Need to do Something With my Savings...

Thargor

Hi, Ive been procrastinating over what to do with my savings for way too long now, basically its all cash because I got spooked and got out of everything a while back when it looked like crisis 2.0 was upon us, well its 50k Prize Bonds but that might aswell be cash seeing as I only get €50 every 6 weeks or worse. I have 30k in a Post Office account earning feck all and another 15k in my current account.

Now just as I approach 100k it looks like there might actually be another crisis looming, I know the long term amateur shouldn't try to time the market but with Brexit, bad start to 2016, possible end to QE and everything else it does feel like a bit bearish.

Vanguard ETFs were where I should have gone a couple of years ago but are mostly down on the year now same as most of the market.

Im basically frozen with indecision and need advice, any help appreciated. I dont really want to get a mortgage as I dont know if Im even staying in Ireland, Im 31 btw.

valoren

Having no position in the market is having a position after all

It depends on your time frame for investing.
Long term investing for decades? Bearish sentiment is what you want. Companies are on sale so to speak.
Look at the companies that are household names.
Growing dividends, attractive price earnings i.e. don't overpay for shares, competitive advantages, the kind of companies that will be there forever.
Buy smart and never sell.
Ignore the noise.

Thargor

Thanks, I know that amateurs shouldn't try to time the market, it's just that right now seems like a time to be in cash, so why would I be buying when there's no urgency to do so? Brexit, Greece, China, markets flat or down since the start of the year, it just feels like too big a risk in the short term, and some big names do agree. I'm just trying to get a feel for what more experienced investors think before I do anything...

What sort of companies would you be looking at with your strategy?

Frogdog

By no means a professional/expert, but would you consider buying a few different low-cost funds/ETFs (mostly equity, some bonds) which generate a decent dividend/coupon?

Roonbox

Thargor wrote: »

Thanks, I know that amateurs shouldn't try to time the market, it's just that right now seems like a time to be in cash, so why would I be buying when there's no urgency to do so? Brexit, Greece, China, markets flat or down since the start of the year, it just feels like too big a risk in the short term, and some big names do agree. I'm just trying to get a feel for what more experienced investors think before I do anything...

What sort of companies would you be looking at with your strategy?

I agree with you that I think you should sit tight for a bit if you are thinking of investing in equities. I think the next 18 months is going to be dramatic.

Thargor

Frogdog wrote: »

By no means a professional/expert, but would you consider buying a few different low-cost funds/ETFs (mostly equity, some bonds) which generate a decent dividend/coupon?

Definitely, I'm looking for suggestions on exactly that, but also want peoples opinions on current risks, any suggestions?

mgadget

You say you got out of everything before, when you expected crisis 2.0. What were you previously invested in?

On the face of it you sound like you are averse to accepting a devaluation in your investment? At what value does your 100k have to be before you start to lose sleep? 90k, 70k?, 50k?

Historically you have seen that the market is cyclical and has always recovered, so is the time required for your investment to recover its losses unacceptable?


I am in a similar situation, in that I have more cash than I'd like but I am wary of committing a large proportion of it to the stock markets for mostly the same reasons as yourself.
I differ in that I have have invested continuously into a stock index for the last five years and have not wavered. I will continue to commit to investing monthly a proportion of cash into the fund. I would continue to do this and aim to have no more that half of my investments in the market. - a 25% loss in stock market value overnight would mean a loss of 12.5% to my total investments, which to me is tolerable.

I find ETF's problematic for regular investment strategy with regard to taxation and there being no loss relief. US based ETF's are the exception but also have their own negative quirks, this topic is well discussed at askaboutmoney.com


Myself, 1k a month into a Zurich Life Savings Plan setup by investandsave.ie
Downside is a 1% tax on each investment contribution + an annual management fee of 1%
The fund is an 'umbrella' so losses in one sub-fund can be offset against gains in an another sub-fund when calculating your total investment gain.
This compares favourably to the taxation of UCITS ETF's where a loss one in one month cannot be offset against a gain in another.
It has blended funds which contain a proportion of stocks and bonds which helps reduce the impact of market volatility.
No manual tax returns to be completed by yourself, you sell up and tax is deducted by the investment company.
It has merit for total investments of 20k - 30k, after which the management fee compares less favourably to stockbroker fees. At which point I would cash the fund in and invest it all in a total market ETF.

I do not think that bond funds or bond ETF's have a place in an investor's taxable investment portfolio.
The coupon or dividend is taxable at 41%. This interest rate is at historically low levels, you are better off in cash.
I would venture to recommend State Savings certificates and bonds if you do not need to the cash in the immediate future.
Example is the 10 year bond paying 24% after 10 years tax free. A bond fund would have to return approximately 48% in the same period.

Thargor

Just some Tesla and a couple of oil shares, Ive never had a decent investment portfolio that I could stick with long term, should have made this thread years ago. Those Zurich fees sound high, how is it performing for you?

Spanish Eyes

State investments for me. I don't care about returns as long as I get something back, and I will with the ten year Solidarity Bond and Savings Bonds/certs and a shedload of Prize Bonds. No taxes either. I know it all evens out but still.

I will never give a bank (or anyone associated with them) a penny of my investments ever again.

Still need the banks though, hate that, any advice there lol.

Roonbox

Thargor wrote: »

Just some Tesla and a couple of oil shares, Ive never had a decent investment portfolio that I could stick with long term, should have made this thread years ago. Those Zurich fees sound high, how is it performing for you?

Depending on your Timeframe, the Dollar index is a trade i am currently watching. Short term probably under 2 years.
edit - A long position in DXY

Francie Barrett

No offence, but it doesn't sound like you know much about the stock market. Your best bet at this time would be to read a few books and keep your cash in the bank for now.

Thargor

Nah I know enough having been in and out over the years, the banks are no different to putting it under the mattress these days with DIRT and rates where they are, Im just looking for opinions.

Francie Barrett

Thargor wrote: »

Nah I know enough having been in and out over the years, the banks are no different to putting it under the mattress these days with DIRT and rates where they are, Im just looking for opinions.

Do you really know enough though? You said you owned Tesla and oil shares. This strikes me as speculation rather than investing. Not trying to be nasty here, but if you don't want to do the work on individual stocks but insist on investing then indexes are your only option.

Thargor

I know enough to be a long term investor, dont worry about that, the fact that Im asking for suggestions on a public BB should tell you Im not Gordon Gecko. I know indexes are the best place for long term hands off investing but Im just worried about the short-medium term environment, it feels like things could be getting bearish very soon and Im wondering if its better to hold off.

Sonnenblumen

Thargor wrote: »

I know enough to be a long term investor, dont worry about that, the fact that Im asking for suggestions on a public BB should tell you Im not Gordon Gecko. I know indexes are the best place for long term hands off investing but Im just worried about the short-medium term environment, it feels like things could be getting bearish very soon and Im wondering if its better to hold off.

Without oversimplfying things, I think it a no brainer to invest at least 30% of your funds in bluechip stocks (and ones paying a consistent divi which I would re-invest for compounded growth).

You could select at least 2 risk types (marginal, low,):
Rock Solids Group I (low risk): would include essential services, gas, water, electricity suppliers. Very good UK examples would include National Grid (also in USA), United Utilities, Royal Mail etc

Rock Solids Group II: major bluechips (global brands) including pharmaceuticals, food, alcohol, household etc. Examples include Diageo, GlaxoSmithKline, BP.

A third and very interesting group which are mainly Irish, not too expensive, good Yield etc etc and interestingly a growing international dimension to the business include:
ICG Group (almost debt free, SP & Divi consistently growing), IFG Group (doing very well in UK and all), DCC (excellent co), Greencore (big player in convenience market UK and now in USA), etc

There are many more. Depending on how risk averse you are, I would invest at least 50% and probably more of your available cash (retaining € 20k as an easy accessed fighting fund and balance on medium term savings). The latter is essentially a waste of valuable cash & time because of negligible returns.

Put your money to work, spread it and enjoy the rises and do not worry too much about the occasional set back. Buy to hold, works well the longer the term.

Good luck

Speedwell

I did what had to have been the most idiotic and accidental investment ever. I received a small inheritance (about twenty thousand dollars; I was in the US) and noticed the price of gold was low. "OK, the thing about gold is that even if the price crashes, you still have gold, whereas if a stock crashes, you may have some very expensive toilet paper", I said to myself. And I was a nerd, so I put it all in e-gold in early 2002 because I thought it was the future and I could theoretically access it from anywhere in the world. Gold tripled in price before I found someone to take the e-gold off my hands, just barely before e-gold got raided (eek!). In the meantime I had used some of the money to buy a modest car and fund some necessary business investments, but I still made out well in the end. That money paid for my husband and me to move to Ireland and find a home and look for work. Definitely "do not try this at home".

I do have a question, though. I threw all I could over a period of several years into a 401K company-sponsored retirement account before that company had a series of massive layoffs in which I unfortunately lost my job. According to US rules, I was able to take that money and "roll it over" into an "individual retirement account" that I still am not able to touch without significant fees and penalties until I reach statutory retirement age (and I'm only going to be 50 this year). The thing is, I theoretically can withdraw the money if I am willing to take the hit for fees and taxes, so I effectively have my savings invested in dollars. I'm trying to figure out if the dollar is likely to lose enough value against other currencies that it makes sense for me to withdraw the money and invest it in some other, safer way. Your thoughts?

Thargor

Great post thanks for that Sonnenblumen.

ixus

Thargor, as I said to you on thepropertypin, you don't have to do anything. 100k is not a hot potato. Markets are way overvalued, unless you start thinking strong inflation is coming. .

Find the safest, best savings rate you can and relax about investing. Figure out the career path you want to take first (as discussed elsewhere) and what you need to do to get there.

Build the cash pile to allow you to do whatever the hell you want.

Thargor

Thanks Ixus, waiting and seeing feels like the right thing to do alright:



Kicking myself for not getting this sorted back in 2012 though.

I was picking up one of my parents friends from Limerick at the weekend though and there are some dirt cheap apartments down there, 80k for a 4/5 bed you could keep filled with students most of the year? Although rents arent very high.

ixus

A lot of landlords are getting out of the game due to high costs, taxes etc. It's not free money. However, if you're a "handyman" who can fix most things, there is a Cost reduction there. I like Limerick city.

While not wanting to get into yournpersonal life, say you were to change career (as discussed elsewhere>, meet a partner & subsequently start a family or buy a home. Outlooks in life change and it's great to have the cash to just do what you want. I'm practice most of what I talk about, rent, few investments. Pretty liquid for events/opportunities be they career change, relocation, cheaper markets.

CIARAN_BOYLE

I think its worth considering a tax efficient option like the BES scheme. There are investment intermediaries that offer a fund of short term bonds that qualify for the BES scheme.

Thargor

CIARAN_BOYLE wrote: »

I think its worth considering a tax efficient option like the BES scheme. There are investment intermediaries that offer a fund of short term bonds that qualify for the BES scheme.

What are the returns like on something like that?

CIARAN_BOYLE

Thargor wrote: »

What are the returns like on something like that?

Well assuming you are on the top level of income for at least the amount you invest you would get 40% over the 40 years from the government by way of extra tax credits. The actual return is fund dependent.

You are locked in 4 years.

phantom_lord

Most BES schemes (EII now) are borderline scams.

CIARAN_BOYLE

phantom_lord wrote: »

Most BES schemes (EII now) are borderline scams.

True but thats why you go through reputable investment intermediaries.

robp

phantom_lord wrote: »

Most BES schemes (EII now) are borderline scams.

What do you mean? Schemes to scams investors?, or just fake businesses to scam tax payers cash for their investors?

CIARAN_BOYLE

robp wrote: »

What do you mean? Schemes to scams investors?, or just fake businesses to scam tax payers cash for their investors?

Most BES schemes have no exit plan. You are investing to buy .5% of shares in the enterprise and theres no way for you to get your money back or leverage your investment for any purpose.

phantom_lord

robp wrote: »

What do you mean? Schemes to scams investors?, or just fake businesses to scam tax payers cash for their investors?

The "reputable investment intermediaries" and the owners of the businesses involved pocket most of the returns, via big fees and capping the returns to investors. The scheme is just a waste of gov money.