What's the best guaranteed interest rate you can get on an investment?

blobert

Hi there,

I was recently reading Tony Robbin's (big toothed US guru fellow) advice on becoming financially independent and eventually owning islands etc.

He recommended asset allocation (dividing your money between secure and risky ventures) and leaving your money invested in secure options for long periods so as to compound your investments. It made a lot of sense but I think the figures he quoted were unrealistic. He seemed to think that investing only $1200 a year over 40 years at 15% would give you about $2.5m at the end of your 40 years. The figures are accurate but the interest rates are a bit dodgy I think.

Mr. Robbins seemed to think that you could make secure investments (government bonds etc) that would give you a guaranteed return of 12-15% per annum. This was the SAFE stuff; the risky stock market investment could get you 30%-40% at least.

Now as far as I can tell there is no secure investment opportunities offering a guaranteed rate anywhere near 12-15% in Ireland or the UK?

I have money in Northern Rock earning a puny 3.25% per annum and even that is likely to go down at some stage.

Most of the Irish stockbrokers have investment deals where they choose your stocks and try and make you money, but this is not at all guaranteed. And on top of this, most of the safer options only forecast a POTENTIAL interest rate of 6% at best.

Am I missing something or is Mr. Robbins just exaggerating wildly? Perhaps things are different in the US?

Anyway if someone can tell me the best way (highest guaranteed interest) to invest money securely in Ireland or the UK I'd appreciate any advice.

Am I really going to be struggling to beat Northern Rock/Rabo Banks 3%?

And yes I know that I should not be listening to Tony Robbins for advice, but I found the article interesting. He promised me an island for Gods sake!

Thanks in advance

Lump

Put it in a long term savings account (Ie it has to be in there 20 years) AFAIK the interest is just under 20% probably closer to 15%.

If you invest €100 a month at 20%, after 20 years the savings will be 268,830.72

If you invest €100 at 15% for 40 years, the savings will be worth 2,455,144.63. So yes, he's right.

Probably what you'd want is a Notice Deposit Account... you have to have a min of €6,000 in the account and if you want to withdraw, you have to give 30 or 90 days notice, dependant on what interest rate you are earning. Obviously you'll pay tax on the interest, but a certain amount will be tax free.

You could invest in a bank in Estonia (They have flat taxing) 20% for everyone, or in the Camen (Sp?) Islands... you might end up in a tribunal though


John

ronbyrne2005

you wont get anywhere near 12-15% garunteed unless you become a loan shark or make loans to people with bad credit say loan money to a person starting a business and secure the loan on their assets . even if you commit your money for a 20 year term you wont get a rate better than 4% at the moment.all risk free returns are based on the european base rate and bond yields(10 year and 20 year bonds)
if some could get 12% a year risk free why would anyone invest in shares where you would be lucky to get this on a diversified portfolio

defiantshrimp

blobert wrote:

Mr. Robbins seemed to think that you could make secure investments (government bonds etc) that would give you a guaranteed return of 12-15% per annum. This was the SAFE stuff; the risky stock market investment could get you 30%-40% at least.

He says this to sell books to gullible people. It is not possible to earn these reurns

blobert wrote:

Now as far as I can tell there is no secure investment opportunities offering a guaranteed rate anywhere near 12-15% in Ireland or the UK?

Am I missing something or is Mr. Robbins just exaggerating wildly? Perhaps things are different in the US?

Yes, he is. Again to prey on peoples hopes.

blobert wrote:

Am I really going to be struggling to beat Northern Rock/Rabo Banks 3%?

Yes, in that at the moment you can't.

nesf

blobert wrote:

And yes I know that I should not be listening to Tony Robbins for advice, but I found the article interesting. He promised me an island for Gods sake!

As soon as the island was mentioned you should know to run!! If we could all afford our own islands then there would be a serious shortage of islands and the price would sky-rocket and then none of us could afford islands again.

No real way to win really. Unless you invest in islands early and wait for the rush.

blobert

Lump wrote:

Put it in a long term savings account (Ie it has to be in there 20 years) AFAIK the interest is just under 20% probably closer to 15%.

If you invest €100 a month at 20%, after 20 years the savings will be 268,830.72

If you invest €100 at 15% for 40 years, the savings will be worth 2,455,144.63. So yes, he's right.

John

Thanks very much for the advice guys.

It seems from what John says, that high yearly interest rates may be possible if you invest very long term.

Can anyone point me in the direction of such a deal, I cant seem to find any.

Thanks again,
Robert

Lump

AIB have a notice deposit account... They don't say what the interest is on the site, you'll need to see them. (TBH, if you have a lot of money to invest get a flat/house)

defiantshrimp

blobert wrote:

Thanks very much for the advice guys.

It seems from what John says, that high yearly interest rates may be possible if you invest very long term.

Can anyone point me in the direction of such a deal, I cant seem to find any.

Thanks again,
Robert

You should, in theory, be able to get higher interest rates by locking in your money for longer time periods but not greatly higher. There are however AFAIK no long term deposit accounts in Ireland with higher interest rates than Rabo or Northern Rock or AIB's new saving account. And the problem with that is you are at the mercy of inflation, should it spike you are unable to get at your money to spend it or move it to a different asset class. Go with Rabo or Northern Rock or AIB and continually save since you will almost certainly lose to inflation no matter what deposit account you invest in. Again you shouldn't be taking your financial advice from a self-help book that preys on people's desires.

CCOVICH

If you are willing to invest long-term, put your money into something that will typically offer higher returns than deposit accounts, e.g. equities, bonds, property, unit linked funds or some combination thereof.

RainyDay

It's all about risk & return. If you looking for a long-term investment, you don't really need a guarantee. Be prepared to take some ups & some downs. It will pay off in the long term.

homeOwner

Dont forget you will have to pay DIRT tax on any interest you earn which is around 20%(? maybe its more) and capital gains tax on any profit from selling shares or property which is another 20% (? I think).

Also, tying up that amount of money long term may not be possible. You may want to buy a property to live in, or you may find you need a car, or you might have some unforseen expenses you didnt budget for, or pay for college fees, or have an unplanned kid......The numbers sound good but in my opinion life cant be budgeted for like that long term.

I like the sound of the island though!

kc66

U can buy an island in the bahamas for €60,000!

PullMyFinger!

kc66 wrote:

U can buy an island in the bahamas for €60,000!

But is it about the size of a house?

kc66

Not much bigger- 1 acre. But its an island. And its in the Bahamas!

Takeshi_Kovacs

60 grand an acre in the bahamas!! thats a snip , there is farmland near me rumoured to be going under the hammer for over twice that!!

on a side note, has anyone ever invested in wine futures? (i think thats the term>>)

burdburd

Typical returns, net of inflation, are in the range of 5% to 7% depending on species, land quality and other circumstances.

http://www.coillte.ie/farming_and_forestry/investment_scheme.htm

you buy shares worth €750 each and hold them for 10 years

SarahMc

"Now as far as I can tell there is no secure investment opportunities offering a guaranteed rate anywhere near 12-15% in Ireland or the UK?"

SSIA, although that ship has sailed, but if you are not maxing out your contribution, do so now.

The Irish Stockmarket has had an average annual return of 16% since the 60s, but thats not 100% secure.

ronbyrne2005

SarahMc wrote:

"Now as far as I can tell there is no secure investment opportunities offering a guaranteed rate anywhere near 12-15% in Ireland or the UK?"

SSIA, although that ship has sailed, but if you are not maxing out your contribution, do so now.

The Irish Stockmarket has had an average annual return of 16% since the 60s, but thats not 100% secure.

ssia's didnt guaruantee anywhere near 12-15% a year.
stockmarkets provide best returns over long term,if you invest for long term you will ride out risk once you are diversified

SarahMc

"ssia's didnt guaruantee anywhere near 12-15% a year."


Of course they did, you got 25% return regardless of anything extra you got in interest.

Reyman

SarahMc wrote:

"ssia's didnt guaruantee anywhere near 12-15% a year."


Of course they did, you got 25% return regardless of anything extra you got in interest.

I think Ron B's right - look closely again at the return from SSIA. A good bit below 25%!

ronbyrne2005

ssia gave 25% over 5 years!! which is 5% a year approx

SarahMc

Now thats just basic math that hadn't occurred to me I stand corrected.

ronbyrne2005

also inflation was around 3% a year over the period so the "real" return was more like 2% per annum plus bank interest.

killeoin

You know.....i can't understand why people instantly say the stock market is risky....It's not....

Divide your money equally between AIB & Bank of Ireland.
Leave it there.
No way will you lose money, go to yahoo! finance and backtrack to any date and I guarantee you will not have lost money if you invested in the past.

killeoin

ronbyrne2005 wrote:

also inflation was around 3% a year over the period so the "real" return was more like 2% per annum plus bank interest.

yeah but the great thing about the SSIA's is that the banks seemed to be able to pull out 4% - 4.5% interest. Way above the going rate and the inflation rate.

air

killeoin wrote:

You know.....i can't understand why people instantly say the stock market is risky....It's not....

Divide your money equally between AIB & Bank of Ireland.
Leave it there.
No way will you lose money, go to yahoo! finance and backtrack to any date and I guarantee you will not have lost money if you invested in the past.

I agree with your sentiment, however banks have and will again go bust so there is risk involved - as there is with any investment.

killeoin

air wrote:

I agree with your sentiment, however banks have and will again go bust so there is risk involved - as there is with any investment.

neither of the big boys will go bust (AIB late 80's remember!).
The only problem would be the correlation between banks and the housing boom/low interest rates. Thats where I feel the risk would come in.

democrates

I read "Rich Dad, Poor Dad" with great interest.
Greed, selfishness, a given. Financial independance for the author translated into parasiting off your fellow man. His answer to his own childhood baggage was pathetic.

Best way to have a happy life is not to simply chase monetary wealth, but to know and live by your values. All good will follow naturally. The big mistake people make is to think "money = choices", true to an extent, but too often money becomes the end rather than the means, and scrooge results. The Island goal is ironic.

ronbyrne2005

democrates wrote:

I read "Rich Dad, Poor Dad" with great interest.
Greed, selfishness, a given. Financial independance for the author translated into parasiting off your fellow man. His answer to his own childhood baggage was pathetic.

Best way to have a happy life is not to simply chase monetary wealth, but to know and live by your values. All good will follow naturally. The big mistake people make is to think "money = choices", true to an extent, but too often money becomes the end rather than the means, and scrooge results. The Island goal is ironic.

agreed.

Greenhorse

democrates wrote:

I read "Rich Dad, Poor Dad" with great interest.
Greed, selfishness, a given. Financial independance for the author translated into parasiting off your fellow man. His answer to his own childhood baggage was pathetic.

Best way to have a happy life is not to simply chase monetary wealth, but to know and live by your values. All good will follow naturally. The big mistake people make is to think "money = choices", true to an extent, but too often money becomes the end rather than the means, and scrooge results. The Island goal is ironic.

I remember reading that book. I must have read it a differnt way as I didnt translate it into parasiting off anybody.

What have I missed?

I rem one passage where he bought a house off a desperate vendor for half what it was worth. Is this what you mean?

However from memory half of what it was worth was more than the vendor owed on it. They guy couldnt afford the repayments so wanted out.

money does equal choices. More money equals more choices. eg you can go the movies a bit more often if you work in a chipper than if you are on the dole. (an exagerated example granted)

Values maketh the man.

Rgds,

Niall

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