Personal Finance Advice

Hi folks,
Sorry I know there are plenty of threads like this but I guess everybodies situation is different.

I have a RaboDirect deposit account and I drip feed 1K per month to an Anglo Irish regular saver account. There are 10 months to run before the 2 years is up and the account closes. I am trying to decide now what to do with the money at that time. I want to research all my options ahead of time. I have loaned my brother 15K which I will be getting back in a year or so. I plan on leaving ~10K in the RaboDirect account for a rainy day (unless the highest interest rate conditions change) and basically want to know what to do with the rest of it. Assuming I maintain my current rate of saving and hopefully will have had one or two pay increases, I expect to have 35K to invest somewhere.

My long term goal is to buy a good house for myself in the midlands in maybe 5 years time. Are managed funds like Quinn's ones the best option? I have a relatively high attitude to risk in that I am still relatively young with no ties. I don't really want to have to monitor my investments performance every day so something hands off like a fund seems to suit.

I have read through several threads and there seems to be very good advice here. Although ultimately I will decide what's best, what would people recommend? I am happy to share more information about my current situation if that will help.

Age: 25
Base Salary: 34K EURO
Benefits: Free VHI, phone, broadband, laptop, company pension scheme along with plenty of stock programs.
Total savings (excluding stock): 34K EURO (14K can't be touched for 10 months and 15K loaned to brother)
Total Stock Value: 7,000 EURO
Average Savings per month: 1000 EURO per month
Outstanding Loans/Debts: None

Hi Raul, you are in a pretty good situation and have some clear objectives in mind - better than many at your age.

A question I have for you is what are your projected savings for the next 5 years. Given your goal of purchasing a home, before considering investments you should project how much money you will have in 5 years if you maintain your current savings regime - perhaps a lower risk option (such as a high interest savings account) might be best for you.
5 years is actually a short-term duration for investment in the equities markets (for some good insight into this, read http://www.askaboutmoney.com/guide/ch08.htm), so you will probably want to look for lower risk investments (even though you said that you can tolerate higher risk as you are young, I find that most Irish people really don't like to lose money!)

With that said, say you decide that you still want to take a risk and put some of the money into the stock market. I won't recommend any fund in particular for investment - however I will give you some guidelines from my own experience. To reduce your risk, your investments need to have exposure to a couple of markets, not just one ("don't spend all your money in one shop" as my father used to say). Also be extremely vigilant of fees associated with these funds. Ireland's managed fund business is in relative infancy (compared to the US), so fees can be quite high. As well as managed funds, you should consider ETFs - funds of a sort (but they trade as stocks), but without active management (so fees are lower), typically tracking some market index (such as the ISEQ20 for example). Other threads on here cover these topics in a lot more detail, as well as many sites/articles on the web.

Best of luck!

Thanks for the reply tightkerrman. Yeah I don't like to lose money either I have seen in other threads that 5 years is more short term than long term when it comes to the stock market. I am no great financial guru but I found Eddie Hobbs book "Loot" very good as it gave me a very general understanding of the stock market, bonds, investment strategies etc...

If I maintain my current rate of saving then I would hope to have ~100K saved in 5 years time. I know that there will be emergencies and other unforeseen circumstances where I will have to spend more than normal but I expect (or hope ) to be earning at least twice what I am on at the minute in 5 years time.

I have read about spreading the risk rather than having all my eggs in one basket. I could well decide to leave it in a high interest rate desposit account but I was wondering if they will reduce again once SSIA mania cools off or will ECB interest hikes counteract this?

I think I will research ETF's more and see if they are for me.

An update on this. My Anglo Irish regular saver term is finished in August and I will have 25K plus ~5K from my Rabo account to play with. I have received a 20% salary increase since my original post plus ~6K of company shares. I have maintained my rate of saving 1K per month and still have no debt. I don't plan on selling my shares in the foreseeable future unless there is an emergency.

I still have the same goal of buying/building a house in a 3-5 years time with a sizeable deposit. I don't think investing further in equities will result in the return I want by this time. So should I just keep my 30K in my Rabo Account (might change to Northern Rock) and drip feed 1K per month to a Irish Nationwide 7.35% regular saver account and possibly a second regular saver with First Active? Any better alternatives?

Hi raul

I am in a similar position in that my AI RSA is up in July and I am looking for a new home for it. I was thinking of contacting anglo to find out if you wan open a new one when your first one matures? It's not like you will have two accounts open at the same time. It might be worth a shot!

Hi GravityGirl,
I don't think I want to stay with Anglo for another 2 year term. I am not overly confident that they will maintain the 7% rate for this duration plus I think 4.5% is the gaurantee. On paper, First Active and Irish Nationwide offer a more flexible service in that I can take the money and run if they drop interest rates to an uncompetitive level.

That being said, I opened up my Anglo account at 5% and it eventually increased to 7% and stayed at that for most of the term. It has served me well up to now but I just don't think it will last

Raul you can take your money out of the anglo account at any time too you know. Itthen reverts to an easy access account and you get the RSA interest up to the day that you withdrew the balance.

gravitygirl said:

Raul you can take your money out of the anglo account at any time too you know. Itthen reverts to an easy access account and you get the RSA interest up to the day that you withdrew the balance.

Click to expand...

Actually never thought of that Thanks GravityGirl. Might stick with Anglo so if it is an option and set up an extra one with Irish Nationwide