Looking for investment strategy advice

J

jim

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Hi all,

Firstly, I am aware that there are many threads covering something very similar to what I am going to ask for advice on. I have read through some great threads recently and they are all very enlightening but sometimes a little confusing when the debate starts to take hold. I will explain my situation now and then I will ask some questions with regard to what my investment startegy should be.

- I am 32 years old earning a gross salary of 57k per annum.
- I have just purchased a house for 212k (mortgage has 30 years left and is circa 190k)
- I have circa 30k in savings.
- I have modest outgoings and since buying my house my mortgage is slightly more than covered by the rental income I am receiveing so I am savings between 2k and 2.5k per month

I am quite proud of and happy with my situation and I lead a financially very comfortable life but I want to make sure I dont rest on my laurels and just leave my savings to wither away over the years. I am very keen to maximise and grow my savings/investments and wealth (who isnt?:)).

There may a lot of other releavnt information, in addition to three points outlined above, that I can provide to anyone who is interested so just ask.

I suppose the question I have can be put quite simply as: What should I do with the savings of 30k that I have and which are going to grow considerably (I think) in the comming months and years.

My objective is to become self dependant as early as possible by having investments in place the income from which can support me. I am currently single but I am assuming that in the years to come I will have a wife and kids so although a disposable income of 1k - 1.5k per month not including rent/mortgage is more than adequate fro me now I know that in 10 years I might need a disposable income of maybe 3k per month.

Should I start looking into buying another property now? I already knowthat alot of you will say absolutely not for a host of reasons I am aware of - but for soem reason this approach appeals to me (Yes I am Irish!). But if I rule out that approach what is the best thing I could do? I have been reading a lot that shares are a good investment and have had good retuns over the last few years (appreciate thats not an indicator for the future), its liquid and passive.

The thing is I dont know how or where to start to invest in shares. I like to think I would be alright at picking companies myself that i would like to back and so I would ideally like to be able to have a share portfolio I can manage myself - is this possible? is there a website?

Other than shares or property I dont fancy just putting it in a deposit a/c and I dont know much about any other option such as EFT's or bonds.

I appreciate this is covered elsewhere but I am just hoping for a few simple pointers.

Thanks very much,
James
 
jim said:
Should I start looking into buying another property now? I already knowthat alot of you will say absolutely not for a host of reasons I am aware of - but for soem reason this approach appeals to me (Yes I am Irish!). But if I rule out that approach what is the best thing I could do? I have been reading a lot that shares are a good investment and have had good retuns over the last few years (appreciate thats not an indicator for the future), its liquid and passive.

The thing is I dont know how or where to start to invest in shares. I like to think I would be alright at picking companies myself that i would like to back and so I would ideally like to be able to have a share portfolio I can manage myself - is this possible? is there a website?

Other than shares or property I dont fancy just putting it in a deposit a/c and I dont know much about any other option such as EFT's or bonds.
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Hi James

You currently have a 30 year mortgage so I assume you will get another 30 year mortgage for your second property. But you think you might need the money in the next 10 years. So what about the 30 year commitment you're after making? Geared property is a massive, long term investment and shouldn't be made with short to medium term intentions.

If you don't know where to start with investing in shares either read a lot about it or pay someone who does know to invest for you. There are a lot of people who devour company information every day and even they get it wrong a lot of the time. If you do it yourself and you don't do your research, you have a very good chance of failing...or just buying the companies you know.

ETF's are a mirror of an index. Say the S&P 500, which represents 500 large companies in the US. An ETF mirrors those stocks and weighting. It's an easy and cheap way to follow the market, which many people believe reflects the true value of a company.

There's not a huge amount of value out there at the moment, so take a 5 year view on these things.

Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
The great thing about property at least from an amateurs perspective is its simplicity, its lack of volatility (before 2008 anyway), and the fact that it cannot be bought and sold on a whim. The stock market overall has performed better than any other asset but with huge volatility. The volatility results from the ease at which stocks can be bought and sold. This volatility is only increasing with computer buying and selling and hedge funds amplifying the moves both up and down. Most people say that when they invest they will take a 5 year view but what happens when 2008 comes along and every day your stocks, all of them are falling 1 or 2 % a day for months. Even ETFs that track the market had big falls then, prescious metals also fell hard. Only the best and experienced fund managers can deal with this.
 
SBarrett said:
If you don't know where to start with investing in shares either read a lot about it or pay someone who does know to invest for you. There are a lot of people who devour company information every day and even they get it wrong a lot of the time. If you do it yourself and you don't do your research, you have a very good chance of failing...or just buying the companies you know.
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Hi Stephen,

Thanks for your reply. I will take a look into ETF's. I think I am ok with regard to selecting Companies myself to invest in, I am happy to have a go at this myself without advice. What I dont know is how do I go about doing this, is there a website that I can just set up an a/c with and begin trading?

Thanks,
James
 
If I were in your shoes, my first priority would be to pay down the mortgage. It represents a guaranteed return of the prevailing SVR. In an Irish context, that's really hard to beat.

Think of it this way: until the mortgage is gone you are borrowing at 4% to invest at an uncertain x%. That x% will be subject to 30, 41 or 51% tax depending on the nature of the investment. Once you factor in the cost of risk, it's hard to win.
 
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jim

I can strongly recommend TD Direct Investing. Very low transaction costs (€15 per trade). Multi currency. Very efficient online platform. Easily contactable by phone also - none of this "chose from the following options" palaver and great response times.

Toronto headquarters but with a presence in Ireland. I was able to provide the necessary ID by scanning and e-mailing (though I think you need some sort of signed clearance from your bank), I think I got everything sorted on the same day.

Pardon me if I raise an eyebrow at your confidence at chosing what companies to invest in; I worked in the business FMYTICTR and I haven't a clue:rolleyes: Even if you do possess that skill, diversification into about 20 shares is highly recommended. That would cost €300 or 1% of your portfolio on the way in (plus stamp duty if applicable) and on the way out, not too bad I suppose.

I recommend UK investment trusts as they have the same tax treatment as direct shareholdings and provide efficient diversification at a fraction of the transaction costs of maintaining a direct portfolio, albeit the former can have management charges of say 0.25% p.a.

I think things like ETFs are a disaster taxwise these days: 41% exit tax on any profits:( and no credit for any losses:eek:

I note trasneoir's post. Hard to disagree with that.
 
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jim said:
Hi Stephen,

Thanks for your reply. I will take a look into ETF's. I think I am ok with regard to selecting Companies myself to invest in, I am happy to have a go at this myself without advice. What I dont know is how do I go about doing this, is there a website that I can just set up an a/c with and begin trading?

Thanks,
James
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I would suggest you do nothing about investing for the next 12 months, but read up on the topic. It has been my experience that most would be investors have no problem identifying good companies to invest in, but very few have the ability to identify the price at which those investments should be undertaken. And even more so the bottle to make the decision and stick with it when the price is right!

Take your time there is no rush, learn as much as you can before you start putting real money on the table.
 
Can you tell me more about the house that you're renting out? I'd be interested to hear how the rent is more than paying for the mortgage/insurance/etc.
 
mayway said:
Can you tell me more about the house that you're renting out? I'd be interested to hear how the rent is more than paying for the mortgage/insurance/etc.
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Hi mayway - its a three bed house - I have 1 room, two tenants have the other two...rent relief scheme. rent for two rented rooms is slightly greater than my monthly mortgage repayment. Let me know if you need clarity.

J
 
Duke of Marmalade said:
jim

I can strongly recommend TD Direct Investing. Very low transaction costs (€15 per trade). Multi currency. Very efficient online platform. Easily contactable by phone also - none of this "chose from the following options" palaver and great response times.

Toronto headquarters but with a presence in Ireland. I was able to provide the necessary ID by scanning and e-mailing (though I think you need some sort of signed clearance from your bank), I think I got everything sorted on the same day.

Pardon me if I raise an eyebrow at your confidence at chosing what companies to invest in; I worked in the business FMYTICTR and I haven't a clue:rolleyes: Even if you do possess that skill, diversification into about 20 shares is highly recommended. That would cost €300 or 1% of your portfolio on the way in (plus stamp duty if applicable) and on the way out, not too bad I suppose.

I recommend UK investment trusts as they have the same tax treatment as direct shareholdings and provide efficient diversification at a fraction of the transaction costs of maintaining a direct portfolio, albeit the former can have management charges of say 0.25% p.a.

I think things like ETFs are a disaster taxwise these days: 41% exit tax on any profits:( and no credit for any losses:eek:

I note trasneoir's post. Hard to disagree with that.
Click to expand...


TD investing have a truly awful customer service and their online trading platform is full of long existing uncorrected errors but they are indeed extremely good value and provided you are ok with awful service over the phone and an ( on the surface ) occasionally inaccurate portfolio breakdown , they are fine , i was with them for four years , now with saxo who are a little more expensive but the service is light years ahead
 
Hi Jim,

Congrats on your financial stability and your approach to earning and protecting your savings through shrewd investing. Great advice so far from Duke, Jim and Stephen. I too cocked an eyebrow at your confidence in 'having a go without advice' especially when you didn't know how to go about it. A great start would be to take the advice of the three mentioned above, take your time to read and research about stock market investing, set up a dummy portfolio and track your stocks over time until you gain confidence or learn that it's not for you. In the meantime go with trasneoir's advice to get a 4% return on your money with little or no risk....I would settle for this return right now when there is so little value available.

When you are ready to invest for real the environment may be more appealing for investors.

Best of Luck.
 
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