Advice Request - High Income, Large Lump Sum

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DeeKie

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PROFILE

Age: 33 - female

Annual gross income from employment or profession: 125,000 + up to 40k in bonus

Type of employment: Partnership

Expenditure pattern: In general are you spending more than you earn or are you saving? No, not by a long way

No property and so no mortgage
No loans or other borrowings – car loans/personal loans etc None
Do you pay off your full credit card balance each month? Yes

Savings and investments:
Bank: 170,000, currently (and stupidly I know) sitting in a no interest BOI current account having been extracted from Norther Rock last year

Do you have a pension scheme? Yes, paid by partnership of 10% of salary
Payment /Salary protection policy: Yes

Do you own any investment or other property? No

Film Relief: I do a section 481 investment each year.

Death in service policy: Yes

What specific question do you have or what issues are of concern to you?

I have been very lax about making my money work for me and I want to change that this year. I may buy a property with my partner this year of which my share would be approx €400,000. That is the only property mixing that we shall be involved in together however.

What would people recommend? I don't know where to begin, my head begins to spin when I consider the options.
I am considering putting some money into :
  • a regular savings account,
  • a fixed term forestry investment product
  • a fund associated in some way with shares.

I dont really know what percentage to allocate to each, and what products might be best for me. Help?!
 
The question you need to ask yourself, is what you want to do with your money.
Is the goal to buy a property, take time off, retire early, travel, settle down.

You are in a very good position, but what you should do with what you have saved will depend on what your plans are.

Regarding property, you are in a very good position to call the shots, regarding what you want, and where you want it. Given your salary and savings, you could easily get into a situation where you are a slave to your mortgage over the next 20 or more years, buy buying a bigger house than you need, or you can buy something sensible, and have most of your money at work for you - given the price range you mention, and assuming a 50/50 split, it seems like a sensible move.

What level of risk are you comfortable with. What sort of gains are you looking for and what sort of losses would you be willing to take.

Once you figure out your goals, you can make it happen. You just need to prioritize what exactly it is you are shooting for, before proper advice can be given.
Regading equity and funds, i'd steer clear of irish based equity houses, who seem better at charging fees than managing. The tax implications of an offshore account should be investigated. Given the weak dollar, moving some of you money to an american money manager might be an avenue worth persuing, since the fees are lower and the quality of management higher.

Let us know what your thoughs on what direction you wish to move are, and we can go from there..
 
Well as I said I do plan to buy a property with my partner this year. It will probably be around the 600k mark, 650k absolute max. The ultimate aim would be to put myself in a position to shift to a less pressurised job in a couple of years which might push me back a bit in salary terms but I would still be making 100k plus I expect.

The way I look at it I shall comfortably be able to cover half or perhaps slightly more of the mortgage. The question for me is should I be using the whole lump sum towards the property. I think probably not (?) and that I should be thinking about the products that I mentioned?

As to risk I think that I would be best mixing up the risk profile which is why I am leaning towards the combination of the products that I mentioned. I am prepared to take relatively high risk for some of my investment, but temper that also with some guaranteed returns which beat inflation / deposit accounts. Thats why I thought the forestry investment products looked good.
 
I'd steer towards using a third of your money towards a house, and investing in a balanced fund portfolio of growth stocks, later in the year when the current market turbulence dies down.
With a sum that large, soak up as much as you can on line, as only you can know best how to invest your own money.
Stay away from non standard investment vehicles until you are more comfortable your investing in general.

Make sure the funds are easy to get money into and out of so that you can access it when you need it.

If you have time, read, make practise portfolios and bring yourself up to speed.
 
Thanks cancan. Any other suggestions? Is it a good idea to wait before investing in a stock based portfolio?
 
How much is your share of the partnership worth? That could be a substantial additional asset which you might want to liquidate in a couple of years if, as you say, you plan to move to a less pressurised job.
 
Regarding the Partnership you should give serious consideration to putting Partnership Lie Assurance Cover in place if you have not already done so


Bedlam
 
I'm a salaried partner or quasi partner so ownership shares are not an issue. And yes a good life assurance policy is part of my package. I am not really worried about post-life issues though, more "during life" gains!

I just wonder what sort of product mix I should be going for. What % of the lump sum I should allocate to high or medium risks, Irish residential property, deposit accounts and what sort of sort of products I should be looking at. The advice of 1/3rd of the lump sum being allocated towards the property was given, do others concur? I am very clueless. Also what I should be streaming future earnings towards.

Thanks to all that have replied so far.
 
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