Lump Sum Investment Advice

[elacsaplau]

You have hijacked this thread........I wonder do you realise that many readers will find your tone in raising the point offensive.

I fully agree and believe that the offending post was arrogant, inappropriate and hilariously ironic. The spirit of Askaboutmoney is that members of the public can raise questions and seek information and then, those concerned, can decide how best to proceed. Everyone knows that this is an internet forum and consequently has specific advantages and dis-advantages.

In fairness to the OP, I suggest future posts to this thread should be addressed to the substantive issue and that if people wish to develop the other "theme" - they do so in a separate thread.

 

[Steven Barrett]

After reading through this thread, I'm a bit afraid to give my tuppence worth on the OP

It's impossible to give good advice on what investment strategies you should employ based on 'I've €750k and am risk averse". Peepee, what is your goal? What do you want to spend the money on and when? Money is only ever good if you have something to spend it on. You will never look back at life and be talk about the money you had saving in a bank account but you will always talk to your wife and kids about the great experiences you had throughout your life.

So my advice is talk to your wife about what you would like to do over the next number of years and then figure out what you need your money to do for you so you can make it happen.



Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)

 

[KOW]

After reading through this thread, I'm a bit afraid to give my tuppence worth on the OP

It's impossible to give good advice on what investment strategies you should employ based on 'I've €750k and am risk averse". Peepee, what is your goal? What do you want to spend the money on and when? Money is only ever good if you have something to spend it on. You will never look back at life and be talk about the money you had saving in a bank account but you will always talk to your wife and kids about the great experiences you had throughout your life.

So my advice is talk to your wife about what you would like to do over the next number of years and then figure out what you need your money to do for you so you can make it happen.



Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)

Wise man. Honest comment.

 

[Sarenco]

Sarenco why would you go for a rental property? Seems like a lot of hassle and you've argued before here the yield is not worth it , would 200k into a REIT not be better ?
I'd avoid the investment property myself, seems like a second job for minimum gain.

Hi Fella

I've certainly made the argument in the past that the yield currently achievable on a residential rental property is invariably insufficient to justify a leveraged investment at current BTL rates, having regard for our tax code.

You are, of course, absolutely right that a basket of REITs could be substituted for the rental property in my suggested allocation and an investor would achieve a far greater degree of diversification with such a holding.

The FTSE EPRA/NAREIT Global REIT Index currently has a distribution yield of 3.87% and I'm pretty confident that I could purchase an investment property in an area with high rental demand at the moment for around €200k that would give me a comparable net yield of around 6%.

I would then ask myself whether the additional hassle and risks associated with such an illiquid, concentrated investment is worth an extra ~2% in projected yield? Well it might be if the rental property only constituted a portion of my investment portfolio, if the balance of my portfolio was highly liquid and well-diversified and I had the capacity to commit the time that inevitably comes with a direct property holding (I'm assuming that is the case given that the OP told us he only works part-time).

I did try to emphasise in my post that there is no "right" answer to the question asked but I do think it's critical to look at the portfolio as a whole when trying to formulate an allocation that might address the OP's stated financial goals.

 

[Sarenco]

Peepee, what is your goal? What do you want to spend the money on and when?

To be fair Steven, the OP has already told us his financial goals:-

I guess what I am looking for is to have enough for my wife and I to live fairly simply through to retirement and on.
I'm not interested in leaving my children a lot of money. They will get a good education and the family home ultimately.

 

[johnny1234]

This is now a post that is well set out with some strong views from qualified advisers. There is no single approach that can be deemed as the one that I got.

I personally am not allowed state my story as Brendan will simply erase it. I did exactly what the OP is seeking opinion on. And I went to the biggest in the Irish market and Yes, I have been to Hell. I'm not back yet. The Statutory Body made a determination as did the High Court. But it is not very pleasurable for a family to be taken to the cleaners and watching Financial Institutions and staff break their hearts laughing. All I can say to the OP is 'be careful'. The biggest is not always the best.

 

[Sarenco]

Rgds global equity investment trusts, where do I start when researching these?

The industry association website (www.theaic.co.uk) is a super resource.

I specifically mentioned investment trusts (as opposed to other equity investment vehicles) because I think they give the best balance between achieving an appropriate degree of diversification and (relative) tax simplicity. Something like Foreign & Colonial Investment Trust plc is a good core holding - well diversified, relatively cheap, hands-off investment vehicle that is taxed in the same way as individual stocks (income tax on dividends, CGT on capital gains).

I think the tax treatment is particularly relevant in your circumstances (where your income is modest relative to your investable assets).

 

[cremeegg]

The industry association website (www.theaic.co.uk) is a super resource.

I specifically mentioned investment trusts (as opposed to other equity investment vehicles) because I think they give the best balance between achieving an appropriate degree of diversification and (relative) tax simplicity. Something like Foreign & Colonial Investment Trust plc is a good core holding - well diversified, relatively cheap, hands-off investment vehicle that is taxed in the same way as individual stocks (income tax on dividends, CGT on capital gains).

I think the tax treatment is particularly relevant in your circumstances (where your income is modest relative to your investable assets).

Hi Sarenco, is an investment like this not likely to fare worse than just buying shares. Isn't it the case that most investment managers underperform the index, and in addition do the charges not reduce the return.

Thanks for any response.

 

[Sarenco]

Hi Sarenco, is an investment like this not likely to fare worse than just buying shares. Isn't it the case that most investment managers underperform the index, and in addition do the charges not reduce the return.

Very briefly:-

1. The probability that a widely diversified portfolio of equities (such as a portfolio held through an investment trust) will achieve acceptable returns is far higher than the probability that a highly concentrated portfolio of individual shares will achieve acceptable returns;

2. I'm not particularly advocating active management but I wouldn't be comfortable investing in a vehicle with a fixed 41% exit tax if I expected to have a much lower marginal tax rate. Investment costs and taxes reduce returns.

 

[Steven Barrett]

To be fair Steven, the OP has already told us his financial goals:-

That's still pretty vague Sarenco. If Peepee is in his early 40's, is there nothing he will be spending money on between now and retirement? Is he going to wait out the decades until retirement? They are already part time self employed. Maybe they like doing what they are currently doing and will tip along doing that as long as they are enjoying it. He mentions the kids will get a good education. Does that mean private education, even boarding school? If so, how much are school fees? And how many kids? Lots and lots of questions.

Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)

 

[irish_investr]

Hi,
This kind of question "what should I do with €x" always draws responses like "put it in this, put it in that". The suggested investments all have merits and risks, but I think a key thing to consider is HOW. Right now, the sum is entirely risk-free, and "Capital preservation" is certain. YES, a diversified portfolio will generate positive returns OVER TIME, but any transaction opens up the possibility of instant loss. Its a fairly stressful situation, even if its a luxury problem In relation to current income level, the sum involved is major, and that probably reflects the potential for stress in the situation.
Having decided on an appropriate asset allocation or portfolio (thats the easy part) you will probably be well served by incremental investing. Every month move a small portion from the bank account to the investment account. Considering the sum involved, I would say this is a multi-year project (if it was me, I'd say ten years). You (OP) seem to be well clued up on "professionals" - of course, they want you to be invested for as much as possible, for as long as possible. All kinds of charts and statistics will prove them right "over time", but the small print clearly states "past results are no guarantee...". nuff said..

 

[johnny1234]

And coupled with all this are the costs which have to be given full consideration. Those been the fees for buying the equities plus Tax if applicable plus a Management Fee if and where applicable. Much of all this is down to the right broker, who can only offer suggestions and guidance. Nobody can predict the future. And to take personal investment advice from a Web page is pure madness. You must also check the credibility of any company offering services. Personally, I wouldn't touch an Irish owned investment organisation no matter what they tell you.

 

[peepee]

they like doing what they are currently doing and will tip along doing that as long as they are enjoying it. He mentions the kids will get a good education. Does that mean private education, even boarding school? If so, how much are school fees? And how many kids? Lots and lots of questions.

Yes we will continue to work part time. If I was planning another child I would have included this in the original post. Spending lots of time with the kids on weekends away (can be done cheaply with a camper van), 1-2 hols abroad a year. There are lots of excellent schools where I am that are not private. I will not pay 3-5k a year for six years for an education I dont think is any better. However in a system that rewards rote learning and focused/exam prediction preparation I would consider moving the children to a Bruce college type environment for the 2 years into Leaving if they wanted it.

Thanks for all the replies so far, keep them coming. I will investigate the suggestions and post again in the new year.