1 Million Euro to invest - managed fund?

V

venividivici

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Sold farm - have cash to invest. Getting mixed suggestions from bank and accountant. Balanced managed fund appears to us to be best. Good time to buy. Prices low. Everything cyclical and we are in for the long haul - at least a 10 year plan. Can anyone give us some educated opinion on what you would do in our position? We're not big risk takers or seasoned investors, but we don't want to leave it all on deposit at below the rate of inflation or in a guaranteed 'safe' non-money-making fund. Any suggestions would be very helpful
 
Sold farm - have cash to invest. Getting mixed suggestions from bank and accountant.
You should not expect independent, professional advice from the tied agents in the bank. I would expect better from a good accountant but perhaps you need to talk to a truly independent advisor such as a good multi-agency intermediary or an authorised advisor. Somebody who will do a thorough fact find/financial review, understand your short, medium and long term goals/needs and then identify a range of savings/investment options that might match. For €1M you really should be thinking of getting such all encompassing assistance.
 
On what basis do you say that prices are low? On the basis that they are lower than they were last week? Have a bit of patience. Stick it on deposit and do a lot of research.
 
Thanks a million for your speedy replies. The funny thing is, on the way driving to the accountant this morning, we were heading towards the Deposit/sit-and-wait strategy - God knows how much worse it's going to get. But then we got talked out of it. Amateurs that we are. Gut instinct shouldn't be ignored. Thanks again
 
Timing the market is a mugs game. Don't do it. You should stick the money on deposit at the highest rate possible (see the Financial Best Buys forum lists of best deposit rates on offer and see if you can negotiate an even better rate for your large lump sum) until you get independent, professional advice along the lines that I mentioned and the work off that.
 
Once again, thank you so much. I know what you are saying makes perfect sense. We'll sleep much better tonight! Will ring accountant first thing and cancel investment plans and check out best deposit rate. As they say 'When in doubt, do nothing'. Thanks and good night.
 
Plans? What specific plans were tentatively agreed to and who recommended them and why exactly?
 
Our accountant (for last 8 years and my father's before that, with whom we have a great working relationship and who we do trust) gave us a lot of information about various investment funds etc - Irish life, Hibernian, Eagle Star, Canada Life/Great West among others - and when it came down to it, the Balanced Managed Fund from Hibernian looked like it suited our needs - we don't need to have a regular income from the money; we're both 40, so 10-15 years' investment is possible; we don't want high risk, but would like to beat inflation at least. To be honest though, we are very much relying on the expertise/opinion of others which is quite frightening when you are dealing with this kind of money.
 
Here's a few random bits of advice: -

  • If you eventually decide to go down the road of Managed Funds, make sure that you are fully aware of charges. €1M is a sizeable amount of money and you should cut a deal. Whoever you go through, find out how much commission they're earning if you go with their recommendations. Find out also how much the company (e.g. Hibernian) are deducting in charges. Haggle on this.
  • Don't be bamboozled by jargon - if you don't understand every last detail, get the advisor to explain it to you in terms you do understand. That's what they're there for.
  • Given the large sum of money and your 10-year+ timeframe I'd say it's very important to diversify - look for exposure to different asset classes, fund managers and regions. This will protect you from underperformance by one fund manager, asset class or region.
Liam D. Ferguson
www.ferga.com
 
A few Harchibald tips.

There are no silver bullets. So whilst 1M is a significant sum don't think there are double digit returns for the picking.

There is no such think as this being a good time to invest. Better than a year ago to be sure, but only time will tell if it is good.

No way of picking between fund managers. Charges should be the only deciding factor in chosing your investment house.

Decide how much you want to "punt" i.e. run a chance of double the deposit returns but also run a chance of losing at least in the short to medium term. Put the rest on best deposit.

Put the punt in a pure equity fund, not a managed fund where effectively 30% is on deposit but paying fund charges.

The one advantage you have with big money is negotiating power. The standard commissions if you invested the whole 1M would be 35K upfront plus 5K per annum, hard to believe for a couple of hours work.:eek: No way should you pay the trailer fee, and you should get the upfront commission knocked down to what you think is fair for the advice - which is not rocket science after all.
 
Another tip - the €1M does not (and probably should not) go into a single product/investment option. Your goal should probably be to build a portfolio that is well diversified by asset class, risk/reward profile, geographic region, timeframe (with a view towards funding your short, medium and long term goals) etc. This is why I suggested getting a comprehensive fact find/financial review done with a truly independent, professional advisor above. At the very least have a read of the www.itsyourmoney.ie site and their summary guide to savings and investments, the AAM equivalent guide, the key posts here and browse around the site to see in existing threads what others have asked and been suggested in similar situations.
 
Getting mixed suggestions from bank and accountant.
Ignore the bank. The only interest they have is flogging you their own products, which in all likelihood will not be the most competitive way for you to invest your money.
Balanced managed fund appears to us to be best.
Possibly, but it's best not to put all your eggs into the one basket. Make sure you read the fine print on any managed fund. A 1.5% entrance and exit charge would leave you nearly €30k down on your lump sum assuming that there was no growth at all.
Can anyone give us some educated opinion on what you would do in our position? We're not big risk takers or seasoned investors, but we don't want to leave it all on deposit at below the rate of inflation or in a guaranteed 'safe' non-money-making fund.
The most important things are to spread your risk and to know exactly what sort of financial product you're signing up to. Too often there are people who post on these forums who lost money on investments because they were recommended products that weren't suited to them or because they never read the terms and conditions properly.
 
Timing the market is a mugs game. Don't do it. You should stick the money on deposit at the highest rate possible (see the Financial Best Buys forum lists of best deposit rates on offer and see if you can negotiate an even better rate for your large lump sum) until you get independent, professional advice along the lines that I mentioned and the work off that.
I agree that its not a good idea to try to time the market, but do you concede that it is a poor idea to enter the market without regard to short-term prospects?
 
Balanced managed fund appears to us to be best.

Take your time and talk to a discount broker


Example if you buy a fund from a non discount broker
100% of your money wil be invested
1.5% annual management charge

If you buy from a discount broker
103% of your money will be invested
1% annual managment charge

Investing a million you could get even better options
 
I agree that its not a good idea to try to time the market, but do you concede that it is a poor idea to enter the market without regard to short-term prospects?
Prevailing/short term market fluctuations are irrelevant if you are investing for the long term in my opinion. It's time in the market that matters not timing the market. Long term investing is done with a view towards such volatility smoothing out.
 
Definitely note LDFerguson's comments above about striking a better deal then the norm (in light of the size of the investment), as well as noting all the other sound advice given here, in particular, stay away from teh bank's 'investment advice'.

Consider paying a fee for advice only from an authorised advisor (contact IFSRA for a list in your area), and if you do then invest through them they will refund you the commission. I would be concerned if I was in your shoes and was told by my accountant that Hibernian's Balanced Managed Fund was the best, not because it's not OK, but to put all that money with one fund manager, with one fund, which has not historically been the best performing amongst managed balanced funds (I know, past performance etc, etc, but it DOES help to see how a fund has performed in the past) ....well, its just not diversifying the risk! Is there a close relationship between the accountant and Hibernian, ie, does he tend to put a lot of his clients' business there?

Would definitely echo the view to put it on a good deposit rate, and take your time deciding what to do - many fund investors currently licking their wounds after recent market falls would love to have been on deposit recently! Good luck.
 
If you buy from a discount broker
103% of your money will be invested
1% annual managment charge

Can you explain that? If I invest €1m the investment company will invest €1,030,000 i.e. they will give me an extra €30,000?? I presume I can't just withdraw the full €1,030,000 the next day so is there some catch?
 
OP, I would definitely take my time in choosing where to put my money, once you get it into a high interest deposit account asap. A few months won't make any difference over the long term.

Higherstate, According to their website the rate is 4.5%
[broken link removed]

Which is the same as Anglo's rate for a 30 day notice account.

Any info on the tracker bond (if the bond offers 130% of theupside, the charges must be high??)
 
If you have a 10 year plus time frame you must get the money working for you today and not loosing money in real terms on deposit. This means asset allocation into multiple asset classes with multiple geographic spreads etc etc. Remeber the opportunity cost of keeping your money on deposit "until the market stabilises!!". In your case could be 60k per annum..........10% return versus 3 or less on deposit nett of dirt.
My advice for what it is worth is get investing and stop giving it to the bank at less than inflation so they can invest it for themselves.
 
I have just recently come across an investment bank called Investec. They are one of the very few that offer you 4.59% CAR which is one of the most competitive in the market for a 30 day notice account.
I[broken link removed] will give you 5.1% AER on balances up to €200K. There are other similar rates on offer albeit some with much lower than €1M limits on the balance.
No management fee.
Why would a deposit account ever have a management fee?
They also have a tracker bond launching soon that guarantees 80% of your money and offers 130% of the upside. No management fee. The bond will be tracking 3 banking stock AIB, BoI and Anglo. Money has to be invested for 3.5 years. Well worth looking into.
I would be more circumspect. No management fee means little when the 80% capital guarantee is arguably a 20% charge up front and tracker bond pricing and likely/maximum returns are often difficult to figure out due to the arcane and complex way in which such products are structured.
 
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