100k to invest

slumped

Hi

My dad has 100k after a sale of land. He was set on buying property but at 55 years of age, he would still have to borrow another 140k for the type of house he is looking at.

Where should he invest the 100k? Are there any secure bonds etc. that will give him a better return than the standard savings account?

He doesn't mind the money being locked in for 5-10 years.

I don't want him to buy a property, personally I think that interest rates will rise and he will be in trouble.

Any help appreciated.

Culchie

My parents have similar conundrum, having sold a site lately, and are of similar age.

I've advised them to put into Northern Rock deposit account, available on demand.

Shares are long term strategy (considering their age) and property as you say is (imo) due some sort of correction soon, which could means 5 years in the doldrums, which is nothing for a young couple starting out to weather this cycle, but for your parents could be significant, should they wish to liquidise their assets for whatever reason.

If it were me (and I like to speculate), I'd take 5 or 10% of the money and make a speculative play, like buying an acre of potential development land in Eastern Europe for €5000-€10000 or something (do your research), and put the rest away safe and sound in The Northern Rock.... but that's the 'only live once, speculate to accumulate, you can't bring it with you' side of me coming out:)

Look into CMC Capital in Cork. they do syndicated investment in german commercial property - 100k minimum investment. Safe 5 year investment with good return

slumped

Thanks for the advice.

Anyone else want to help me?? PLEASE!!!!!!

S

TabulaRasa22

They might try investing in small local startups, if they have any connections with the business community around about. They get to control their investment and the factors that affect how it performs, unlike any of the other suggestions. There is always an element of risk, but you can minimise these risks to a great extent.

is_that_so

Look at France if you are considering foreign property. I did a bit of research a few years back.
They have a state backed lease back scheme. Basically you get to use the property for x number of weeks per year for the length of the lease , typically 9-11 years.
The rest of the time it is rented out.
With 25% of the cost as a deposit, leasing would then pay the mortgage for that time. With 100K you could get a very nice place .

PS 55 is not OLD

seatleon2000

Sherry Fitzgerald are offering 100K apartments in Berlin with garaunteed rental for 5 years ..

connundrum

The apartment is worth +/- €85k, and the 5 years guaranteed rental is simply added onto the cost of the apartment.. every developer is doing it and its high time someone put an end to it. :mad:

I've had a lump sum in with with an Irish Life Tracker Bond, simply due to lack of options and/or effort on my part. But it's worked out well.. 11% growth pa since 2003. The bond was guaranteed to the value of 101%, so I felt safe. Not saying that it will continue to reach 11% pa for the foreseeable future, but I feel confident enough

mike65

Invest in a compnay that imports quality cars from UK - lucrative line of work these days. People like to spend money a nice Merc etc but resent Irish prices and specs/model range.

Mike.

Reyman

I'd take Culchie's advice on this one.

Move the money into Northern Rock or Rabo and get stability for the time being.

Property's top of cycle with no further up potential and lots of down risk

Likewise shares have had a very good run and are very closely tied to this 'bubble' economy. Rising interest rates will also damage share and property prices and favour holding your money in cash.

At 55 any other approach is too risky - you may not be able to claw back losses

PS Look at what's happening in Iceland - and swap the 'c' for an 'r'

drdre

slumped wrote:

Hi

My dad has 100k after a sale of land. He was set on buying property but at 55 years of age, he would still have to borrow another 140k for the type of house he is looking at.

Where should he invest the 100k? Are there any secure bonds etc. that will give him a better return than the standard savings account?

He doesn't mind the money being locked in for 5-10 years.

I don't want him to buy a property, personally I think that interest rates will rise and he will be in trouble.

Any help appreciated.

My dad just told me that banks in pakistan are offering 19% interest rate.Wow thats alot compared to here.i donot have a lot of money to invest or i would.

4red

Your dad could do worse than pop along to the Money Show next weekend in the RDS. It's got comprehensive investment opps. i.e. property, equities, land banking etc. so he could get a good overview...
http://www.themoneyshow.ie

antoinolachtnai

You would have to buy pakistani currency to benefit from the pakistani interest rate. Get independent financial advice before you do that!

Investing in property in Ireland is definitely not a sure thing, but if he can get a good property at an ok price, don't discount it completely. If he already has BtL, there might be a tax benefit in going with property.

And 55 is definitely not 'old'. A relative of mine (76) just got a loan for EUR 320k to buy a BtL property. (The tax advantages of this particular property make it worthwhile.)

VF10

Talking of Pakistani interest rates, a US associate, who's well clued in Macro Economics has been telling me to buy 2nd world debt! he's especially positive about Brazil, based on a number of drivers, primary being that they will be Oil tade neutral in 2 years due to the extensive bio fuel program they're persuing, plus the fact that Argentina and Brazil will be the "Global Fram", in a similar way to China being the Global factory... current interest rates are 17%+

antoinolachtnai

Is that the nominal interest on the debt (which is presumably in dollars or euros), the return at today's prices or the rate on the Brazilian currency? There is some risk of default, surely?

peckerhead

slumped,

Not disagreeing with any of the advice given here, but you should also have a look around (and do a few searches) on www.askaboutmoney.com, if you haven't already. There are some fairly knowledgeable heads knocking around there — and plenty of dissenting views, too. You'll find a lot of posts asking the same kind of question...

FWIW I would agree with those who are recommending equity investment/cash deposits over property.

dathi1

Always research a country before you invest in it. Pakistan is not stable. It has a dictatorship in power and the hench man has been nearly killed twice by Islamic Insurgents. I'd stay miles away from Pakistani Banks.

drdre

dathi1 wrote:

Always research a country before you invest in it. Pakistan is not stable. It has a dictatorship in power and the hench man has been nearly killed twice by Islamic Insurgents. I'd stay miles away from Pakistani Banks.

i would not argee with you there.its alright for me as i have relatives there.and my uncle and cousin are high up in a bank over there.i know that its safe but it might not look safe to others.its a good return and thats all i care about.my uncle from dublin has put money into an account over there and will be getting a good return with out worrying

Blackjack

drdre wrote:

i would not argee with you there.its alright for me as i have relatives there.and my uncle and cousin are high up in a bank over there.i know that its safe but it might not look safe to others.its a good return and thats all i care about.my uncle from dublin has put money into an account over there and will be getting a good return with out worrying

Countries in these markets will generally have restrictions for Foreign Investors, generally surrounding the repatriation of funds.

Korea and India for example do not allow Foreign Investors to maintain currency accounts other than for generally legitimate purposes such as payment of wages of expats, purchasing of goods and services. In India, Foreign investors are not allowed to earn interest on cash accounts. In both countries, investors are generally not allowed to maintain overnight balances in these currencies, to prevent speculation in the currency.

I don't know what the deal is with Pakistan, however I do believe that there are restrictions on place on PKR. It's all very well having great rates of interest but if you can't take the money out of Pakistan, it's almost worthless to you. In your case this will be OK, as you have relatives there and there are probably ways around the restrictions so that at least someone has the benefit, this won't be the case for most people though.

matthew111

If you`ve got 100k why not invest in a property in Slovenia.You can get 1 or 1.5 bedroom apartment in the capital which is Ljubljana.Turnover is around 6%/pa and yield is around 10%/pa.If you`ve got any question just ask
Matt

eatsloads

is_that_so wrote:

Look at France if you are considering foreign property. I did a bit of research a few years back.
They have a state backed lease back scheme. Basically you get to use the property for x number of weeks per year for the length of the lease , typically 9-11 years.
The rest of the time it is rented out.
With 25% of the cost as a deposit, leasing would then pay the mortgage for that time. With 100K you could get a very nice place .

PS 55 is not OLD

Had a look at French Lease Backs a while back too, seem like a good idea if you dont mind the money being tied up for 9-11 years? Quite affordable and some great places knocking around. Was looking at one on a golf course beside Lake Anecy outside Geneva. Definitely something I will think about again

Chipboard

Property may be at/near the top of its cycle but that is fine if your 35 and your making a 20/30 year play. If your in your 50's it probably not a good idea.

Also, as people get older they should invest in less risky assets. If you have a pension in is generally invested in property, shares, bonds and cash. As you get older a higher proportion of the fund is moved into bonds and cash because although you can take a hit on the value of your pension when hour in your 30's or 40's, if that happens when your 57, your in trouble so it makes sense to crystallise your gains in the latter years, just in case there is a stock market crash or a recession.

I reckon your dad should invest in a capital guarateed fund. All the Life assurance companies do them. I put my aunt into one a few years ago and while it wont make her a millionaire, she has peace of mind and a decent return from it.

Dont listen to what an employee of a bank or life assurance company tells you. They are paid to sell investments. Get an independent adviser.

cabla

To be honest i wouldnt bother looking to invest in property in ireland. only worth while ivesting in the centre cities, its far too expensive. He would need another mortgage and at his age im sure he wouldnt get it. i would reccomend investing in oversees property, only problem in the local authorities, to avoid the hassle try go somewhere that are intersted in foreign buyers. Think outside the box of the euopean union think of europe as a whole, there are some places you wouldnt think.

antoinolachtnai

What makes you think he wouldn't be able to get a mortgage?

cabla

His age basically from now till 20 years he will be 75, a bit risky for an insurance company. The actuary will have it all worked out however, like average life span of a man, i dont know his health but they will look into that, also his habits, smoker drinker etc... You could work it though so you would get a loan, possibly you could get one and he could pay you or maybe you can secure it, so if he dies you can keep paying. Im not too familliar about mortgages but i doubt they just throw them away. Id recomend foreign though, saves all the hastle of loans etc. only problem is foreign regulations and authorities.

antoinolachtnai

I don't see any difficulty in a man of that age getting a btl mortgage if he wants it.

If you're not too familiar about mortgages, is it really wise to be involved with property? The whole point of property investing is that (a) it allows you to leverage and (b) you can benefit from mortgage interest tax relief (the 'tax shield'). If you don't have a mortgage you can't benefit from either of those benefits.

cabla

Ok did some research! Mortgages go up to 65. You could take out insurance on the mortgage so if he dies the insurance will pay it off.

antoinolachtnai

So you are certain that mortgages cannot go beyond 65? Where did you find this out?

cabla

I just have a load of info on mortgages. Think about it if your 65 buy the time you pay off a 20 year loan ur 85, your average age for a man is like 73 or something. Also to get one at 65 you would want to be in great health and be earning a certain percentage (over 10 i think) of the mortgage to be even considered.

Paraic

Hi
There is no set max age for a mortgage. Majority of people are purchasing interest only morgtgages for Buy to let properties. Where the rental income will be taken into account. Also the idea is to sell the property in 15years and payoff capital.If he was purchasing the house as his own home to live in the age factor will be looked at alot more closely.

Paraic@obreinfinlay.ie
Mortgage Broker

cabla

Ye thats what i meant. I kinda misread everything :P
Ye a lot do it for renting etc. sorry about that