Start at the end

With €50,000 to invest, it’s well worth considering your goal.  What’s the money for, and how much will you need?  Everything else is working back from here.

Avoid extremes

Deciding your goal will reveal the most suitable investment type.  At this kind of money, best avoid extremes.

Except if you need your cash in the very short term, you almost certainly don’t want to leave all of your €50,000 in cash (the no-growth extreme).

At the same time, for most people, it’s probably not worthwhile to create a €50,000 share portfolio (the high-risk extreme).  Firstly, the share dealing costs to devise a suitably diversified (that is, wide) share portfolio will be substantial.

There are other transaction costs too, including stamp duty at 1% for Irish shares and 0.5% for UK shares.  And thirdly, you’ll need to manage your share portfolio fairly closely – most people don’t have the time for that.

Collective investment funds can be considered a middle ground where your money is effectively being managed for you by the fund manager.

Don’t get too clever

Moneycube believes most people should steer clear of specialised “products” such as kick-out bonds (here’s a great article on the topic), or even investment opportunities focused on a single asset, such as forestry.

Often, these investment opportunities involve locking up your money for an uncertain period of time, and provide very little visibility on costs to the investor (i.e. can be more expensive than they look).

Take some advice

For the sum of €50,000, it will pay most people to take some financial advice.  Why?  Three reasons.  Firstly, to help choose a suitable investment and get reassurance.  Secondly, to consider and access investments that simply aren’t available elsewhere.  Thirdly, to consider your wider situation and in particular the tax-efficiency of different options.

Start with €50,000, and keep going

Investing your money is about giving it time to get to work.  So the sooner you get your money moving, the more chance it has to grow.  Better still, keep topping up your investment regularly to build your next €50,000.

 

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