the £/€ rate is more or less irrelevant too.

Long-term hedging of a currency is more of a gamble/bet than a hedge, imho, as long term currency fluctuations are impossible to predict


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