Saving versus investing

smndly

Hey, im looking to put money aside every month with a view to saving up for a deposit on a mortgage in the next 4-5 years.

I feel like I'd prefer to invest some of the money in something with medium risk such as a few mutual funds like what radodirect have to offer as the deposit rates are so poor at the minute. I know banks are more likely to give you a mortgage if they see you have been consistently putting money in a savings account for a number of years without touching it as this shows that you are likely to be reliable at repayments.

Will they have the same outlook if I put a fixed monthly amount of cash into funds or will they see this as different does anyone know?

newacc2015

smndly wrote: »

Hey, im looking to put money aside every month with a view to saving up for a deposit on a mortgage in the next 4-5 years.

I feel like I'd prefer to invest some of the money in something with medium risk such as a few mutual funds like what radodirect have to offer as the deposit rates are so poor at the minute. I know banks are more likely to give you a mortgage if they see you have been consistently putting money in a savings account for a number of years without touching it as this shows that you are likely to be reliable at repayments.

Will they have the same outlook if I put a fixed monthly amount of cash into funds or will they see this as different does anyone know?

Those mutuals are generally BS. The only person benefitting from them are the seller of them. The fees are massive on them ie annual fee, entrance and then exit fee. Some of them are "medium risk" yet it is not uncommon for them to be worthless

KBC have a regular saver at 1.5% or (2.5% if you have a CA with them). If you want to invest medium term, you really should just save the money in a bank account

JTMan

newacc2015 wrote: »

KBC have a regular saver at 1.5% or (2.5% if you have a CA with them).

3.5% AER variable if you have an Extra Current Account with KBC.

daveharnett

smndly wrote: »

I feel like I'd prefer to invest some of the money in something with medium risk such as a few mutual funds like what radodirect have to offer as the deposit rates are so poor at the minute.

Lots of other people are in the same boat. Since interest rates are so low, lots of money has poured into the stock market, which results in high prices. Historically when prices are this high, it has tended to spell poor short/medium term returns.

smndly wrote: »

Hey, im looking to put money aside every month with a view to saving up for a deposit on a mortgage in the next 4-5 years.

This is a short investment period for stocks. Historically, it's very rare for a diversified portfolio to drop in (inflation adjusted) value over a 15-20 year investment period, but there are lots of occasions where an investor would lose his shirt over a 4-5 year period.

Since you're ultimately looking to put this money into property, one option might be to start early and look at investments who's value is strongly correlated with the ups and downs of the irish property market? It would at least offer some protection from the scenario where general market returns are bad and everybody is buying property.

That said, I'd bite the bullet and hold it in cash or bonds. When the next irish property bust comes around in the early 2020s, a wedge of cash could go a long way.