Investing in Top 10 irish companies

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lored

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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
 
5 years would not be considered anything like long-term for stock market investing.

The generally recommended timeframe for stock market investing is at least 7-10 years - and obviously, the longer the better.
 
I said 'over' five years - it is actually money I want to put away for my kids education - I won't be needing it for at least 10 years.
 
One of the easiest ways to invest in a wide spread of Irish companies would be through a QuinnLife fund, Celtic Freeway.
There a plenty of threads on AAM covering such funds.

This will mean greatly reduced charges vs purchasing shares in 10 individual companies. (Celtic Freeway charges 1%).

For greater security/diversity, perhaps you could look at Quinn's European funds, instead of the Irish fund.
 
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lored said:
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
Click to expand...

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).
 
lored said:
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
Click to expand...
The guide just contains some general rules of thumb many of which are primarily informed by Brendan's personal opinions (with some input and counterviews by others) - for specific advice suitable to the circumstances of a particular individual's situation I believe that independent, professional advice might be a good idea.
 
Thanks for your replies. The guide does say to only pick 2 companies from the same sector. Thus I might have to pick 10 from the top 15 or so. The guide also states that most of the companies in this list have interests outside Ireland and as such this gives diversification into other markets indirectly.

Surely if i put 50k into a quinn fund it'll cost €500 per year at 1% charges. If I buy direct i'll have a bigger initial charge but avoid these yearly charges?
 
lored said:
Surely if i put 50k into a quinn fund it'll cost €500 per year at 1% charges. If I buy direct i'll have a bigger initial charge but avoid these yearly charges?
Click to expand...


Not quite true-you may also have ongoing 'account maintenance' type costs when using a stockbroker (this may not be the case with certain online brokers)
 
CCOVICH said:
Not quite true-you may also have ongoing 'account maintenance' type costs when using a stockbroker (this may not be the case with certain online brokers)
Click to expand...
I think that this is only if they actively manage your account for you.
You can decide to manage your own account.
 
No - some broker accounts charge a maintenance fee just for having the account open - this is completely separate from any fees for doing active/discretionary management of your investments.
 
Fexco (for example) currently charge €40pa, which is quite a bit less than 1% of €50K. But if you do any buying/selling at all, that will attract further charges and commissions. Whatever the virtues of 'buy and hold' as a general strategy, and whatever spread of companies you choose, I'm not sure it would be a good idea to take the view that you won't make any changes to your portfolio for 5-10 years, no matter what.

Maybe you could split the lump sum, i.e. directly buy a certain amount of shares to hold for the long-term, invest part of the money in a low-cost tracker fund like the ISEQ-20 ETF, and part into one or more of the Quinn funds?
 
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