Dan_The_Man
Registered User
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Would you consider a rental property?
€300k would buy a decent 2-bed apartment in most parts of Dublin, as things stand, that could reasonably be expected to achieve a rent of around €15k pa, net of costs.
A rental property certainly isn't a risk-free (or hassle-free) option but it should provide you with a good inflation hedge.
If that doesn't appeal, you could do far worse than invest the €300k in accumulating shares of a world equity tracker (something like iShares MSCI World UCITS ETF). The tax treatment is a bit of a pain but otherwise it should prove to be a good long-term, hands-off, nvestment.
I also like investment trusts but you need to be careful of triggering any UK inheritance tax issues at this level of investment.
Incidentally, I think you should maintain a high allocation to equities in your pension for the time being - you already have plenty of cash and fixed-income investments for somebody at your stage in life.
Hope that helps.
Thanks ...it certainly does help
Yes I would consider investment property - threads on here and else where seem to suggest it is more hassle than its worth, but I guess its horses for courses and maybe bad news travels quicker.
iShares MSCI World UCITS ETF - I'll check it out , but I take its subject to the rise and fall of equity markets
How about 50% in property, borrow the rest or do BTL rates make it a bad proposition?
50% in the ETF.
Pension - with Irish life ....its 60% Equites, 30% Bonds and 10% cash
That's really very cautious for your age (and I am often accused of being overly conservative around here).
I very much take your point that you are in a strong financial position so don't need to take on too much investment risk. But unexpected inflation is also a risk to bear in mind - cash and fixed-income got killed in the late 70s/early 80s, in real terms.
It's really all about trying to achieve a reasonable balance accross (and, less importantly, within) the different core asset classes.
Maybe aim to have something like 1/3 of your total net worth in property (including your PPR), 1/3 in business (equities, including equity funds in your pension) and 1/3 in reserve (cash, bonds and other fixed-income investments) by your normal retirement age.
It's very important to think of your financial position as a whole and not to compartmentalise it into different accounts or buckets.
Well, the lowest cost platforms won't necessarily be the safest.in terms of iShares MSCI World UCITS ETF
Where's the the best (safest, low cost) place to purchase?
That's obviously an option but BTL rates are pretty horrendous at the moment. There's obviously no point borrowing money at, say, 4% while simultaneously holding bonds paying, say, 1%.
Equally, it doesn't make a lot of sense to me to hold low or even negative yielding cash/bonds in your pension (to which an AMC is applied) while holding an ETF outside your pension, which is subject to a fairly punitive tax regime. Where you have the choice, I think it makes more sense to hold equities within your pension and your cash/fixed-income outside your pension.
It's generally agreed that property falls somewhere between cash and equities on the risk/reward spectrum. Another option might be to buy something like €100k of 5-year State Savings Certs and invest the balance of your after-tax savings in a world equity ETF.
Again, it's really a question of trying to balance your overall portfolio and not looking at individual component parts in isolation.
Well, the lowest cost platforms won't necessarily be the safest.
I would probably stick with one of the bigger "bricks and mortar" brokers (Davy, etc),
That's obviously an option but BTL rates are pretty horrendous at the moment. There's obviously no point borrowing money at, say, 4% while simultaneously holding bonds paying, say, 1%.
Equally, it doesn't make a lot of sense to me to hold low or even negative yielding cash/bonds in your pension (to which an AMC is applied) while holding an ETF outside your pension, which is subject to a fairly punitive tax regime. Where you have the choice, I think it makes more sense to hold equities within your pension and your cash/fixed-income outside your pension.
It's generally agreed that property falls somewhere between cash and equities on the risk/reward spectrum. Another option might be to buy something like €100k of 5-year State Savings Certs and invest the balance of your after-tax savings in a world equity ETF.
Again, it's really a question of trying to balance your overall portfolio and not looking at individual component parts in isolation.
Well, leveraging an investment increases risk.
It's best to think of a mortgage as a non-callable "negative bond" - it's an obligation to pay back the principal, with interest. Admittedly, the interest payments are tax-deductible, which reduces the effective rate. But it will still be materially higher than the interest you would receive on any deposit/bond.
Think of it like this - you would be taking out a loan @4% to place it on deposit @1%.
Well, €150k @4% is obviously €6k.I guess the question is how much will a mortgage of say 150k @ 4% eat into the 15pa? (on a notional 300K BTL)
I guess the question is how much will a mortgage of say 150k @ 4% eat into the 15pa? (on a notional 300K BTL)
I accept I have funds on the sidelines doing less than 4% but this would be a hedge....if circumstances (rates etc) change I can always just pay it off
Well, €150k @4% is obviously €6k.
TBH I suspect BTL rates are higher than 4% at the moment.
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