Lower Risk Investment Recommendations (Bonds)

Discussion in 'Investments' started by Nickname, Apr 16, 2018 at 7:28 PM.

  1. Nickname

    Nickname New Member

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    I am looking for any advice on how to invest money for approximately 3 years or so. I would favor lower risk investments as I have plan for the money but it wouldnt be a catastrophic if i lost 10 or 20%. i am familiar with fixed term deposits and NTMA bonds but the return is lower than I want. I think Corporate bonds, emerging market bonds or a bond ETF would probably be closer to the what I am looking for (+3%). Any other recommendations for would be appreciated and useful resources for independent learning.

    Thanks.
     
  2. cremeegg

    cremeegg Frequent Poster

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    2,276
    Hi Nickname and welcome to AAM.

    If you need 90% of the money in 3 years I suggest that you put that 90% on deposit.

    The remaining 10% you can invest in a higher risk investment. Especially if you expect to be able to leave it invested for the longer term.
     
  3. Sarenco

    Sarenco Frequent Poster

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    4,689
    Hi @Nickname

    The yield-to-maturity of the Bloomberg Barclays Euro Corporate Bond Index is currently around 0.87% and has an effective duration of around 5.25 years. An ETF that tracks that index will have a TER of around 20bps and exit tax is currently 41%.

    In contrast, 5-year State Savings Certs currently pays interest @0.98%pa if held to term. Tax-free, with zero investment costs.

    For shorter holding periods, I would suggest sticking with (State guaranteed) deposits. PTSB currently have a 3-year fixed term deposit @0.70% and DIRT is scheduled to fall to 33% by the time it matures.

    3 years is far too short an expected holding period for high risk investments like EM bonds or equities.
     
  4. Nickname

    Nickname New Member

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    Yeah fair point, I can lose more than 10% of the investment without a negative impact on future plans but in my head that is what a low risk investment would be i.e. something that might drop by 10% or so over a short period (probably not technically accurate...). I have most of my pensions in the stock market and I planning to put some more money into etfs so really looking for something safer than that.
     
  5. Sarenco

    Sarenco Frequent Poster

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    4,689
    Are you carrying any debt?

    Paying down debt (including a mortgage) is the safest investment of them all.
     
  6. Nickname

    Nickname New Member

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    6
    I have some cash put aside for a deposit for a house and a few other bits and pieces and no immediate plans to use but I will probably need it in the future. I would like to invest in property but I think that it is not the best time from a personal point of view or market point of view... I think the saving certs could be the best fit, maybe I was looking for something more exciting!