Hi all,
I have just read the 'askaboutmoney - guide to savings and investments'. I have a lump sum that I want to invest for over 5 years.
The guide recommends buying shares in the top 10 irish companies as the best option for a long term investment. The guide is a few years old now - does this advice still hold true?
Thanks,
lored
It depends how much you have to invest. You really need to be buying €10,000 of shares per transaction on the ISEQ to make it worth while (even if holding for 5+ years) Stamp Duty is 1% and 0.3% (min €20) Broker Fees upwards. The bigger guys charge circa 1% Broker Fees. Davies Charge 0.75% (min €25). Also, you pay 20% CGT on any profits when you sell. If you were buying 10 companies you're looking at an initial investment of €100k.
The advice to invest in the top 10 is well meant. It means you would be spreading your risk and only investing in bigger and thus less volatile companies. However, in the case of the ISEQ it is not such good advice because the index is disproportionately waited towards banking and construction (which means you're not really diversifying). Here's the list of the top 10 by market cap.
C R H PLC 19415
ALLIED IRISH BANKS PLC 18585
BANK OF IRELAND 14976
ANGLO IRISH BANK CORPORATION PLC 12651
RYANAIR HOLDINGS. PLC 7702
ELAN CORPORATION PLC 6643
IRISH LIFE AND PERMANENT PLC 5206
SMURFIT KAPPA GROUP PLC 4121
KERRY GROUP PLC 3806
I don't thnik just picking the top 10 is a great idea. It would be better to invest in companies which have good potential capital growth. Howerver, that takes research, both specific company and overall economic research, which requires time.
If you are looking to invest a smaller amount and/or don't have the time an equity fund would be a better idea. I'd advice an European Equity Fund rather than and Irish/ISEQ fund as it's better diversified. Also Germany is on the UP while Ireland is increasingly looking like it is on a DOWN (cycle that is).