ETFs or investment funds for 7-8 years span?

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dublinman2333

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Hey guys, I’m a 26 years old guy and I plan to save for 7-8 years for house mortgage. I’m pretty much a newbie so I’m not sure whether I should keep dollar coast averaging in the 2 ETFs I currently own (Vanguard S&P 500 and FTSE All World), or I should invest in some funds from Zurich Re?
The concerns I have are that it seems the stock market in the past few years have been pretty bad, and I’m investing 7-8 years for a house mortgage instead a 10-20 years long span. Would investing in ETFs be a good option? Tbh I checked the Prisma portfolio from Zurich Re, a risk 5 out of 6 portfolio has a 5.2% 5-year average annualised profit, but you have to deduct a 1.3% management fee as well. So according to this it won’t even be 4% afterwards. Plus according to their performance graph they didn’t even perform as well as S&P 500 and FTSE All World. However there 2 ETFs are all equities and for the Zurich Re Prisma fund equities only take 53% or so hence theoretically the risk is lower.
So for a 7-8 year span for house mortgage application which option do you guys think would be better?
Thanks in advance.
 
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TBH, I wouldn’t go near equities (in any form) with such a short investment horizon.

Just stick with regular savings accounts.
 
Sarenco said:
TBH, I wouldn’t go near equities (in any form) with such a short investment horizon.

Just stick with regular savings accounts.
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Hi Sacrenco. How long do you think ETFs should be normally invested in? Should it be at least 10 years? I think even if I go for regular saving plans from Zurich Re etc they’ll still put my money into funds… Do you think bank saving accounts are better? The interest can be quite low though it's kinda hard to keep up with inflation
 
I'd go with ETFs. I personally would be okay with the level of risk on a 7+ years period. Some examples from recent market downturns (Sp500):
1. 2000 crisis: losses recovered after 7 years
2. 2008 crisis: recovered after 5 years
 
10 years+ is a suitable term for equities. Just looking at the USA the 5 years from Sept 1929 saw annualised losses averaging over 17%pa for 5 consecutive years. Even over 10 years, this period of history saw annualised consecutive losses of 4.95%pa for 10 years.

Equities are more susceptible to severe short-term capital losses and hence you should be saving in a traditional bank regular savings plan.
 
dublinman2333 said:
Tbh I checked the Prisma portfolio from Zurich Re, a risk 5 out of 6 portfolio has a 5.2% 5-year average annualised profit, but you have to deduct a 1.3% management fee as well. So according to this it won’t even be 4% afterwards.
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The annualised figure you've quoted is net of all portfolio transaction costs and other ongoing costs over that period. Part of the AMC is also included in those figures because it's the distribution channel that decides what AMC will apply to the pension/savings contract.

What isn't included is the 1% Government Levy so not having a 101% allocation is going to have the effect of reducing your return by circa 0.15% pa as it's a (Government) entry charge.


www.prsa.ie
 
Repeating what others have said, what about high interest savings accounts?
I mean "raisin" for example.

At least it's predictable, you can look ahead and see what you'll have.

With equities you'll have to cash out ahead of any purchase and how do you time that?
 
moneymakeover said:
Repeating what others have said, what about high interest savings accounts?
I mean "raisin" for example.

At least it's predictable, you can look ahead and see what you'll have.

With equities you'll have to cash out ahead of any purchase and how do you time that?
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Yeah that actually makes perfect sense. I was originally thinking if I put them in an investment plan from let's say Zurich Re, you'll be able to cash them out if you want after 3 years. And I was thinking to drop money in monthly for 7-8 years and then cash out when I actually plan to apply for mortgage
 
I opened a second broker account with De Giro as Saxo would not allow me buy JAM ( JP Morgan American trust ) , it’s the best I could see as while the European domiciled ETFs are probably more accurately aligned to the S+P etc , the tax treatment is just too unfriendly
 
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