Fiscal Procrastination

JayC5

Hi folks,

To cut a long story short I came into a significant some of money recently which I intend on using wisely. I have a laymans knowledge of the various investment options & the related risks of each - basically what I'm asking is if you guys had 80-100k to invest which you don't intend on using for 2-4 years what would you do with it? Also what would be the average return you could expect within reason for this ball park figure? (if this breaches forum rules just ignore that question...)

I'm just looking for vague suggestions of what is considered common sense with that sort of figure. I'm not a gambler so I don't intend on taking on anything with an extremely high risk factor - I'd just like to get the most bang for my buck whilst not being stupid with it!

Also, whats the deal with tax on any interest earned - is it particularly high?

Thanks in advance for your time & advice

JCcinq

dunkamania

dirt tax is 20%

2-4years is quite short term, so most of your money will be in bonds, or cash.

If you believe interest rate are going to decline, bonds are a good bet, and if you believe the opposite, cash is the way to go.

Goodluck2me

Buy Stocks.

portomar

if youre very risk averse, buy bonds. if you want exposure to upside, you could mix bonds and stocks, or stocks and deposit, or deposit and a little in higher risk stocks, or "bluechips" such as the irish financials in this country. my current advice is to buy your own stocks rather than a fund, though i used to believe the opposite. ive learnt that they usually underperform the stock market.

dunkamania

2-4 years is too short for a heavily stock weighted portfolio.

Dont try and pick your own stocks, use ETF's to track broad market indices.

How have those bluechip financials performed in the last year.......

portomar

dunkamania wrote: »

How have those bluechip financials performed in the last year.......

i think their dismal performance was implied by my quotation marks dukamania.... the sarcasm detector is off the charts on my end!

dunkamania

Ooh, a sarcasm detector. Oh, that's a "real" useful invention....

Unfortunately, mine is on the blink

eggie

Dont put all your eggs in one basket, diversify a little. Put some in an idex where you follow the aggregate market, some in bonds with a guaranteed return - inflation linked treasury bonds for security would be advisable.

Some in stocks - do your research and dont speculate.

Put a little into options but only if you know what you are doing, never write naked options. If you write options without holding the stock then limit your risk by using vertical or horizontal spreads. The spread you take will be determined on your outlook for the underlying stock. Eg. if you think the stock will rise take on a vertical bull spread (buy an OTM/ATM option and sell a FOTM option), if you think it will trade neutral or decline take on a vertical bear spread (sell an OTM option and buy a FOTM option) and take advantage of time decay. Spreads will limit your risk.

P.

A Random Walk

eggie wrote: »

Eg. if you think the stock will rise take on a vertical bull spread (buy an OTM/ATM option and sell a FOTM option), if you think it will trade neutral or decline take on a vertical bear spread (sell an OTM option and buy a FOTM option) and take advantage of time decay. Spreads will limit your risk.

Eh yeah they said they were a layman. Actually, even I haven't a clue what you're on about.

Dunkamania had it right I think. If you see yourself needing the money in 2-4 years, heavy investments in shares is probably not a good idea. Bonds can be hard to pick for the layman, I'd leave them alone if I didn't understand what I was doing.

A diversified portfolio of shares would have returned about 5% over inflation over the long run. No guarantee that will happen in the future of course. Bonds might return 1 or 2% over inflation, bank accounts will break even if you're lucky.

Raskolnikov

If you're going to buy stocks, then stay away from Irish ones. Trading costs are ridiculous and you're also subject to 1% stamp duty on all purchases. No good for the little guy.

JayC5

Cheers for the advice chaps,

Some of it great & some of it went right over my head

I noticed something in a previous thread concerning someone who had a similar query and he received the following advice:

Maybe it would be better to open a few accounts and spread the amount, as the likes of First Active offer 5.22% on balances up to €15,000, and then you could put say €10,000 in Halifax at 5.15% etc. Don't forget Northern Rock are 5% on up to €3m.

Ok, I'm aware that he's referring to general savings accounts with high street banks but I'm thinking would it be wise to invest some money across a spread of these reasonable interest offers & then invest a smaller fraction in a low to medium risk area?

Say splits of 10k, 15k, 20k or whatever was the specific max amount & invest around >40k in a five year+ investment plan?
The stock market to me is snore-inducing - it might as well be in Latin. I'm just happy to make a wise investment move and let the bank look after the rest as it simmers in the background over a few years and if it all goes well possibly leaving it in there as a nest egg.

Am I making sense or do I sound like I'm flapping about in kindergarten?

Clytus

According to Jim Rogers buy anything that Grows!!!!...and if you are gonna buy 2 of it...double it,cause the prices of agri commodities are gonna quadruple in the next 2-3 years.

Asia....he's asia mad...to the point that he hired a Chinese nanny to raise his 2 year old daughter and teach her Mandarin aswell. He's totally sold on china being the worlds economic superpower in the not too distant future...because basically the $ is shagged!