Hi. I’m saving for a mortgage and have kept my deposit savings in a normal current account without positive or negative interest.
I am thinking of investing the money between 6 to 18 months with the ability to withdraw the funds at almost any time. Well, perhaps with up to 2 week’s notice.
Does anyone have a suggestion for a low volatility, low risk investment (in Euro to avoid fx fees) with obviously low gains? How about an ETF like MVEU, iShares Edge MSCI Europe Minimum Volatility UCITS ETF EUR (Acc)? Or rather something from this list? 4 Low-Risk Vanguard ETFs Perfect for Income Investors | The Motley Fool
I think TIPS may be the one of the ways, they are bonds inflation related therefore supposed to give a minimum yearly profit based on inflation, also they don’t follow the stock market whatever it happens.
stocks might be too volatile. you might want to look at something like P2P lending, of course there is risks with that too but worth investigating. not sure if it’s in your country you could get 7% on 100k here: https://easymoney.com/
I’m with @Scrooge_McCodf: if you’ll need the money in six to 18 months, just leave it in cash. There’s little point taking unnecessary risks with a deposit over such a short timeframe – or you risk not being able to buy within the next 18 months.
A lot of P2P Lending platforms and Loan Originators went bust in the last months. So there is too much risk to put all eggs in only one basket (P2P Lending).
I constantly say, don’t put more than 5-10% of your money in P2P Lending.
TIPS are a good option for inflation protection (inflation risk), but they are still affected by market risk (price movements), specifically the interest rate risk.
ok interesting, I don’t know much about it just know it exists. the OP is looking to park 100k for 18 months so the assumption is they have a high net worth so maybe 100k is small fry to them.
Thanks for your comments, guys. 100k is a huge amount of money for me. I am prepared to risk 2-3% but not more.
I don’t know how long it takes before I get mortgage approval or even can view houses in Ireland again. I’m also changing jobs and lenders don’t give money during the 12 month probation period. That’s why I don’t quite know how long I will need to park the money. I don’t even know if lenders would lok favourably at any investment of the supposed house deposit.
It sounds like just keeping it in the bank is the best option. Even if it means losing a bit due to inflation. Better safe than sorry.
I wanted to do something similar, so I picked some short term bond etfs (ERNE or 0-3Y duration corp or government bond etfs). Yields are small, but you protect your cash at least a little.
I think this is the best option.
Invested money is always at risk, particularly when looking at such a short term span.
If you just had a government treasury, physical, with a fixed date and a fixed yield then I would agree, but doesn’t the value of a bond ETF with a portfolio of bonds (and rolling over when they mature) fall when interest rates rise?
I am not a bond expert though.
If that is the case then please be careful.
The nearer you get to needing to use money the least risky places it should be. So keep in bank if trying to buy house imminently (within couple years).
Once you have the house though dont pay it down more than you have too! With interest rates at 1.5-3% for lots of mortgages better to take a long term investment view with stocks.