If you are in a position to save regularly, and just 24 years of age, equities are most likely the best option. And equities do include property (i.e. diversified property funds and REITs). Investing in Absolute return funds is a more conservative route and consequently you should expect returns to be lower over time. There's a Free booklet you can access at another thread on AAM, but it's only free until end November. There's a useful example of the pluses of regular investing in the booklet.Hi all,
I just wanted to see if you had any opinions on the AIMS fund from Aviva. I am looking for a regular saver now that I have my emergency fund of 10k built up.
I am 24 years old, on 28k a year and looking to put away 300/400 euro a month (increasing further over time) to hopefully be able to make a dent at a deposit in 5-7 years time.
Am I better off going with a regular saver from the likes of KBC or EBS or is there anything else you may recommend. As I have an emergency fund built up and I am still quite young, I am willing to take on more risk with these funds.
Any ideas or if you need more info just let me know.
G
I am 24 years old, on 28k a year and looking to put away 300/400 euro a month (increasing further over time) to hopefully be able to make a dent at a deposit in 5-7 years time.
Hi Brendan
Now there's plenty of scope to poke holes in the research but it does challenge the conventional wisdom that an equity investment has a greater chance of outperforming cash deposits over 5-year holding periods. Also, bear in mind that the majority of the savings will not actually be invested for as long as 5 years in the OP's case.
The FT100 is anything but representative of the typical portfolio, which is why I total ignore an research based on it, but that is just me.
So you have two broad options.
A savings account
An equity fund
- Very little interest
- Very low risk
- You know what you will have after 5 years: €28,000 (€10k + 60 months @€300)
I think you should invest your lump sum and ongoing savings in an ETF.
- A risk that after 5 years, you will have less than €28,000
- A greater likelihood that you will have more than €28,000
- Uncertainty
When you are within a year or two of having saved the deposit, then you should switch out of the stock market.
- If stock prices fall, you will have to wait longer to have the deposit
- If stock prices rise, you may be able to buy sooner or have a bigger deposit so you would be borrowing less.
Brendan
Earlier this year Paul Lewis, who presents BBC Radio 4's Money Box show, published some research comparing the returns on a FTSE100 tracker fund with the returns on cash moved each year into a best-buy one-year deposit account with a bank or building society in the UK. The research assumed dividends were reinvested, and that the cash was reinvested each year along with interest earned. He found that the return on the deposits beat the total returns on the tracker in 57% of the 192 five-year investment periods beginning each month from 1 January 1995. The tracker won in just 43% of periods. Here's a link to a Guardian article on the research:- https://www.theguardian.com/money/2016/jun/18/cash-trumps-shares-for-top-returns.
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