Investment advice please

dahamsta

Should have a few quid to spare shortly, reckon it's time I started tucking some money away. Any recommendations for a nice simple investment account? I need two, one for me and one for my youngfella, say a hundred a month in each to start, maybe increasing that later. Access to the cash wouldn't be a priority, but it would be nice to have emergency access, maybe a couple months notice.

How does Permanant TSB stack up? Any other tips?

Thanks,
adam

Victor

Obviously, max out your SSIA.

I would split the money two ways - build up €5,000 in the credit union / best deposit rate you can get and the rest in a PIP / PEP type product.

If you are thinking of the "youngfella", one thing might be life insurance.

And seeing as you are getting on in your years , invest in a pension (annual lump sums work out cheaper to invest fees wise, but aren't earning for that duration)

Blackjack

Agree with Victor. Max out your SSIA (if you have one that you have not already maxed out), or find someone trustworthy who has not Maxed theirs out and see if they'll agree you you contributing. It really is the best investment opportunity on the Planet at the moment. As regards shares, Irish banks are underpriced compared to their UK counterparts (going by Price/earnings ratios), hence you'll probably see a lot of interest in those outside of the BOI, AIB, Perm TSB.
Best to research the issues before commiting, so if you are looking for a quick guide to how to do things there are some great Websites there that can give you a lot of info (Ncb.ie has a great "Investor Education" link that gives a lot of useful info, as do a lot of the financials, particularly Brokers, websites).
However, putting all eggs in one basket is probably not a wise plan so a mutual Fund is probably the best option for spreading the risk.
Also, as victor mentioned, the Pension is a good idea, as it is tax deductable if you are fortunate enough to work for a company that has a contributory pension plan then making Additional Voluntary contributions is a very tax effective way of saving money - you are taxed and PRSI'd on your Gross salary AFTER contributions, so you are actually saving you own hard earned money and the gov only taxes you on anything after that. Not sure how this would work for the self employed, but the pension plan is definetly worth checking out.
If you can afford it, Rental property is always a good bet, probably not the best in Ireland at the moment though - Bank of England are about to increase their Interest rates and I would imagine that the ECB and Greenspan will be doing so as well, not necessarily to follow suit, it's just the way things have to go.

Victor

Originally posted by Blackjack
Greenspan will be doing so as well, not necessarily to follow suit, it's just the way things have to go.

I think greenspan has said "hold" on interest rates as he is vaguely optimistic about the American economy (or maybe it's just difficult to sell government debt these days).

dahamsta

I want to let this run for a few days before responding properly, so I'm just poking my head in to add two bits of information:

- I don't have an SSIA. "Spare cash" has only just found its way into my dictionary.

- I'm self-employed. Sole trader. Consultant. Tips & Tricks Welcome.

Having a look at ncb.ie right now, thanks for the posts so far. Very constructive, but as you might have gathered accounting and finance aren't my strong points. Gotta look up things like PIPs and PEPs. Which is a bit sad, when you consider I did Accounting, Bus. Org. AND Economics for my Leaving.

adam

thegills

Dahamsta.
I'm in your shoes at the moment; soletrader too. You should be calculating your tax return as it needs to be in by tomorrow. I am putting a lump sum into a PRSA to reduce my tax bill.

As far as investing I have put a few bob into a Bank of Ireland savings account with a guaranteed return. I have also invested in the Irish Forestry Fund which has a tax-free growth (10 years though). I put a few bob in for my 3 year old and will do another one for my 9 month old very soon (the 8th Forestry Fund is now looking for investors so you need to act fast)

thegills

PS: As a soletrader you can say that your home is your office and write off a portion of electricity, mortgage, telephone etc.
You can claim subsistence if you work away from home say for 2 days a week etc.

RicardoSmith

Originally posted by thegills
PS: As a soletrader you can say that your home is your office and write off a portion of electricity, mortgage, telephone etc.
You can claim subsistence if you work away from home say for 2 days a week etc.

But isn't there an issue to be aware of that if you claim for certain stuff or if you claim over a certain amount you home could become liable for capital gains tax when you go to sell it. Something to be avoided at all cost.

thegills

RicardoSmith.
I'll look into this as I am being advised byu a Tax Consultant. My home will remain my home but I use a back room as an office. This is my registered office. Based on square footage I can claim a portion of bills as these bills would be higher as I work from home.

Fergal C

Northern Rock offer good rates on savings.

De Rebel

Most of the above suggestions make sense.

Pensions can be particularly flexible and rewarding for a sole trader.

Spreading your investment can also be a good thing, provided you don't spread it too thin and end up burried in management charges.

Prize bonds should also be (a small) part of a portfolio.

Rental Investment Property is a bit of a fad and shoudl be considered as a part of your portfolio if you have a lot to invest.

Shares are HARD WORK. Tips on shares that guarantee fast easy money are exactly the same as tips on horses, except that the nags are usually more predictable. You can make money from shares, but be prepared to work hard at it.

SSIA is the best of the lot.

In terms of deposit accounts, Northern Rock have been mentioned, Anglo Irish are also worth looking at. Better again is First Active's Elevator Account which opens and closes every now and again (Issue 6 closes today).

You need to take a 5/10/15 year perspective on when you might need cash before deciding between the different products. This is every bit as important as trying to second guess the returns. For example, if you have ideas of building a lump sum to act as down payment on a house or a ferrari in 5 years time then it would not be wise to put everything into pension, unless you are 60! Likewise if the mortgage etc is under control, then shovelling it into pension is better than building a cash mountain.

ur mentor

as a sole trader you may consider overpaying your tax somewhat
I overpaid €1k last year and got a tax free interest payment of €48.
if you overpay too much they will not give you interest.
using house as office affects insurance and planning permission also. it can also attract rates on property (or portion of) plus it may attract water rates. These are payable on commercial property but not on domestic.
invest in yourself- take courses, do more training, get an edge somehow and especially steer your work towards your bliss.
:cool:

Fergal C

The business section of today's Irish Times has an article evaluating different savings plans.

RainyDay

First of all, have a good read of the Askaboutmoney.com Guide to Savings & Investments for an easily digested guide to the key issues. Start making decision about your attitude to risk - If you are prepared to put your capital at risk, you will make greater returns in the long run. If you restrict yourself to capital guaranteed investments, you are restricting your returns also. If you have a long timeframe in made (7 years +), you really would be shooting yourself in the foot if you don't accept some risks.

Avoid PIP's/PEP's unless you can find very low-charging options. The lowest charging investment funds I've come across are Quinn Life (index tracking - 1%) or EBS (active investments 1.5%).

Pensions give you a tax deferral (with tax-free growth in your fund), but not a tax break. You still pay tax on the income when you draw it down in your retirement.

I'm very wary of the forestry investment funds as they have in-built mechanisms to allow the directors to take money out of the funds via 'forestry maintainance fees' - see this thread from Askaboutmoney for the specifics.

I disagree with De Rebel's view that shares are hard work. If you plan to buy/sell regularly, then maybe they could be hard work. But buying & selling regularly will make your broker rich, not you. Buy & hold for the long term - spread your investments over a range of industries & regions to minimise your risk.

De Rebel

Originally posted by RainyDay
I disagree with De Rebel's view that shares are hard work. If you plan to buy/sell regularly, then maybe they could be hard work. But buying & selling regularly will make your broker rich, not you. Buy & hold for the long term - spread your investments over a range of industries & regions to minimise your risk.

To clarify, I say that shares are hard work to counter the commonly held view that they are an easy option - all you need is the right tip. By hard work I mean research that goes into selecting the correct strategy, selecting the correct shares, selecting the correct mix, selecting the correct buying date/price and most importantly selecting the correct selling point.

While I don't have any faith in day-trading, buy and hold is not the only strategy either.

I don't think there is any real disagreement between us RainyDay, I'm just always very nervous when I see advice like the above "Buy the banks they have loads of locked in value you'll do well out of them" being dished out. I've made some great returns from investing directly in equities, (better than any of the equity funds I have money in) but it certainly takes hard work to do so.

trap4

Originally posted by ur mentor

invest in yourself- take courses, do more training, get an edge somehow and especially steer your work towards your bliss.
:cool:

Interesting advice. Do you mean you should try to steer your work towards something that you are passionate about? Eg. if were big into gadgets you could try to become a tech journo (like the guy on gizmodo.com)?

ur mentor

Originally posted by trap4
Interesting advice. Do you mean you should try to steer your work towards something that you are passionate about? Eg. if were big into gadgets you could try to become a tech journo (like the guy on gizmodo.com)?

yep, lifes very short. Too many people dread going to work. Look at comments on boards about things people hate to do- getting up for work is one of them.
If you really want to enjoy this short life then you need to enjoy your work. If you are passionate about it then you will give customers a great service. Just make sure you charge them enough. I reckon passion will earn at least a 50% premium over ordinary pricing. To be the best you must have passion. Passion involves love.commitment dedication etc. lol;)