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Young, free, single and want to invest some cash

  • 05-10-2007 3:58pm
    #1
    SuperHans
    Closed Accounts Posts: 309 ✭✭


    Looking for some advice here.
    I already have a fairly diversified investment in the Irish stock market (invested in the Irish ETF about 18 months ago), and was looking to invest elsewhere.
    I have about €7k to spare and was thinking of putting it into some US ETF. There is one called a VTI(I think) that I think looks good.
    I am young and don't mind a bit of risk, although I wouldn't go as far as going into some high risk venture. Would investing in this ETF be a good option for me, or are there other options out there that would fit my risk profile better?
    I am not set on investing in the US and am open to other markets, and I am not confining myself to equities only.
    Oh, and I am looking for a medium/long term (5-7 years, maybe more) kinda thing.
    Any suggestions?


Comments

  • #2
    A Random Walk
    Closed Accounts Posts: 346 ✭✭A Random Walk


    VTI is a good ETF to choose for a total US stock market ETF. Risk wise you are buying a total US index, so in ETF terms it would be relatively low risk.

    If I was in your shoes I would try and create a portfolio that suited my risk profile. Malkiel's book gives a good explanation, but it could look like this for example:

    25% US
    25% Europe
    20% Asia/Pacific
    10% Property
    10% Commodities
    10% Cash

    All of the above could be bought through ETFs, although to keep your costs down you would need more than 7k.

    The ISEQ ETF is good for Irish diversification but there is an entire world out there to invest in.


  • #3
    SuperHans
    Closed Accounts Posts: 309 ✭✭SuperHans


    Yeah, I think I'll go for the VTI. I'm actually trying to build up a nice portfolio in dribs and drabs, so when I build up another bit of cash I'll consider investing in the proportions you have outlined.
    Does 10% in cash basically mean holding money in a savings account/risk free investment, such as government bonds?

    Also, I would like to hedge any US investment so that I don't have to worry about fluctuations in the dollar. Is this easy to put in place or would it involve too much expense for a paltry €7k investment?


  • #4
    A Random Walk
    Closed Accounts Posts: 346 ✭✭A Random Walk


    SuperHans wrote:
    Yeah, I think I'll go for the VTI. I'm actually trying to build up a nice portfolio in dribs and drabs, so when I build up another bit of cash I'll consider investing in the proportions you have outlined.
    You might want to consider drip feeding the money into Quinn life if you want to try a dollar cost averaging strategy, rather than investing it all in one go.
    Does 10% in cash basically mean holding money in a savings account/risk free investment, such as government bonds?
    Yes, I don't have a link to hand but volatility is smoothed out considerably by holdings in bonds & cash. Bonds are usually not a good choice for an Irish investor however (41% tax)
    Also, I would like to hedge any US investment so that I don't have to worry about fluctuations in the dollar. Is this easy to put in place or would it involve too much expense for a paltry €7k investment?
    Can't think of an easy way to do it. If you're creating a balanced global portfolio it shouldn't matter as a fall in one country will mean a rise in another (simplistic analysis). It's only if you go big in one country or another that you'll have to deal with issues like this.


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