Investment options - 500k to invest for 1 year.

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theoneill

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Hi, at the end of this year I will have about 500K to invest for one year, ultimately (in October 2016) tax needs to be paid on this sum at 33% but in the meantime I want it to work for me.

I cannot afford to lose any of the principle, with this in mind I was considering Prize Bonds as they are state backed and may offer some return.

Given that interest rates seem very low and DIRT very high I thought this was a sensible option.

Is this a good strategy or am I being too naive?

Advice much appreciated.
 
Your time horizon is too short to take on any investment risk. A deposit, prize bonds, State Savings product or robust structured product are all you should look at.
 
just some advice on prizebonds..the returns on them seem to have dropped dramatically in the past 18 months or so..maybe pop the 500k in them for 3 months,see what happens..at least your capital will be safe.

Pat
 
Thanks all, I have noticed that the returns in PB's have dropped. But as far as I can see my options are very limited especially given the very limited time-frame.
 
Lucky you having these types of problems!!

Really depends on what your ultimate intention and flexibility is. Understand that 33% must be paid in tax so that is sacrosanct. So at least one third goes into something where zero risk of capital loss. That will then be available to pay the tax.

Re the balance - what's your longer term intention for that? If you absolutely have to retain the principal and cannot take even a modest degree of risk, even on a small portion, then your options are very limited indeed.
 
Unfortunately I have very limited flexibility and for the coming year I want to keep the principle intact. After next year I should have more freedom to explore other investment opportunities and perhaps allow for a greater degree of risk.
 
I wouldn't put it in prize bonds. You should stick it in a term account for the year. You'll earn 1.2% which isn't huge but with a balance like that it'll be worth €6,000 or €3540 after DIRT is taken.
 
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