SAVINGS & INVESTMENTS
Investment options can be very confusing and finding the right mix of a good return at an acceptable level of risk is challenging. At McGuire Liston Financial Services we identify the investment choices that best meets your requirements, based on your risk profile.
Savings
Most of us need to save in order to fund for future life events – holidays, marriage, home purchase, education, retirement. It is best to develop a structured savings regime by way of regular monthly payments into an appropriate savings product. Perhaps all that is needed is to save in a regular bank savings account, particularly if you are likely to need the funds in the short to medium term (less than 5 years). However, if you are saving for the medium to long-term (over 5 years) then you need to think clever and opt for a savings vehicle that will help your money to grow. Call McGurie Liston for a confidential assessment of the best options for you.
Investments
If you have a lump sum to invest it is important to assess what your requirements are. You need to determine what your priorities are and make your decisions based on several important elements of any investment.
Considerations before you Invest
Risk
What is your attitude to risk? The potential for higher returns invariably carries a higher level of risk. Apart from the security of the underlying asset, there are other risks, for example, your investment may be affected by fluctuations in exchange rates.
Return
What return are you seeking and is it a realistic target? If it looks too good to be true then it probably is. Many products are cleverly packaged to give the appearance of offering specific and attractive returns but most often they are indicative numbers and are not guaranteed. Read the small print.
Diversity
It is important where possible to spread your investment across a selection of financial products and asset classes. As the saying goes, do not place all of your eggs in one basket, just in case you fall!
Access
How important is access to your funds? Can you afford to lock your funds in for 3, 4 or 5 years or even longer? Be sure to keep some funds in an accessible medium for emergencies.
Liquidity
Even attractive investments can sometimes be difficult to encash. Property is a key example and many property funds have strict exit conditions, which can make encashment difficult.
Past Performance
Past performance is no guarantee of what may happen in the future. However, it is useful to look at the performance of any financial institution or financial product in the past. Always look at performance over an extended time frame and companies that consistently perform at the required level should be considered positively.
Costs
Establish what costs will be associated with your investment. Some funds offer attractive returns but are subject to exorbitant annual management charges and other fees.
Taxation
Establish at the outset how any gains will be treated from a tax perspective and learn of any tax free limits that may exist.
Multi Asset Funds
Multi-asset funds may include investment in equities, bonds, property, alternatives and cash. This provides a greater degree of diversification than investing in a single asset class and dilutes the volatility that can come from having all of ones eggs in the same basket. The product providers offer a range of funds carrying different levels of risk and potential income / growth, so there is a fund to suit all levels of investor.
Absolute Return Funds
Rather than buying and holding assets in the hope that markets will rise in the manner that traditional unit-linked funds do, Absolute Return Funds also invest in less traditional assets and strategies that will look to benefit if markets fall. The objective of these types of funds is to make positive modest returns regardless of the direction of markets.
Structured Funds
Structured products are packaged investment funds offering pre-determined potential investment returns based on a set of criteria being achieved. They will typically be made up of 2 main components:
(a) A fixed term deposit/zero coupon bond, used to generate any capital protection offered and
(b) a derivative aimed at generating investment returns.
Very often there is a guaranteed minimum level of capital return at the final maturity date. For example, if rates are low it is typical that 90% or 95% of the capital invested will be guaranteed, meaning that just 10% or 5% of the capital is actually at risk. Talk to McGuire Liston and we will outline the funds currently on offer.
REITS
A Real Estate Investment Trust (REIT) is a property investment company, the shares of which are traded on a public stock exchange. The rules governing REITS are quite specific, and there must be a minimum of 3 properties, with no single property making up more than 40% of the fund. Also 85% of the net rental income must be distributed back to shareholders by way of a dividend.
REITS were introduced in Ireland in the 2013 budget and differ from other investment media as rental income and capital gains within a REIT are not taxed within the company. The funds are only taxed when being paid out to shareholders.
