EBS investment portfolio with Irish Life

Lusocu

I've recently had a meeting with a financial advisor at EBS. We talked about investing in a medium risk portfolio product that is managed by Irish life. Would I be better going to investment broker myself. Are there better options to be thinking about? I'm not interested in taking high risks.

Lusocu

Jez I stink of newbieness who has no clue.

topper_harley2

If you are going down the route of professional advisors, go to one who is independent and fee based. They can advise you outside of allegiances and kickbacks.
An EBS advisor will only ever recommend a managed portfolio as they are Tied Agents for Irish Life. Hence, they are immediately biased. Be sure to check the fees on these, as even 1% can wipe out returns over 20 years.

You dont give enough (i.e. any) information about why you want an investment portfolio, what you are trying to achieve, what are your other financial priorities/circumstances etc.

If I were an advisor I'd be asking:

• Have you any high interest debts like car loan/credit card etc
• Have you an SVR mortgage
• Have you a rainy day fund of 3-6 months salary
• Have you a pension
• Have you kids
• Are you married
• Have you any investment property
• What exactly constitutes success for this investment portfolio
• How long are you happy to be without this money
• What would you do if value dropped 30% overnight

Most people when asked why they want to invest generally say "I want to get better return than in normal bank account"......that is not a goal, thats a vague pipe dream that you cannot quantify.

There are lots of similar threads on this forum, I'd suggest having a good read of them as well before deciding what to do.

Lusocu

I have nothing, no loans etc only a big pile of cash that I'm worried inflation will eat away at. I've decided I don't think I have the constitution for investing. I'd be constantly worried I would lose a lot of it. I'm going to cancel next week with EBS/Irish Life and leave it in a number of deposit accounts. Except for some money that I need for emergencies. The plan started officially on Friday. I have a 30 day grace period to pull out. I just hope they haven't lost anything in the few days they have my money.

topper_harley2

Good call I think. Check out state savings instead.

Cathbadhian

I would actually counsel against 100% cash - at the end of the day it's a guaranteed negative return (due to inflation and interest rates). The real question is what loss you are willing to tolerate over a specific timeline. Run down how much cash you might need in 1, 3, 5 and 10 years. The longer the term, the more % of your cash you might consider investing to stocks. At each 5-10% increment, calculate possible "temporary for a few years" losses on your stocks of 50% (by stocks, I assume a broad passive fund). If you see a number you can live with, you can use that % as your investment % into stocks. Within those stocks - the folk here can advise on what indices are good ideas for the next 5-10 years. Probably far more honestly than most managers.

Lusocu

I've started an investment plan with EBS/Irish Life called map4. On a scale of 1 to 7 in terms of risk it's at a 4. Classified as being the upper tier of medium risk. It officially started last Friday. They recommend you leave it there for 5 years. I'm definitely not prepared to lose it. I'm thinking of entirely cancelling or maybe putting 35% instead of 50%. Even so I don't foresee myself spending anything for many years, if ever. I feel I've missed the boat on property as there are no steals in the property market anymore. I feel like I'm putting my faith in some guy moving numbers around on a computer. I know nothing about markets but I'm worried they'd tank and the worry of waiting for them to bounce back would be too much. I also see it makes sense to do something to combat inflation. Having an interest on deposits was much more assuring in the days when they were worth it.

newacc2015

Cathbadhian wrote: »

I would actually counsel against 100% cash - at the end of the day it's a guaranteed negative return (due to inflation and interest rates). The real question is what loss you are willing to tolerate over a specific timeline. Run down how much cash you might need in 1, 3, 5 and 10 years. The longer the term, the more % of your cash you might consider investing to stocks. At each 5-10% increment, calculate possible "temporary for a few years" losses on your stocks of 50% (by stocks, I assume a broad passive fund). If you see a number you can live with, you can use that % as your investment % into stocks. Within those stocks - the folk here can advise on what indices are good ideas for the next 5-10 years. Probably far more honestly than most managers.

I am not trying to be condescending, but have you actually opened up a business section in a newspaper in the last 3 years? We have had constant deflation or no inflation. With interest rates still being half decent considering we have no inflation, there is no real loss in the value of money. There is no sign of any inflation on the horizon. So this "guaranteed negative return" you are on about is not the reality at all and hasnt been for a long time. This is not opinion, it is the reason why pension funds are willing to take Government bonds at 0.6% for 10 years, as they dont think there will be inflation in the medium to long run. Not even the strong US economy has sizeable inflation. So I cant understand where you getting this idea of needing to beat non-existent inflation in the economy?

A ton of hedge fund managers are saying stocks are seriously overpriced and that you should keep savings in cash not overpriced stocks. QE has artificially inflated stocks. Fear has over inflated old reliables such as Colgate as they are seen as "safe"ie people will buy old reliable consumer goods even if there is a recession

OP that MAP4 seems like a dog of a financial product. I wouldnt touch over priced bonds, which they have invested in. The fact that nearly all the investment is in non-eurozone countries means there is a massive currency risk ie the euro tanking and you will lose a ton of your investment. I cant understand why you would pay 0.9% to Irish Life when you can go onto Degiro and get Vanguard ETFs with a management fee of 0.05% per annum for a basically the same thing ie you can buy index funds, index bonds etc. I also wonder if their recommendation of keeping your funds with them for 5 years has anything to do with their commission from Irish Life?

If you can get out of the product now ie there might be a cooling off period, then get out. If you really want to beat non-existent inflation and you are a high income tax earner, call a tax advisor or the likes of BDO. Ask about investing in their rehashed business expansion scheme. It gives you decent tax relief, which is a guaranteed return and a possible capital gain after 3 years

Lusocu

The advisor at EBS wasn't able to meet with me today to cancel the plan. I'm meeting tomorrow to cancel. I can live quite easily with deflation or no inflation and forego the carrot offered by EBS/Irish life as a greater return than deposits. All I really want right now is for my life savings to be safe. I can take time to educate myself on investing and make decisions on what to do then if I decide to go down that path. If inflation actually starts then it would seem like a better idea to me. I kind of jumped into the map4 plan head first as it seemed like a no brainer in the meeting. They've had my money for a few days now. I don't know is it possible for them to screw up and lose some in only a few days. I'll find out tomorrow. The whole thing just felt wrong in my gut from the beginning. I had thought that EBS would be getting a cut, how could anyone think they would not. It was a bit silly of me to jump the gun. Thanks for your advice. No inflation has eased my mind a little and it feels like the right decision to abstain for now.

Cathbadhian

newacc2015 wrote: »

I am not trying to be condescending, but have you actually opened up a business section in a newspaper in the last 3 years? We have had constant deflation or no inflation. With interest rates still being half decent considering we have no inflation, there is no real loss in the value of money. There is no sign of any inflation on the horizon. So this "guaranteed negative return" you are on about is not the reality at all and hasnt been for a long time. This is not opinion, it is the reason why pension funds are willing to take Government bonds at 0.6% for 10 years, as they dont think there will be inflation in the medium to long run. Not even the strong US economy has sizeable inflation. So I cant understand where you getting this idea of needing to beat non-existent inflation in the economy?

Er...because there is inflation? It's not huge, but it certainly exists. Also, interest rates on notice accounts would fall well below inflation. More so once you finish paying DIRT. As I said, holding cash right now implies a "guaranteed negative return". All very easily evidenced by visiting the CSO website followed by the Bank of Ireland website...

Francie Barrett

Lusocu wrote: »

I have nothing, no loans etc only a big pile of cash that I'm worried inflation will eat away at. I've decided I don't think I have the constitution for investing. I'd be constantly worried I would lose a lot of it. I'm going to cancel next week with EBS/Irish Life and leave it in a number of deposit accounts. Except for some money that I need for emergencies. The plan started officially on Friday. I have a 30 day grace period to pull out. I just hope they haven't lost anything in the few days they have my money.

It doesn't have to be all or nothing. You could consider dipping your toe into investing with a small amount of your capital. If you're comfortable, you could then periodically add to that. There's piles of threads created here in the last week on index investing, that would be the best place to start.

Lusocu

Francie Barrett wrote: »

Lusocu wrote: »

I have nothing, no loans etc only a big pile of cash that I'm worried inflation will eat away at. I've decided I don't think I have the constitution for investing. I'd be constantly worried I would lose a lot of it. I'm going to cancel next week with EBS/Irish Life and leave it in a number of deposit accounts. Except for some money that I need for emergencies. The plan started officially on Friday. I have a 30 day grace period to pull out. I just hope they haven't lost anything in the few days they have my money.

It doesn't have to be all or nothing. You could consider dipping your toe into investing with a small amount of your capital. If you're comfortable, you could then periodically add to that. There's piles of threads created here in the last week on index investing, that would be the best place to start.

I'm finding it very hard to come up with a % to invest. If I invest too little it will not be worth the risk. And I am not feeling comfortable with significant amounts. This is due to talk of markets "tanking" and "crashing" which makes me very skittish, weather they will or not is another thing. I guess nobody really knows for sure. I'm thinking investing is not for me. I've had advice here not to go with EBS/Irish life as their portfolio is not good. If I do want to invest the sensible thing seems to be to go to Degiro and pretty much cut out the management fee. Right now I feel like just pulling out.

gordongekko

Lusocu wrote: »

I'm finding it very hard to come up with a % to invest. If I invest too little it will not be worth the risk. And I am not feeling comfortable with significant amounts. This is due to talk of markets "tanking" and "crashing" which makes me very skittish, weather they will or not is another thing. I guess nobody really knows for sure. I'm thinking investing is not for me. I've had advice here not to go with EBS/Irish life as their portfolio is not good. If I do want to invest the sensible thing seems to be to go to Degiro and pretty much cut out the management fee. Right now I feel like just pulling out.

Well if in doubt then yes pull out. Use the next few months to educate yourself on the matter. 6 months over a 20-40 year time frame won't make a lot of difference.

newacc2015

Cathbadhian wrote: »

Er...because there is inflation? It's not huge, but it certainly exists. Also, interest rates on notice accounts would fall well below inflation. More so once you finish paying DIRT. As I said, holding cash right now implies a "guaranteed negative return". All very easily evidenced by visiting the CSO website followed by the Bank of Ireland website...

Er... there is no inflation actually. Or the odd month there is inflation, it is at most 0.2 or 0.5%. For most of the last three years we have had deflation or no inflation. Are you aware of this? Does inflation at 0.2% merit speculative investing when you can still get regular saving accounts with 2.5% rates or 1% fixed?If you think so, then go for it. But it is not savvy IMO. Even with DIRT and inflation, we are probably in the only period of time in the last 100 years where inflation is not eroding the real value of money.

Care to share those links? Or are you trying to hide the fact that BOI only charges negative rates on massive deposits as it doesnt fit your narrative?

Here is a link to the CSO Website where you will see deflation has been occurring for most of the previous few years. The HICP has inflation at a whopping 0.1%

http://www.cso.ie/en/releasesandpublications/er/cpi/consumerpriceindexjuly2016/

Cathbadhian

newacc2015 wrote: »

Care to share those links? Or are you trying to hide the fact that BOI only charges negative rates on massive deposits as it doesnt fit your narrative?

Not sure how I earned your ire on this. Your link shows a positive inflation rate for the year to July, i.e. inflation does exist. As for trying to hide negative rates, not at all my intention. The highest advertised AER rate is 1.25% for BOI on a 7 year account (fixed and paid at maturity). Notice accounts are 0.5% maximum for a 90 day notice period, and interests on shorter notice periods approach zero. (Also, I'm a new account so I actually can't post links easily ).

personalbanking.bankofireland.com/wp-content/uploads/2016/06/Customer-Deposit-Interest-Rate-Table-10-June-2016.pdf

CPI/HICP forecasts are also public knowledge:

centralbank.ie/publications/Documents/QB3%202016%20Forecast%20Summary%20Table.pdf

The target obviously being 2% in the medium term (however realistic that might be, who knows - I wouldn't bet heavily on it).

So, the usual advice about erosion of value hasn't magically upped and retired. Running the numbers, the loss to inflation of 0.5% per annum over 5 years on 10,000 would be 250. It's 780 if inflation returns to 1.5% or so. Since I'm not in possession of a crystal ball, I have to assume inflation will increase back towards normal.

Whether a loss of 250-780 of value over 5 years is worth the trouble of shunting even some money into stock market is, of course, up to the whoever owns the cash to decide.

newacc2015

Cathbadhian wrote: »

Not sure how I earned your ire on this. Your link shows a positive inflation rate for the year to July, i.e. inflation does exist. As for trying to hide negative rates, not at all my intention. The highest advertised AER rate is 1.25% for BOI on a 7 year account (fixed and paid at maturity). Notice accounts are 0.5% maximum for a 90 day notice period, and interests on shorter notice periods approach zero. (Also, I'm a new account so I actually can't post links easily ).



CPI/HICP forecasts are also public knowledge:

The target obviously being 2% in the medium term (however realistic that might be, who knows - I wouldn't bet heavily on it).

So, the usual advice about erosion of value hasn't magically upped and retired. Running the numbers, the loss to inflation of 0.5% per annum over 5 years on 10,000 would be 250. It's 780 if inflation returns to 1.5% or so. Since I'm not in possession of a crystal ball, I have to assume inflation will increase back towards normal.

Whether a loss of 250-780 of value over 5 years is worth the trouble of shunting even some money into stock market is, of course, up to the whoever owns the cash to decide.

We had the first bit of some what measurable inflation this summer in three years. 40% of that inflation was due to increases in insurance eg motor insurance. Month on month inflation for July was -0.2%. So inflation next month maybe in fact deflation. The HICP was 0.1 for July. We dont have constant inflation which you seem to think we have

If you look at inflation or lack of for the last 5 years. You will see taking 2011 as a base year prices have increased 2.4% over 5 years(they started to decline again in July). Most goods are still significantly cheaper than 2011. The flaws with measuring inflation is that it doesnt look at your expenditure. If you werent in education or regularly staying hotels you would have a greater purchasing power in 2016 than 2011. Only a few indexes have increased since 2011 and most have in fact declined

http://www.cso.ie/multiquicktables/quickTables.aspx?id=cpm01_2016

Inflation returns to 1.5%, the central banks would have more than likely increased interest rates. So the chances of losing the real value of your money is probably quite small/