It is estimated that there is over €90 billion held on deposit in Ireland, in a time where deposit rates are historically low. This is likely driven by the fear of losing money especially given the losses incurred during the investment market turmoil of 2008 which is still fresh in people’s minds. However deposit rates are so low that coupled with the cost of inflation, it is actually one way to lose money!
So what are your choices?
As a Financial broker, we recognise that everyone likes to maintain an element of funds on deposit, as they should for emergency funds purposes.
However diversification of funds thereafter is important.
By seeking independent financial advice, a good financial broker should be able to work with you to ascertain your risk profile and separately to that your capacity for loss, amongst other factors and put a plan in place which does not involve leaving all your funds in a low rate deposit account.
What are you investment options?
The main options available for investment can be summarised as follows;
Investment funds managed by Fund Managers are available from life assurance companies such as New Ireland & Zurich.
Simply put, funds pull together the funds from many investors and Fund managers then use it to invest in a wide range of assets from company shares, bonds, property & many other asset types. Your investment is held in units. There are funds to suit all risk level types. A good financial advisor will ensure you are invested in a diversified portfolio.
Generally this type of investing is done through a stockbroker who should work with you to pick a diversified portfolio of stocks in order to spread your risk sufficiently. This investment type is more suitable to lump sum as opposed to regular savings.
There are various alternative investments out there such as forestry, or property. We would recommend that such investments form part only of your portfolio as such investments involve high exposure to a specific type of asset.
Investing in property also leads many people to take on a second mortgage. However this is high risk should property values fall. The risk of negative equity means that for most of us, investment is best done debt-free.
If you have funds on deposit, you should look at investing part in long term investments. A good Financial Advisor will go through your particular circumstances and recommend options to you.