Hi,
My mum has recently received 300k and I want her to put it somewhere where she can get a good return on it. She's elderly and this is to pay for any and all expenses she may have for the rest of her days.
She does NOT want a long-term fixed account as 'value of investments may go down as well as up' and if she needs to withdraw it in advance of the maturity date she could lose thousands.
What would be the best bank/po/cu account to put it in in order to A) make sure it's 100% safe from institutional collapse and B) get a good rate of return on her investment ?
Please no suggestions of gold, shares, Monets etc. Liquidity is important.
Thanks.
T.
You really need to work out how much money your mum is reasonably likely to need immediate access to, and plan accordingly. So, you could consider the following: work out how much she spends at present per annum, i.e. her annual spend. Put this amount in the best instant access account you can find and put the same amount in the best 1 year deposit account. Then, you could go on like this, building a ‘ladder’ of interest-paying deposits, including Post Office savings certificates, with different maturities of up to say 5 years. The idea here is that long duration deposits tend to pay higher interest rates than short term deposits, so rather than investing all of your mum’s good fortune in a low interest rate instant access deposit account, you split the money over several accounts that pay higher interest the longer you leave the money on deposit. Under the deposit guarantee scheme http://www.itsyourmoney.ie/index.jsp?pID=125&nID=757#DGS deposits of up to €100,000 are protected, so don’t place more than that amount in any one institution. Then there is the risk of inflation.. Only equities consistently beat inflation (in the long term). If inflation is a concern, your mum could put say 5 - 10% of her money into a euro equity tracker. While this will fluctuate it should beat inflation in the long term [and she could always leave it as a bequest]. [Disclaimer: The above is comment / observation and is not a recommendation to follow any particular investment strategy or to buy / not buy any particular fund.]She's elderly and this is to pay for any and all expenses she may have for the rest of her days.
What would be the best bank/po/cu account to put it in in order to A) make sure it's 100% safe from institutional collapse and B) get a good rate of return on her investment ?
Buy property maybe. Not just any old property. Prices low at the moment, get good value for €300,000 depending on where you are. If can rent it out easily then thats your money every month i.e. not servicing a mortgage. I know timing to sell isn't easy but house prices generally rise especially when buy at or near the bottom of the market.
I think this is something I'd seriously consider if its was my money.
Why? Is it important to have all €300k liquid?Liquidity is important.
Well sort of, yes. Perhaps not all, but definitely half.Why? Is it important to have all €300k liquid?
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