Protecting Investment within Government Guarantee advice

Hi
Having used Best Buys advice for many years I am struggling to know what to do with substantial funds due to poor interest rates.
Current situation:
€100K in BOI - just matured
€100K in AIB
€100K Nationwide UK: 1 year
€100K PTSB: 1 year
€100K KBC: 1 year
Maturity dates on all of the above vary.

The rate in BOI is only 1% approx. so reluctant to put in there again now that it has matured. I have spread the funds purely to get the government guarantee but not sure what to do with matured BOI funds.

I'd appreciate any advice in order to maximise the returns. With these overall funds should I be looking at buying property or other investment options.

Thanks
MFK

1% is a dreadful return offered by BoI. You are right to consider moving the cash elsewhere.

What about Rabo for the BoI matured funds? They will pay you 1.95% on 100,000 EUR with a 90 day notice account. Almost double the return offered by BoI and it is from a bank with a high rating.

MFK said:

With these overall funds should I be looking at buying property or other investment options.

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If those kind of returns are going to meet your needs then stay where you are, there is no need to go taking on extra risk if you are already able to reach your goals. If on the other hand those returns will cause you to fall short then you do need to start considering alternatives.

Hi, MFK.
We have many clients who are facing or have had to deal with the same challenge you are facing re returns. As Jim says if these returns meet your required return level to meet your goals, then fine. If not then you may need to consider alternatives. As is always stated risk and returns are inherently linked so if you are trying to achieve higher returns you need to be comfortable with the level of risk you are taking on.

This generally will encompass three variables. Firstly we suggest you look at your desire or willingness to take on investment risk i.e. risk attitude. Then look at your loss tolerance and ability to take on investment risk i.e. can you afford a negative outcome. This is the ability to accept risk. Lastly overlay what required rate of return is needed to meet your long term goals. This is the requirement to take on investment risk. Only by combining all three components of your risk attributes will you have an accurate assessment of your risk profile.
We believe ( purely our opinion) that we may well be dealing with this or an even worse interest rate environment for the next 3 years +, so this issue is unlikely to go away.
There are a huge range of alternative investment options to consider and as you mention property may well be one of them. For our clients we looked at the various options. Our preferred picks for those moving from deposits to higher risk/return options were a range of investment options with strong counterparties, rated AA or higher or having a significant coverage provided by an explicit Govt guarantee to reduce credit/counterparty risk. For the investment element, our suggestions centred on lower volatility Absolute Return options, at least until some profit buffer has been delivered. Then and subject to your risk attitude consider diversifying into a range of other potentially higher risk/return options. For all of the above we would recommend that you have full liquidity i.e you can get the funds back on request with no charges, penalties or restrictions. If you send me a pm I can e-mail you the risk return report we circulated to our clients. As always do your own research and/or ask several firms/advisers for their thoughts/recommendations. Then you will be in a better position to make an informed decision as to what is the better option for your particular preferences. These are important decisons/issues so we would recommend that you do your due diligence as thoroughly as you can.

Regards Vincent

Many thanks for all the replies. I do feel at this stage that I need to get some qualified advice but have always been concerned that their advice may be commission driven etc. I don't want to tar all advisors with the one brush as I don't have much experience of them to be fair. What payment structure do people advise - Fixed fee or % of savings etc? any thoughts really appreciated.

North Star said:

There are a huge range of alternative investment options to consider and as you mention property may well be one of them. For our clients we looked at the various options. Our preferred picks for those moving from deposits to higher risk/return options were a range of investment options with strong counterparties, rated AA or higher or having a significant coverage provided by an explicit Govt guarantee to reduce credit/counterparty risk. For the investment element, our suggestions centred on lower volatility Absolute Return options, at least until some profit buffer has been delivered.

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Seriously! You expect clients to understand that? Wanta take another bash at it???

The higher the return, the greater the risk. Your money's not burning a hole in your pocket.

We have all been tempted in the past of super returns been offered for funds, deposits and other financial products. Do yourself a favour, keep your money in a safe place before it becomes a calamity.