Savings Alternatives

Discussion in 'Deposits' started by Ronan9, Nov 12, 2017.

  1. Ronan9

    Ronan9 New Member

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    What are the best alternatives to savings accounts to earn a return on in the republic of Ireland at the moment?
    Are there any types funds worth investing in?
     
  2. dub_nerd

    dub_nerd Frequent Poster

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    Stating the obvious, but: funds aren't an alternative to savings accounts. A financial advisor will tell you that your question can't be answered until you assess your appetite for risk.
     
  3. Ronan9

    Ronan9 New Member

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    Thanks for reply. What do you suggest is an alternative to a savings account so?
    I figured I'd have to consult a QFA but wanted to see if anybody had any ideas first.
     
  4. dub_nerd

    dub_nerd Frequent Poster

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    Nothing! That's my serious answer. I see a lot of people obsessed with the idea that "their money has to be working for them". Actually we've never had it so good in terms of the differential between interest rates and inflation.

    By all means, divert whatever portion of your savings to risk assets that you think is appropriate. There are people on here who will tell you that they have a place in everyone's financial planning. One regular poster used an interesting turn of phrase, referring to keeping all your money in cash as "recklessly conservative".

    BUT... don't divert your saving to risk assets because of low interest rates. Your money is eroding slower than when interest rates were high! Now is not the time to take risks with money you wouldn't have risked in a higher interest rate environment. You will just be fodder on the day of financial reckoning that is doubtless coming down the tracks at some stage.
     
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  5. Palerider

    Palerider Frequent Poster

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    As a former banker I've learned that doing nothing is actually a strategy, in a low interest, low inflation environment there is no need to take on risk.

    Doing nothing in the popular equities asset class for example back in 2007 would mean today ten years on your cash pile is the same, it would not be if say you bought the very popular Bank shares, you would be wiped out.
     
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  6. gnf_ireland

    gnf_ireland Frequent Poster

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    @Ronan9 If you have a variable rate mortgage (not a tracker), the vast majority here will say that paying down your mortgage early will give you a guaranteed risk free rate of return of ~3% after tax, equating to >5% before tax. This is probably the single best place to invest at the moment, after your cash reserve.

    After that, it could very easily be your pension fund - depending on your age and your proposed retirement age. It is likely that you may be able to access your pension fund earlier in years to come if you fall into bad health etc, and that may prove invaluable.

    Outside of that, personally I am convinced cash is as good as any at the moment - or spending fund it as my wife likes to call it ;-)