Best way to invest 100K for 2 years?

daveg

As per the title where would you invest 100K for 2 years.

Raiser

Hi DaveG, before you invest it might be an idea to read the article linked below - the main warning to heed is that investors sometimes blindly follow other investors for no good reason. Just something to bear in mind as you evaluate your investment options, best of luck with this.

Raiser.

http://www.ezinearticles.com/?Lemmings-Are-Gathering&id=47429

lomb

buy a house

daveirl

This post has been deleted.

lomb

Personally i dont see any risk in it. buying shares is a waste of time, as u cant gear them without termendous risk.
u could borow 200000 on a rental property, use the 100 as a deposit/stamp duty/legal fees and u will most probably make 50% on your original investment after 2 years imho. it is risky over 2 years though for sure, but the rewards make up for that.
everyone is different,, if u put it on deposit u will lose 1-3% per annum in real terms after inflation. shares are probably at the peak of the cycle so are dodgy.
can i ask what u intend to do with the 100 after 2 years?

daveg

lomb wrote:

Personally i dont see any risk in it. buying shares is a waste of time, as u cant gear them without termendous risk.
u could borow 200000 on a rental property, use the 100 as a deposit/stamp duty/legal fees and u will most probably make 50% on your original investment after 2 years imho. it is risky over 2 years though for sure, but the rewards make up for that.
everyone is different,, if u put it on deposit u will lose 1-3% per annum in real terms after inflation. shares are probably at the peak of the cycle so are dodgy.
can i ask what u intend to do with the 100 after 2 years?

We have just sold our site. Plan is to emegrate to OZ in 2 years time.

Lomb you say you would see a 50% return on investment if you buy a house in 2 years. Thats 50K increase in price after 2 years. Do you not think that that is a bit unrealistic? I would have throught maybe E25K increase in 2 years.

If buying a house we would have to factor in:
Solicitor fees *2 (buy and sell).
Stamp duty
CGT (probably not as we could live in it)
Estate agent fees to sell
Hastle and risk of not selling when the 2 years are up.

Thanks for the advice though.

lomb

Well if u HAVE to sell in 2 years then it is slightly rissky, but look at it this way would u rather see a return of 10-50% than se your investment lose 5% over the same time GAURANTEED

lomb

Id find a property in a good rental location close to a college or whatever even if its a bit run down. u will also get 6% in rents over the 2 years. forgot about interest DOH! yeah if u get an interest only loan the rent will cover the interest. then u can reevaluate in 2 years what to do. sell up and move to oz or stay in ireland.

Hobart

Dave,

do a search on investing and gearing on google. I am currently looking into it, if you want some PDF's on it, send me a PM with your email address in it.

****For the benifit of the Mods***** I do not work for any company linked with any investment products.

daveirl

This post has been deleted.

lomb

daveirl wrote:

This post has been deleted.

they are due to several reasons--
1. if u gear them its incredibly risky, this is buying on margin and is dodgy to say the least as values are very turbulent.
2.banks are unwilling to provide a large gearing on them in any case.
3. u need a wide basket of shares as opposed to one company.
4. u have no control on the ceo or his accountant cooking the books and the company going belly up.
5not even the chairman knows what the real financial position of the company is with the complexity of transactions. the company could be haemoraging money.

to the op , if your site had planning or other development potential which i think it had from a previous post and u didnt need the money i cant understand why u decided to sell it,with building costs static at 100 -120 euro a sq foot in galway the site is going to go up at a rate exceeding the rate houses are in the area. i think u should have held it as u will most probably regret it in the years to come. there is a cost in and out of property as u know(stamp, legal etc)

ixus

Lomb, if you think shares are at the end of a cycle, why not property?
Seems like you're saying prices can only go up?

Wouldn't touch property now.

Daveg, have a read of www.askaboutmoney.com if you haven't already come acaross it.

Interesting debate on the future of irish property in the Great Financial Debate section.

There are banks that will take that kind of lump sum and guarantee it plus a % if you put it in certain funds for a period of time. You should check with your bank manager ( and other banks) what they can offer in return for you lending them 100K for 2 years.

Also, euro lotto is around €75 mill tonight, so you could have a crack at that. ( i want a cut if you win).

frost

You need to decide what you want first.

How much risk of your capital and/or potential return are you willing to take? (Risk is normally proportional to return. If the amount of return seems high for the claimed risk, warning bells should be ringing)

How liquid do you want this to be?

What will you buy after 2 years? Ideally you want the value of the money to stay the same or increase relative to the price of whatever you're buying. In your case, it sounds like you will buy property in Australia, so you should consider Australian property prices in the area you are thinking of moving to. You will also have to address (or simply accept) the exchange rate risk.

And you rightly point out that transactions costs (esp. stamp duty for Irish property) for a short-term investment may impact a lot on the potential return.

Good luck!

daveg

lomb wrote:

to the op , if your site had planning or other development potential which i think it had from a previous post and u didnt need the money i cant understand why u decided to sell it,with building costs static at 100 -120 euro a sq foot in galway the site is going to go up at a rate exceeding the rate houses are in the area. i think u should have held it as u will most probably regret it in the years to come. there is a cost in and out of property as u know(stamp, legal etc)

We've sold for the following reasons. We bought 6 months ago, and have sold, today, making nearly 100% on the site. Planning is out Feb 2007. It was a case of either sell or build. With the plan to emegrate in 2 years it would have been a silly move to build. You are 100% right about site prices increasing and house prices staying put nearly in our location. Therefore we would have only being looking at approx 20K more profit if we built the house (at no where near 100-120 Euro per SF - where did you get thar sf price from? Thats very very high). We wern't in a position to leave the site much longer as there is less than a year left on planning. Ideally we would have loved to have held onto it. It was our dream house (plans) and we took 2 years to buy the site. Still have made good money so at least thats something.

daveg

ixus wrote:

Lomb, if you think shares are at the end of a cycle, why not property?
Seems like you're saying prices can only go up?

Wouldn't touch property now.

Daveg, have a read of www.askaboutmoney.com if you haven't already come acaross it.

Interesting debate on the future of irish property in the Great Financial Debate section.

There are banks that will take that kind of lump sum and guarantee it plus a % if you put it in certain funds for a period of time. You should check with your bank manager ( and other banks) what they can offer in return for you lending them 100K for 2 years.

Also, euro lotto is around €75 mill tonight, so you could have a crack at that. ( i want a cut if you win).

Thanks ixus. Thats very interesting about approaching the banks. We have a Northern Rock account which gives 3% but I'll have a chat with our bank, TSB. We actually had a meeting arranged with them today to discuss investments but I had to call it off as I was sick. Will approach them again though. LoL at the Euromillions. BTW I am familular with Ask about money.

daveg

If we do decide to leave it in a deposit/3% account is there one available that isn't caught for dirt tax?

daveg

frost wrote:

You need to decide what you want first.
How much risk of your capital and/or potential return are you willing to take? (Risk is normally proportional to return. If the amount of return seems high for the claimed risk, warning bells should be ringing)

I'd be willing to look at medium to possibly high risk if there was a good return over 2 years. I know risk is proportional to return.

frost wrote:

How liquid do you want this to be?
What will you buy after 2 years? Ideally you want the value of the money to stay the same or increase relative to the price of whatever you're buying. In your case, it sounds like you will buy property in Australia, so you should consider Australian property prices in the area you are thinking of moving to. You will also have to address (or simply accept) the exchange rate risk.

Spot on. We will rent for year 1 in Oz. Just in case things dont work out. We will look to buy, using our cash, year 2 on. We may need to use some of the cash to survive over there till we get jobs. Although I'd imagine we will have an additional 15K+ in savings to do this. Dont really want to touch that nest egg.

frost wrote:

Good luck!

Thanks.

Thomas_S_Hunterson

[cough]cayman[cough]island[cough..cough]
bloody cold;)

ukdavros

Property can only go up.
It always has and always will.
You look at the trend from when they started recording this stuff and the trend has always been up, ok with the odd dip here and there.
The simple fact is they aint making anymore land. Population increases and they need houses to live in.

2 Years is more risky than long term investment,
people will always need houses.
even if there is a crash so what, as long as you arnt selling it doesnt matter, If there is a crash, people are more likely to rent.

Take the worst that can happen high interest rates and Negative equity
I cant understand why people let there houses get re posessed, as soon as you realise there is a problem you should move out and rent it out. Because the problem was a drop in prices, you can now go out and buy another one cheaper than your previous one.

Its difficult to loose if you play it right (but not impossible)

Regards
Mark

ionapaul

ukdavros wrote:

Property can only go up.
It always has and always will.
You look at the trend from when they started recording this stuff and the trend has always been up, ok with the odd dip here and there.
The simple fact is they aint making anymore land. Population increases and they need houses to live in.

2 Years is more risky than long term investment,
people will always need houses.
even if there is a crash so what, as long as you arnt selling it doesnt matter, If there is a crash, people are more likely to rent.

Take the worst that can happen high interest rates and Negative equity
I cant understand why people let there houses get re posessed, as soon as you realise there is a problem you should move out and rent it out. Because the problem was a drop in prices, you can now go out and buy another one cheaper than your previous one.

Its difficult to loose if you play it right (but not impossible)

Regards
Mark

Interesting viewpoint. Not sure many economists would agree many of your points, but however! Buying property with a view to selling after two years is incredibly risky - just look at the huge entry / exit costs. No financial advisor would dream of advising such an investment strategy. Over such a short period of time, almost all will advise putting the money in the safest investment vehicle available to you - so most likely a special savings account such as that offered by Northern Rock or RaboDirect.

ukdavros

Its working for me, rode through the last so called crashed and now they are worth even more.
So called experts have a habbit of getting it wrong more often than not

daveirl

This post has been deleted.

ukdavros

Sorry
I meant the big UK crash, when most people got cold feat and playing it all wrong.
I now live in Ireland but still have the UK properties. Now looking at buying more over here.
Ireland as a place and its people just knocks the socks off England. Hence why we moved.
I am Welsh so can get a way with saying that.

chump

This lad has two years...
I'd say stick it on 2 shares, Elan and DCC

Try that and let it ride

ToxicPaddy

Whoever was saying about approaching a bank and seeing what they offer I
think has the best idea.

It causes the least hassle and stress and at the end of it you know what you're guaranteed minimum return will be.

Buying a house causes stress, cost a lot in legal fees, stamp duty, tax etc, stocks and shares are risky, even blue chip companies can lose money and share values can fall.

I know someone who made a killing on a property sale, went into the bank lodged the money and told the bank manager they wanted to invest. A financial advisor was called in, they picked certain funds etc that they thought were a good investment, the bank agreed to a guaranteed return if the funds were left there untouched for a set period of time and at the end of the day, they guy is gonna sit back, stress free and watch his money grow.

He wont have to worry about losing money or taking any risk.

Granted he wont make a killing which is possible in shares or property but hes still gonna make a very nice return and with absolutely no risk to his money.

Best way if you ask me. Greed isnt always good

Tox

mcdonnst

Im buying a new apartment in the city centre for two years,

first time buyer (no stamp duty)
Got a solicitor for 1500 all inclusive to buy
interest in 2 years about 18k
furnishing 3k
Sell in 2 years,
solicitor and agents fees again say 5k
Maintance and other charges 4k
total expenses say 32k

I neee somewhere to rent either way so I would be spending 12k in rent

Apartment is 365k have 40k in savings

so with 12k from renting out a room in rent a room scheme

that leaves 18k in expenses, thaking the fact that I would have to pay rent if

I dont buy, The apartment only needs to increase by 8k and I am in profit.

So thats about 1.2% increse a year. I i believe that a 2 bed apartment 1

min from O'|connell st is a less risky investment.

Any views

ionapaul

Go to askaboutmoney.com and run these figures by the more experienced / professional property investors there. I feel confident that most will advise you to think twice about this if you only plan to keep the property for two years - the entry / exit costs for property mean that it is much much more suited to long term holding.

But what do I know, property is going to go up by 30% this year!

daveg

mcdonnst wrote:

Any views

Yes. Can I invest €50K with you

vector

no one had mentioned it but the ol' credit union account* will return maybe 2.5 per annum, yes its not amazing especially considering inflation, but it is easy

* unless there is a "maximum permitted balance" on a CU account?

conor_mc

Property is a crazy idea for two years - I think that should be ruled out.

Northern Rock or RaboDirect are offering 3.35% on deposits, or something similar.

If it were me, I'd have a punt on maybe 30-40k in an investment fund(s) with low or no entry/exit charges and then stick the rest on deposit.

Worst comes to the worst and your investment a/c has bummed out, at least you can leave it there for a longer term and make your money back over 5/10 yrs while still having access to a large wedge of cash for buying in Oz.

Sleepy

mcdonnst wrote:

Im buying a new apartment in the city centre for two years,

first time buyer (no stamp duty)
Got a solicitor for 1500 all inclusive to buy
interest in 2 years about 18k
furnishing 3k
Sell in 2 years,
solicitor and agents fees again say 5k
Maintance and other charges 4k
total expenses say 32k

I neee somewhere to rent either way so I would be spending 12k in rent

Apartment is 365k have 40k in savings

so with 12k from renting out a room in rent a room scheme

that leaves 18k in expenses, thaking the fact that I would have to pay rent if

I dont buy, The apartment only needs to increase by 8k and I am in profit.

So thats about 1.2% increse a year. I i believe that a 2 bed apartment 1

min from O'|connell st is a less risky investment.

Any views

Don't do it. You have absolutely no guarantee you'll find someone to rent your other room. Most renters prefer not to live with their landlord. The property market WILL crash in the near future. You're simply setting yourself up to be burned. If you were looking at buying an apartment you'd live in for the next ten or fifteen years, it might make sense to buy, not somewhere you intend to sell on in two.

What will you do if the crash happens while you own the apartment and are stuck in a position where you're paying a higher mortgage rate than you initially forecast (due to the rejuvenating German and French economies), your property's value has gone down and you still want to leave. Can you afford to take the financial hit if you have to sell for less than you bought?

WICKL0W

Would you contemplate buying a place in OZ now ?

lomb

Sleepy wrote:

Don't do it. You have absolutely no guarantee you'll find someone to rent your other room.

theres no gaurantee of anything, but if the borrower can afford the payments he should run with it imho.

daveg

WICKL0W wrote:

Would you contemplate buying a place in OZ now ?

I don't think so for 2 reasons. 1/ We are going with a view of seeing how it goes for a year. If we decide to stay after a year we will buy. 2/We have only a rough idea of suberbs in Melbourne. We really need to live there for a year to be sure of schools, suburbs, house prices etc..

whizzbang

lomb wrote:

theres no gaurantee of anything, but if the borrower can afford the payments he should run with it imho.

Isn't the Oz market on the turn? In certain areas, Melbourne I think.

conor_mc

whizzbang wrote:

Isn't the Oz market on the turn? In certain areas, Melbourne I think.

But that could never happen in Ireland, right? :rolleyes:

whizzbang

conor_mc wrote:

But that could never happen in Ireland, right? :rolleyes:

no, never, we are special remember, property prices can't drop here because St Patrick said so.

J

mcdonnst

How likley is there to be a crash.

Is it not predicted that there will be a 8% rise in property prices this year alone.

D'Peoples Voice

lomb wrote:

buy a house

A wise move:D

Am I right in saying that the best Lump Sum products are:

PTSB (21 days notice) 5.25%

Rabodirect 5.00% (for amts up to 10K, 3.75% thereafter)

AIB online 4.50%

Northern Rock 4.30%

Ulster Bank Reward Reserve 4.25%

National Irish ECB Tracker 3.95%

Anglo Irish Bank 3.80%

Pfizer Demand 3.20% (up to 3.40% for large amounts)

The best Reg saver products are:

AIB reg saver 7.10%

Halifax 7.00%

BofI 6.50%

Ulster Bank 3.75%