Where to put €300k cash?

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p walsh

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Hi, I don't need access to this cash urgently - where should I put €300k to get the best returns on cash pls? How would you allocate it and to what institutions?
 
Second post in the forum is what you're looking for. You'll note references to guaranteed limits per institution. Go down the list until the limits sum to €300k and there you go.

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With a major question like that, you need a money makeover

Key Post - Basic information required for the "Money Makeover" forum

It can be difficult, but please try to use a meaningful title in your thread For example "27 year old with mortgage arrears". You will get a much better and much more coherent answer if you give as much information as possible in your first post. For example, if you give your mortgage rate, it...
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Brendan Burgess said:
With a major question like that, you need a money makeover

Key Post - Basic information required for the "Money Makeover" forum

It can be difficult, but please try to use a meaningful title in your thread For example "27 year old with mortgage arrears". You will get a much better and much more coherent answer if you give as much information as possible in your first post. For example, if you give your mortgage rate, it...
www.askaboutmoney.com
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Age is a big factor in any "money makeover" - being 40 and thinking about returns and being 60 and doing the same, are worlds apart! I'd like to hear what the generic view is for, as per the op's post, what people think a 60 yr old should do with 300k. Me, I would only consider guaranteed deposits per 100k per bank, and state savings.
 
I see different views there, such as this one. But it's not for you, or anyone else, to tell me I'm "wrong"! It's up to the risk appetite of each and every one of us.
PMU said:
If you are a retiree and are investing only 1% of your wealth, possibly, but should a retiree, who has never invested in the stockmarket before, make a significant investment, when he / she retires?

So, if you invest in the stock market and suffer a significant loss, how long will it take for the market in today's world to give you positive return? If you are investing for a period of 4 years, how likely is it you will be in 'negative equity' if the market suffers a significant loss in the year you invest and how long will it take to regain your loss? (By a significant loss, I mean a loss of more than two standard deviations from the mean, as 95% of returns should lie within 2 SDs). We are looking at potentially worst case scenarios here.

In the past 40 years, the S&P has suffered 3 significant losses. The probability of a year having negative returns is 21%, and there were 3 years with significant negative returns. These were in 1974 (-19.72%); 2002 (-23.37%) and 2008 (-34.49%). If you invested USDs in the S&P in any of these years how long would it have taken for the market to give you a positive return, i.e. to recover your loss? For 1974 and 2002 it was 4 years in each case. But for 2008 it was 7 years. Personally, I think these are reasonable periods of 'negative equity' if you are investing for the long term. However, losses can be cumulative and from 2000 there were three consecutive negative return years. If you had invested in 2000 it took 15 years to get a positive return on your investment. Also, if you were an EUR/IEP investor, you would have to factor currency risk into these returns.

If you look at the Eurostoxx50, in the past 30 years, the probability of a year having is negative return is 29% and the index also suffered 3 significant losses. These were in 1987 (-28.05%); 2002 (-37.3%) and 2008 (-44.28%). If you invested in any of these years how long would it have taken for the market to give you a positive return? For 1987 and 2002 it was 4 years and 6 years respectively. Again this seems a reasonable period to carry a loss, for a long term investor. But if you invested in 2008 you still have a negative return, and to end 2016, are down 26%. If you're a pensioner this is a disastrous outcome; if you were 65 when you invested in 2008 you have suffered a significant loss, except now you are 73 and have a life expectance of 8 more years. The Eurostoxx50 also suffered 3 consecutive years of negative returns from 2000, and if you had invested in 2000 you still have a negative return. And if you're a retiree who invested in 2000, you've just reached your life expectancy.

So would you invest for a duration of 4 years considering the behaviour of stock markets in today's world? Perhaps depending on your risk profile; but as a retiree, a significant allocation would seem foolhardy (unless it is intended to leave it as a bequest).
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podgerodge said:
It's up to the risk appetite of each and every one of us.
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Not sure about that.

People talk about "risk appetite" and that is the wrong way to look at it.

The financial advisor should tell you what your risk tolerance is. Not ask you what your appetite is.

I appreciate that at 60 you might want to take the huge risk of putting all your money on deposit and watch it devaluing every year with inflation.

But I would advocate a more conservative, less risky approach - invest 100% in equities so that there is a fair chance that your investment will maintain its value over the 25 years or so you have left to live.

Brendan
 
Brendan Burgess said:
Not sure about that.

People talk about "risk appetite" and that is the wrong way to look at it.

The financial advisor should tell you what your risk tolerance is. Not ask you what your appetite is.

I appreciate that at 60 you might want to take the huge risk of putting all your money on deposit and watch it devaluing every year with inflation.

But I would advocate a more conservative, less risky approach - invest 100% in equities so that there is a fair chance that your investment will maintain its value over the 25 years or so you have left to live.

Brendan
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Is this good advice?
Are equities an inflation hedge?
Generally, in periods of high inflation, equities perform badly and lose value, actual value. So, not only are you dealing with devalutation due to inflation , you may also be dealing with a drop in the actual price of your purchased equity.
At the moment, bonds are, historically, cheap and may be the value buy.

I'm no expert, but I would think 100% of anything is a risky strategy.

www.institutionalinvestor.com

Here’s Proof That Stocks Were Never an Inflation Hedge

Credit Suisse says that investors are relearning the law of risk and return, and advises them to adjust their future expectations accordingly.
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Hi Allpartied

Inflation is bad for all classes of assets.

But over the longer-term, equities outperform inflation and give a real return.

That is not to say that over the next year if inflation is x%, the return on equities will be x +2%.

Allpartied said:
At the moment, bonds are, historically, cheap and may be the value buy.
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Indeed they might. But you are second guessing the market. The market has determined today's price. I don't know about you, but I have no ability to outguess the market.

If you can repeatedly tell in advance which asset class will perform best over the coming 12 months, then you would outperform the Warren Buffetts of this world.

If the OP invests in equities, in a year's time, he might regret it as they may fall 50%.

But if he leaves it on deposit, I have no doubt that the longer he leaves it on deposit, the more he will regret not having invested it in equities.

Brendan
 
Brendan Burgess said:
Hi Allpartied

Inflation is bad for all classes of assets.

But over the longer-term, equities outperform inflation and give a real return.

That is not to say that over the next year if inflation is x%, the return on equities will be x +2%.


Indeed they might. But you are second guessing the market. The market has determined today's price. I don't know about you, but I have no ability to outguess the market.

If you can repeatedly tell in advance which asset class will perform best over the coming 12 months, then you would outperform the Warren Buffetts of this world.

If the OP invests in equities, in a year's time, he might regret it as they may fall 50%.

But if he leaves it on deposit, I have no doubt that the longer he leaves it on deposit, the more he will regret not having invested it in equities.

Brendan
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But if the investor is faced with one of those disastrous downturns, 40 or 50%, and an inflationary hit, how long will it take to recover? And you, presumably, want to spend that money, at some stage. Spending, by the way, is the best inflation hedge of all.
Remember, you are running against the clock of existence. So, while it may be a happy day, in the hotel bar, while your grieving family toast the eventual return of your investment, it may not have been much good to you.
 
Would I be right in thinking that if a person at 60 were to invest in stocks and then passed away at 85 leaving the stocks in his/her will to beneficiaries, the (possible) gains on those stocks, during that time period, would effectively not be taxed ?
 
Hi allpartied

It's not that you have a choice of a risky investment vs a risk-free investment.

Yes, your investments could go down by 50% and could take ten years to recover.

But if you invest in cash, you are almost certain to lose money.

Brendan
 
Biggles said:
Would I be right in thinking that if a person at 60 were to invest in stocks and then passed away at 85 leaving the stocks in his/her will to beneficiaries, the (possible) gains on those stocks, during that time period, would effectively not be taxed ?
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Correct.

Death is not treated as a disposal for CGT purposes.

Of course, if the beneficiaries exceed the CAT thresholds, they will pay CAT.

Brendan
 
I think it's important to consider the investment horizon when deciding how to allocate assets.

"Investment horizon" refers to the time weighted average of future cashflows.

So, a 65 year old that plans to draw equal amounts from an ARF to meet living expenses over a 20-year period has an investment horizon of roughly 10 years ((85-65)/2).

Taking history as a guide, there is roughly an 80% probability that equities will outperform bonds over any 10-year period. Or, to put it another way, there is a 1 in 5 chance that bonds will outperform equities over any given 10-year period.

So, it seems to me that the only logical approach for a retiree is to hold a diversified portfolio with at least some bonds/cash and some equities.

The precise split between these asset classes is a matter of judgment.

Personally, I intend to hold roughly 10 years of anticipated expenses in cash/bonds at retirement, with the balance in a global equity index fund.
 
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(85-65/2) = (85 - 32.5) = 52.5

I presume you mean (85-65)/2 = 20/2 = 10
 
Sarenco said:
Personally, I intend to hold roughly 10 years of anticipated expenses in cash/bonds at retirement, with the balance in a global equity index fund.
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Do you mind me asking why 10 years? The longest bear market was about 3 years in length.
 
Brendan Burgess said:
Hi allpartied

It's not that you have a choice of a risky investment vs a risk-free investment.

Yes, your investments could go down by 50% and could take ten years to recover.

But if you invest in cash, you are almost certain to lose money.

Brendan
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I think this is a very strange way of looking at it. If you invest in equities then you may lose 50%, if you keep it in cash then you may lose a little but much less than equities.

And there is no point in saying 'inflation is 5% so you lost 5%' because you may not spend all your cash on things that make up the inflation basket

Cash is real money at the end of the day
 
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