Moneymakeover Recently retired and in need of investment advice for some extra income.

acequion said:
While I want to keep at least €50.000 on hand for big plans and emergencies as cited above, I would like to invest about €100.000.
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You’re starting at the wrong end of the problem imo. The question is not how do I invest an arbitrary proportion of my wealth. What you should be asking yourself is what do you want/need to get from that wealth and then applying it in such a way as to maximise the chance of successfully doing so. Otherwise you’re just asking for validation of a smattering of preconceived plans (take 4k per annum from AVC - why not 6k or 2k? Invest 100k, nice round number but why not 90k or 110k? 50k rainy day/ big trip fund, why not 40k/60k?, etc.).

Brendan and others have made some really good suggestions but again, feels like they’re more like options to consider without really understanding your underlying objectives.
 
@S class and ClubMan, would Prisma 3 be considered low risk? I see the point about the bank deposit investments, I have a few bob in one of those, but like you say with tax and inflation, returns are very minor. I would like to get some returns from some of the savings as they're just sitting there and while I agree, to an extent, with the idea of spending more of my savings,can't take it with me and all that, a big sum will still just be sitting there in a few years if I don't invest something. While I understand in theory the concept of risk and the impossibilty of predicting, could anyone give me a rough idea how strong is the likelihood of losing some or all of my invested sum in a Prisma investment, say 50K? Does that happen a lot?

My objective in this is to make a little extra money so that my annual / monthly / weekly income is a little more than what it is already. And if possible, without eating into the savings.
 
Prisma Funds / AAA Funds | Zurich Life Funds https://share.google/Nj30Wv7jvm6IWdmnQ

You can check out prisma funds here.
If you click on the fact sheet for each fund you will see the past performance. They have had years where there are losses.
In the lower risk funds the maximum loss was about 5%.
Over a five year plus period they should very likely give you a modest gain.

Your origional investment is never 100% guaranteed but is probably 90% safe.
 
acequion said:
would Prisma 3 be considered low risk
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www.zurich.ie

Prisma 3 | Zurich Life Funds

Prisma 3 is a Zurich Life, low to medium risk multi-asset fund that invests in a diversified range of global asset classes for long-term gain.
www.zurich.ie www.zurich.ie
The risk of the fund is measured relative to the risk of global equity markets and Prisma 3 has an expected volatility range of 17.5% to 40% of global equity volatility over the long term.
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PRISMA 3 is mainly invested in cash and government bonds, with a small allocation to equities. It might be expected to produce a (modestly) better return, after all costs and taxes, than a decent deposit product over, say, 20 years but that’s obviously far from guaranteed.

I think the more important point is to try and preserve the value of your ARF by taking no more than the minimum 4/5% drawdowns, keeping your income below the €44k standard rate threshold, and use your after-tax savings to supplement your pension.

Don’t be afraid to gradually run down your after-tax savings. There’s really no need to maintain a substantial “just in case” fund - that’s why you have insurance.
 
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acequion said:
could anyone give me a rough idea how strong is the likelihood of losing some or all of my invested sum in a Prisma investment, say 50K? Does that happen a lot?
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Remember, it's only a loss if you take it out. I've got old pension plans that I'm no longer adding to, but that have had -20% years. Didn't bat an eyelid because I know that the long-term average growth will be ~10% nominal and the money remained invested throughout the dip.

Therefore the only risk really is when you withdraw from your investment. Obviously, if you needed 100k in one go for something big and the market tanked just before you withdrew it, then that would be a significant problem. Withdrawals for income (e.g. 3 or 4% per annum) or even occasionally dipping in to pay for a new kitchen or a holiday every couple of years might still make you uncomfortable, but unnecessarily so imo as the vast majority of your wealth (96%+) remains invested.
 
acequion said:
I have done the Zurich risk assessment and came out as cautious which does not surprise me.
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Whenever I see risk assessments with this kind of result for someone in your position, I despair. It's giving you such a bad steer and feeding into your fears rather than assuaging them.

You have an inflation-adjusting guaranteed income of €40k p.a., which would cost about €850k for your age/circumstances if you were to try purchase same as an annuity.

By my reckoning, your net worth is therefore €1.65m or so if I include this notional value of your DB pension, which gives you €1.2m to €1.5m of liquid-ish assets to work with (depending on which home to remove from the total net worth figure), with another €100k expected at some time in the future. In reality, this would safely be able to support overall income of about €66,000 per annum if you chose to sell your home here in Ireland and live exclusively in Spain.

All of which is to point out that you're in a remarkably healthy financial position with lots of great options, and so fearing a 20% or even 40% stock market drop on a €100k investment is really chicken feed to you given the far more positive upside - the ultimate option you do have is to simply let the markets recover (as they always have, eventually) and you'll be alright.
 
conor_mc said:
notional value of your DB pension
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Notional values are all well & good.

An elderly relative (now deceased) was persuaded in their 80s to put over 30k into purchasing shares in an Irish Bank; in the year before they passed away the shareholding was worth €200.

A person in their 30s has time to "let the markets recover", as one gets older, we don't have that luxury.

I believe the OP is right to be risk adverse; in 20 years time, notional values won't pay the bills or medical costs.
 
DannyBoyD said:
Notional values are all well & good.
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You’ve either misunderstood or misrepresented the meaning of notional here. It’s a notional value in lump sum terms today of the state guaranteed pension of 40k tomorrow, which will very much contribute to paying bills and medical expenses in 20 years time.

In this case, it couldn’t have anything less to do with investing in one single Irish bank stock once upon a time. In fact, sticking 200k cash on deposit for 20 years is probably more likely to approximate the experience of your deceased relative than investing half of it in a passive global equities index over the same 20 year period.
 
DannyBoyD said:
An elderly relative (now deceased) was persuaded in their 80s to put over 30k into purchasing shares in an Irish Bank; in the year before they passed away the shareholding was worth €200.

A person in their 30s has time to "let the markets recover", as one gets older, we don't have that luxury.
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Letting the market recover wasn't relevant here, since they weren't invested in the market.
 
@conor_mc Take it that I've misunderstood.

In my mind, a drop of 100k -> 60k is not "chicken feed".

If I spent that much on holidays / travel over 4 years, thats one thing, I'll have great memories / stories / photos & it would be my choice.

It would get my goat to have lost 40k because some looper starts a war, posts trolling nonsense on "Truth Social", or decides to impose tariffs by sticking a pin in a list.
 
Really great input, thanks so much everyone. It really is very helpful to get differing perspectives and has all given me so much more clarity.This really is a great website!

Thanks too to those who took the trouble to explain about risk.

I think I've shied away from the idea of investing 100K in Prismas. But 50K maybe,even 60K. I think Prisma 3 seems a good bet, Prisma 4 is getting a bit uncomfortable I think. How many years should I leave it there?

I might do bank deposit savings with the rest, maybe keeping some to run down.

@DannyBoyD you echo a lot of my misgivings and I'd have to agree about the heartache of losing a large sum. We do live in a volatile world. I will just have to see.
 
DannyBoyD said:
In my mind, a drop of 100k -> 60k is not "chicken feed".
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In that case, don’t leave it in a deposit account for 20 years, as that’s pretty much what’s gonna happen in the long run!

I mean, okay of course 40k isn’t chicken feed really, but it’s not a 40% hit to the OP’s portfolio as a whole either and nor is it necessarily gonna bite even if it does happen on paper since the OP has the means to avoid withdrawals in the very worst case scenario.
 
@conor_mc so are you saying that it's better to leave it there? ie keep it invested in the fund despite heavy market volatility? Bite the nails and weather the storm so to speak?
 
acequion said:
keep it invested in the fund despite heavy market volatility?
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For a passive world equities ETF/fund, absolutely. If you find yourself in that situation, you’ve effectively bought high and pulling out of the fund in panic is selling low. But the key thing is that you have the alternative income streams to weather that storm so the risk to you can be easily managed.

For comparison, consider if you’d withdrawn the lot in Jan of this year after Trump’s tariffs fiasco, you could have crystallised a 20% loss. If you’d stayed the course, you’d be back at break-even within just a couple of months.
 
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