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Low-risk investment, what kind of return likely?

  • 11-04-2018 6:29pm
    #1
    erudec
    Registered Users, Registered Users 2 Posts: 239 ✭✭


    I have a client who is expecting to come into €200,000 and she wants to put it into dead-safe securities. She asked me if it was possible to get more than 1% annually after taxes without going into more risky stuff.

    I was embarrassed to say I don't know. I'm not providing financial advice, but I do feel I ought to know enough to be able to answer such a basic question.

    Back when I was more in touch with the world of finance, 1% annually seemed a laughably low rate of return. Now, after the great recession it seems like it might be an impressive enough feat to reliably return that much.

    Any ideas what's considered a fair rate of return these days? I only have a few stipulations: it has to be something that a person with only 200K can get access to (so if the minimum investment amount is a million, that's no good), it has to be broadly accepted as in the top 20% of "least risky" assets by the general wisdom of the investment community and, of course, it has to involve at least one payment to the investor per year which would yield, in the worst possible scenario (another crisis like 2009) €2000. Every year.

    Is that a tall order nowadays?


Comments

  • #2
    ct5amr2ig1nfhp
    Closed Accounts Posts: 5,019 ✭✭✭ct5amr2ig1nfhp


    Why the need to access 2k+ per year?

    Keep 20k aside. 2k over ten years. That meets her the minimum access requirement per year, the other 180k put into a ten year state savings bond. 1.5% AER and it's tax free. Probably the least risky option.

    The 20k she could put into a regular savings account. 1k/month is usually the most you can deposit on these type of accounts. KBC 2.5%, next up EBS 1.75% family saver etc etc. There are T&C's of course, plus DIRT. She would still be earning over 1% a year on, reducing over the 10 years if she pulls 2k out each year.

    Plenty of other options of course.


  • #3
    erudec
    Registered Users, Registered Users 2 Posts: 239 ✭✭erudec


    Reid Steep Advisor wrote: »
    Why the need to access 2k+ per year?

    Keep 20k aside. 2k over ten years. That meets her the minimum access requirement per year, the other 180k put into a ten year state savings bond. 1.5% AER and it's tax free. Probably the least risky option.

    The 20k she could put into a regular savings account. 1k/month is usually the most you can deposit on these type of accounts. KBC 2.5%, next up EBS 1.75% family saver etc etc. There are T&C's of course, plus DIRT. She would still be earning over 1% a year on, reducing over the 10 years if she pulls 2k out each year.

    Plenty of other options of course.

    Are these all Irish investments? Her partner is from outside the EU and she's considering a move there. The income would go a very long way indeed.

    Would it make sense for her to buy bonds directly? Cut out the middleman?


  • #4
    ct5amr2ig1nfhp
    Closed Accounts Posts: 5,019 ✭✭✭ct5amr2ig1nfhp


    www.statesavings.ie will answer most of your questions. You purchase directly from the NTMA. You must be resident in Ireland for the return to be tax free etc. All the blurb is available on the website.

    "When you put money into State Savings you are placing your money directly with the Irish Government. All State Savings money is under the management of the NTMA. The repayment of all State Savings money is a direct, unconditional obligation of the Government of Ireland."


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