Saving and investment novice

Captain Slow IRL

Hi all,

I'm looking to set up an investment and savings account and was considering Zurich as they provide both. I was hoping to put ~5k into the investment account but am unsure about which risk category to go with - what are the chances that I will lose some/all of my money with a high risk investment account? And for the savings account, is there the same possibility for a high return account?

tia

caviardreams

The fees with these products can be very high and will eat into any returns compared with investing directly yourself, however they are certainly easier to manage from a taxation point of view etc. so certainly if you are brand new to the area might be a simpler option, but just be aware re the charges.

Obviously you should not invest money you can afford to lose as there is this risk attached, the big question is what is your investment timeline? I would not recommend investing for a shorter period than 5 years, and the longer you are willing to leave it, the less risky in a sense e..g if you are thinking of leaving it indefinitely, there is a good chance markets will recover down the line so you don't lose money - this may take a while though. There are some good threads on this topic on the forum and askaboutmoney if you have a search with the pros & cons.

It is definitely getting frustrating (and pointless?) leaving money in deposit accounts these days however!

Captain Slow IRL

The 5k investment belongs to my son and is currently sitting in a credit union account, he's young at the moment so the money will be sitting for a number of years before he will need access to it.

I'm going to set up the savings account for myself, not sure how long I would be saving for but it will be a long term plan, definitely more than 5 years.

Liam D Ferguson

I think you need to be able to be flexible in your exit timing. So if, for example, you / your son need the money for something specific in 7 years' time but there's a drop in values after 6.5 years you can defer cashing it in until it recovers its value.

Be aware also that each of the companies offering investment & savings policies also have fund choices. So some of their fund choices would be higher risk than others. As a very general rule, there is a relationship between the level of risk of a particular investment and its potential return in the long-term. So a fund that offers the potential for high growth also carries high risk. A fund that carries the potential for medium growth also carries medium risk etc.

Risk doesn't just mean the risk of losing money. It's also the risk that a high-risk fund WON't give you a better return than a lower-risk fund or a deposit account. If it was guaranteed that a high-risk fund will give you a better return than a deposit, then there would be no risk.

It's almost inevitable that they will drop in value from time to time, but historically they have always recovered as long as you have the time to wait for the recovery.

Some of the companies offering savings and investment policies also offer reduced charges if you start a lump sum (usually €7,500 minimum) and a regular saving at the same time. You mentioned Zurich Life. They do this reduction in charges on their product.

Henry Ford III

caviardreams wrote: »

The fees with these products can be very high and will eat into any returns compared with investing directly yourself, however they are certainly easier to manage from a taxation point of view etc. so certainly if you are brand new to the area might be a simpler option, but just be aware re the charges....

Decent advice will secure decent value regarding charges. What you've said above is a sweeping generalisation and isn't correct.

caviardreams

Henry Ford III wrote: »

Decent advice will secure decent value regarding charges. What you've said above is a sweeping generalisation and isn't correct.

In fairness, I said the fees "can" be very high, I did not say are "always" very high. Can you point to examples of these "decent value" charges compared to the likes of de giro?

Henry Ford III

caviardreams wrote: »

In fairness, I said the fees "can" be very high, I did not say are "always" very high. Can you point to examples of these "decent value" charges compared to the likes of de giro?

I could, but would have to bill you

p.s. De Giro look fine as a discount stockbroker, but is that what someone with little or no investment knowledge paying a few hundred € a month really wants?

caviardreams

Henry Ford III wrote: »

I could, but would have to bill you

p.s. De Giro look fine as a discount stockbroker, but is that what someone with little or no investment knowledge paying a few hundred € a month really wants?

That's pretty much what I said in my original post - they have advantages in other aspects but fees-wise are usually more expensive:

"they are certainly easier to manage from a taxation point of view etc. so certainly if you are brand new to the area might be a simpler option, but just be aware re the charges."

Just trying to make the OP aware of alternatives, which may or may not be the right fit for them, but no harm looking at all the options and making an informed decision.