First time investor needing advice

M

Mearaithe

Guest
Hi, I am hoping that I can get some advice on investing. I have approximately 200k to invest that is wasting away in cash deposits, this amount has lumped up between normal cash, SSIA and an inheritance. I read the guide book to savings and investments by Brendan Burgess and was happy with the mathematical sense it made. I was ready to jump in and take the advice offered on creating a shares portfolio but then checked to see that the market is looking bad, so now I am unsure.
I would like to keep about 20 k in cash and have easy access to maybe 30k but am happy to go for the long haul with 150 k.
So is now the time to get shares, if so which ? Irish, Euro etc.
All advice gratefully received.
 


[FONT=Verdana, Arial, Helvetica, sans-serif] Remember, a rising tide lifts all boats. Anyone who said 10 years ago, and I quote from Brendan's book:

"A diversified stockmarket investment provides the best return and the lowest risk in the long term
Buy about 10 of the top Irish shares and forget about them."

Would have got away with it.

But the Irish Market makes up only 0.97% of the MSCI European Index and t[/FONT]hat only started to matter last year. With the ISEQ now off, what 30%?
If you buy 4 of the top Irish Stocks, you own 52% of the ISEQ and 3 of them are banks! Credit crunch anyone?

The Irish market is capitalised at some 88Bn Euro. IBM, one company, is what, some 90Bn Euro.

Buying 10 Irish Stocks is not, and never has been, a diversified portfolio.
Anyone with more than 1% of their portfolio in Irish Equity is taking an overweight position in Irish Equity with reference to the domestic market which is, of course, the Eurozone.

So, 1st bit of advice: Think globally.

There is a ton of empirical evidence that says over the long term an investment in equity should provide the best returns. However, when these people are talking about the long term, they often mean 50 or even 100 years. As the economist JM Keynes said "in the long run, we are all dead"

So, I draw your attention to another stack of empirical research that says that over 90% of your investment returns are determined at the asset allocation level.

This means, the mix of the type of investments you buy ie asset classes.
This is THE most important factor and is determined by two main parameters:
a) Your attitude to investment risk
b) your objectives ie mainly your time horizon

So, for example.

If you are a doom and gloomer and you look at the USA, put your head in your hands and begin to cry...........

Then you would take a more conservative approach to your portfolio.

I'll leave you with another quote before anyone trys to time the market:

"we have two types of forecasters, those who don't know, and those who don't know they don't know" JK Galbraith
 
Thank you very much Marc, alot of good information to consider there, as i was a bit concerned about being localised to the Irish market.
Would it be a good policy to go for ETF's to have balanced and moderate risk portfolio with say a split of
40% Euro
40% US
10% China
10% other / emerging

Any comments or suggestions gratefully received.
 

With that much money to invest you should pay for some real advice not rely on opinions of people here. Investing at this time is high risk (even more so than usual)
 
Thank you Nodser, I was hoping to be able to become better informed about investing in the current climate by gleaning the collective wisdom of the users of this forum. Apologies if i made myself unclear ( by "Jump in" I meant start investing as opposed to saving, not purchase stock imediately)I was not going to go out and spend €200,000 based one or two posts saying buy X. I was hoping to learn from those with more experience so when I do get / pay for profession advice I will be more able to understand it and more importantly question it. I thought that was the purpose of this forum but as I am new to this I accept I may well be wrong.
Thank you, all opinions and advices are appreciated.
 

No - you're absolutely correct in my opinion. Askaboutmoney.com is an excellent place to arm yourself with information before seeking professional advice. I suspect Nodser may have simply been cautioning you not to rely solely on the advice you receive here.
 
Mearaidthe absolutely right to take advice here for free. Professional advive will not be able to point you towards a sure fire winner, it is all "on the one hand", "on the other hand".

Long term, maybe a mix of ETFs as you suggest, but ask yourself the following question to make sure you definitely have a long term view.

In 12 months time imagine your portfolio down 40K. Sick as a parrot I would say - out of 10 how many parrots?

On the other hand, and no more likely, you may be up 40K - Happy as a pig... Out of 10 how many pigs?

If more parrots than pigs then you are short term risk averse and better off getting 5.1% from Irish Nationwide - these days the depositor is king - appreciate your power!!

If no parrots or pigs then you genuinely have a long term view - go for your choice of ETFs, as good as any financial advisor will give you.
 

Thank You. Couldn't have put it beter myself.
 
Harchibald what a great way to explain risk averse versus non risk averse investors, classic still laughing
 
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