QI have a small lump sum to invest and am wondering if now is a good time and what should I consider when investing?
A With high inflation, low interest rates and high volatility in stock markets, deciding where to invest can be difficult. While individual investment needs vary, according to Aviva Life and Pensions’ Stephen Rice, some of the basic principles of investing, such as time frames and risk tolerance, remain key considerations.
You should only invest money that you will not need access to for the next five years. Over the long term, stock markets tend to trend up, and while there are no guarantees, if you invest over a reasonable period of time, you have a good chance of weathering the ups and downs and earning a positive return, Rice said.
Stock markets are currently off their previous highs and some may view the current market as a buying opportunity, he said. However, equity markets are quite volatile at the moment and it is likely to be a bumpy investment journey in the short term.
Second, your risk tolerance could be viewed as the risk of how much you are willing to lose in order to make a profit on the money invested. There are many possibilities – investment funds have different risks depending on the assets held, for example stock markets versus government bonds.
Mr Rice recommends that you speak to a professional advisor who will help you with your investment decision.
QI am looking to switch from an adjustable rate mortgage to a fixed rate mortgage soon. I currently have an interest rate of 2.95 percent, with 2.45 percent being offered by my bank for three or five years. I am aware that interest rates are rising. But next year I may have to move for work and I would have to sell my house to fund the purchase of a new one. I’m trying to estimate how high the possible early repayment penalties (ERC) could be.
A Retail banks borrow tranches of money on the wholesale market for variable fixed-rate periods at a given interest rate, to which they add a margin (their profit), and lend them to the mortgage customer.
If the mortgage customer later prepays the mortgage, the bank must repay that customer’s portion of the loan, according to Mervyn Fogarty, a managing director at Howth Financial. If interest rates are lower at that point, the wholesale bank will suffer a loss and pass that loss on to the retail bank, he said.
The bank will in turn pass this on to the mortgage customer in the form of an Early Redemption Break Out Penalty. In the event of a rate hike, this should have the opposite effect as the bank does not incur a loss and therefore the mortgage customer should not receive a breakout penalty for prepayment.
This is what we are seeing in the current climate, Mr Fogarty said.
Q I have recently returned to Ireland after living in California for a number of years. I have just bought a car but am struggling to get insurance at a reasonable price after finding out that my Irish no claims bonus, which amounted to 10 years, is no longer valid as I have been out of the country for over two years am. I’ve had my driver’s license for 15 years. How can I avoid that?
A The official rule is that if you’ve been abroad for more than two years and your previous Irish car insurance expired more than two years ago, you won’t be able to use your previous Irish no-claims bonus when applying for car insurance in Ireland, the Managing Director of Coverinaclick.ie Jonathan Hehir.
However, there is a protocol between Ireland’s Treasury and Insurance Departments which means Irish insurers will take foreign driving experience into account once you can prove your damage free driving experience abroad.
If you have not already done so, contact your overseas insurer to obtain a letter confirming that you are continuously insured as a policyholder in your own name and specifying the number of claims-free years, said Mr. Hehir. Make sure you tell insurers this when shopping.
Also, remember to take into account considerations such as the make, model and age of your current vehicle to lower your premium, and you might also consider seeking advice on paying a voluntary excess, which could also help reduce costs. Shopping is always worthwhile. Get help from a reputable broker.
https://www.independent.ie/business/personal-finance/your-personal-finance-questions-i-have-a-lump-sum-to-invest-but-is-now-a-good-time-to-do-that-41893187.html Your Personal Finance Questions – I have a lump sum to invest, but is now a good time to do so?