If you have, you’re likely kicking yourself, you did not invest before now, as time fly’s past and you realise if you’d invested it say a year ago, you would have one year of potential positive returns behind you instead of the paltry sum currently available on deposit.
So how bad are deposits currently? The answer is very! We have had reason of late to review upcoming maturities of post retirement pension plans (Approved Retirement Funds where one can invest funds from a pension plan at retirement age). In 2011/2012 we invested those clients who wished to invest their retirement fund, in a conservative way, in 5 year deposit accounts which were on offer from many of the financial providers at the time. Looking back now, with the benefit of hindsight, the returns were extremely attractive ranging from 4.75% – 5.5% AER!
By way of illustration, the most competitive 5 year fixed term account available as at today’s date 31st May 2016 is 1.12% AER (Bank Of Ireland 5 year Growth Account).
So if you have funds on deposit, but know that you do not wish to take any or little risk, are there alternative options?
The answer is yes, there are still many low risk and risk free investment options. There are options to invest in bonds which give a fixed return, there are options to invest in tracker bonds which give a partial or full capital guarantee (whereby the capital you invest is guaranteed) and there are low risk options.
A good financial adviser will discuss your plan for such funds; what is the investment term? Can you afford to invest all or some of the funds for 5 years or more? How do you feel about investing? Would be happy making a 10% return on your investment but equally how would you feel if you lost 10% of your capital?
A good financial adviser will determine your life plan, your attitude to risk and make recommendations in keeping with those key pieces of information.
Importantly, there are many options and over the long term, investing in the stock market has historically yielded better returns than deposit.
As Warren Buffet (an American business magnate, investor and philanthropist who is said to be the world’s most successful investor) recently said “Today people who hold cash equivalents feel comfortable. They shouldn’t. They have opted for a terrible long-term asset, one that pays virtually nothing and is certain to depreciate in value”.
We would have to agree.
If you have any queries on the above please do not hesitate to contact us.