Lump sum investment alternatives are badly needed with deposit rates simply dismal, despite the recent interest rates increase. People remain anxious to find a better home for their cash, but what are the best lump-sum investment options in 2023 for the Irish investor?
So let’s get down to it and explore the option of investing in “Multi-asset Funds”, also known as unitised or mutual funds. Here, it’s best to start with a little fresher on the investment markets and their asset classes.
The core investment markets include the equity markets, debt markets, and commodity markets.
1. The debt market, or bond market, is the arena in which investments in loans are bought and sold, i.e. Government Bonds and Corporate Bonds.
2. The equity market, is the market in which company stocks (shares) are bought and sold, as well as property in the form of Real Estate Investment Trusts.
3. Commodity trading covers the buying and selling of a large range of instruments including oil and gas, metals such as gold and silver, and soft commodities like cocoa, coffee, wheat, and sugar.
Assets or investment asset classes include:
Cash: money on deposit (e.g. cash in a bank).
Bonds: loans to companies or governments.
Property: bricks and mortar, property equities or REITs (Real Estate Investment Trusts).
Equities: investment in company shares
Commodities: eg gold, copper, water infrastructure, and agriculture.
Now, just before setting out some smart ways to best access these markets and their asset classes, and to go about making the move from a depositor to an investor, let’s also define the two different kinds of fund management styles i.e. “Active” Fund Management and “Passive” Fund Management.
Active funds are ‘actively’ managed by a fund manager, who buys and sells investments on behalf of the fund in order to maximize gains and minimize losses. As the fund is actively managed, the fund managers can strategically react to market situations, taking advantage of insights and opportunities as they happen.
Passive funds, rather than trying to anticipate and identify growth opportunities, simply track a particular stock market, such as the NASDAQ. Instead of investing in some of the assets in the market, a passive fund will buy across all the assets in a market, to give you a return that reflects how the market, in general, is performing.
Lump Sum Investment Options
When clients approach us looking for a better home for their existing lump sum deposits or investments, the first 2 things we look at are:
1. How long do they wish to invest?
2. What level of return do they expect, which directly corresponds with their risk appetite?
However, regardless of investor type, we always recommend multi-asset diversification to help manage investment risk coupled with a blended portfolio of investment managers and investment strategies or styles.
Moreover, we strongly believe that single-fund investment is overly simplistic and does not properly constitute individual professional advice.
Lump Sum Investment Returns
Although past performance offers no guarantee as to future returns when investing in multi-asset funds the underlying assets are well diversified and risk-managed within volatility ranges. To give you an idea of performance, our best-performing medium-risk multi-asset active fund options have returned an average annualised return of 7% PA over the last 10 years and 8.50% over the past 5 years.
Next steps
We appreciate that everyone’s circumstances are different. The best investments for you right now might well differ from someone else. But with hundreds of funds at our fingertips, we’re confident we can construct a portfolio to suit your individual needs.
The majority of the funds we make available carry an annual management charge of 1.00 to 1.25%, including our broker advisory charge for both initial and long-term financial advice. We also cover the 1% Government Levy, so that with us as your broker 100% of your money gets invested from day one and includes 24/7 online access to your fund values, between your built-in annual reviews.
For more information
Contact: Ken O’Gorman – Director – Investment Specialist – One Quote Financial Brokers on: 01 845 0049 or email: info@onequote.ie
Or enquire online and give us a quick outline of how we can help.
