19 Year old Euro Inheritance - what to do?
Comments
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Thanks for the information. I will look into the Euro accounts in France. I know this may be hard to answer, but with your current knowledge, what would you do with the funds if you were in my position right now? Mix of bonds, stocks & cash? ETFs? ISAs? Wondering out of curiosity more than anything
It rather depends on what your goals are: are you planning to buy a house anytime soon, for instance? What are your timelines for needing the money: 1, 2, 5, 10, 20, 50 years?
Using your ISA allowance is a good idea, if only for the paperwork it saves. If it were me I might be tempted to exchange about £15K, putting the maximum £1200 in a HTB ISA (assuming you don't already own a property but intend to some day in the UK) and then parking the rest in a S&S ISA. What to buy in the S&S will depend on your attitude to risk and time horizons.
Don't forget you can get risk-free interest equivalent to many bonds using current accounts and regular saver accounts. So, while it would mean holding pounds rather than euro, it is possible to get better performance. Whether to hold pounds or euro might depend on where you intend to spend the money at the end of the day. This matters less for equity holdings - a US tracker is going to depend on the dollar irrespective of whether you pay GBP or EUR for it.
My personal lesson: once upon a time I looked at the EUR/GBP rate of 1.50 and said 'oh, that's been stable for years, I'll stay in pounds'. How wrong I was.0 -
Until you have done your research and have decided what you want to do with the money, I would put all of the money into a FTSE tracker fund.
This is a low risk and easy way to invest. Given the amount of money and your age, you should be taking a reasonable level of investment risk.
Invest as much as possible through ISAs, this doesn't matter now but will matter once you are a tax payer.
I do not think you should try to time the exchange rate. There is really no difference between receiving £1 and receiving EUR 0.86 (at the current exchange rate). Leaving your money in Euros and accumulating no interest, if you decided to try and time the currency market, is a bad idea because (1) you are as likely to get the timing wrong as you are to get it right, and (2) while you wait you are losing investment income.0 -
steampowered wrote: »Until you have done your research and have decided what you want to do with the money, I would put all of the money into a FTSE tracker fund.
This is a low risk and easy way to invest. Given the amount of money and your age, you should be taking a reasonable level of investment risk.
Invest as much as possible through ISAs, this doesn't matter now but will matter once you are a tax payer.
I do not think you should try to time the exchange rate. There is really no difference between receiving £1 and receiving EUR 0.86 (at the current exchange rate). Leaving your money in Euros and accumulating no interest, if you decided to try and time the currency market, is a bad idea because (1) you are as likely to get the timing wrong as you are to get it right, and (2) while you wait you are losing investment income.
Reasonable view apart from the ftse point, and all world tracker would be far lower risk and almost certainly perform better.
As well as the diversification just look at how the pound has devalued over decades, that in itself would lead to better returns no matter what currency you want to base yourself in.0 -
Reasonable view apart from the ftse point, and all world tracker would be far lower risk and almost certainly perform better.
As well as the diversification just look at how the pound has devalued over decades, that in itself would lead to better returns no matter what currency you want to base yourself in.
Very true. Either way, the Op is almost certainly going to be better off investing his money rather than leaving it in cash.
For people who are new to investing, my advice is to pick something simple and diversified to start with, while doing a bit of research to find out more.
On the pound, it has been up and down over the past few decades and currently sits at a low point. This suggests to me that may be a good time to buy pounds, although I don't have a crystal ball! (here is a graph showing movements against the dollar since 1990).0 -
steampowered wrote: »Very true. Either way, the Op is almost certainly going to be better off investing his money rather than leaving it in cash.
For people who are new to investing, my advice is to pick something simple and diversified to start with, while doing a bit of research to find out more.
On the pound, it has been up and down over the past few decades and currently sits at a low point. This suggests to me that may be a good time to buy pounds, although I don't have a crystal ball! (here is a graph showing movements against the dollar since 1990).
Yes agree with the simple and diversified point inch is why I'd choose an all world tracker, I hold a fidelity and a vanguard version in different portfolios.
The pound is on a continuing downward trend, it's interesting I was thinking about this earlier. It obviously represents the continuing relative shrinking of the British economy over the last 150 years or so, and whilst I agree it will probably rally in the short term then it will no doubt continue to weaken with the British economy over future decades.0 -
For Euro accounts, almost nobody pays interest. Citi used to, but I discover their accounts now have a nasty monthly fee - so best avoided. Finding Euro accounts is hard enough. As you have a French connection you might be able to open a Euro account in France: while the interest rate won't be high, you'll likely have more options there. British banks are pretty useless when it comes to Euro services, so all the accounts offered are a bit lame (they seem to prefer cheques to online banking, for some reason).
Have a look at monevator.com for investment basics. And don't feel you have to jump in straightaway - better to learn with small amounts as you go than make expensive mistakes.Reasonable view apart from the ftse point, and all world tracker would be far lower risk and almost certainly perform better.
As well as the diversification just look at how the pound has devalued over decades, that in itself would lead to better returns no matter what currency you want to base yourself in.
Thanks for your response. Interesting conversation. With regards to 'risk', i'm happy to take on some but of course not too much. I dont really need/want access to the funds for another 20 years, when I will perhaps by a house. I will most likely be in full time education until 2019, and upon graduation will hope to rent.
I have a 'meeting' with Barclays just to open a Current account and then a Euro account (as im currently with NatWest who dont even offer such facilities!!). Once the funds are in this Barclays account, from there would my best bet be to move 20/25% it into an all world tracker? The only future plan, currently, it to use the funds for a masters - the rest I would like to tie up in investments.0 -
Thanks for your response. Interesting conversation. With regards to 'risk', i'm happy to take on some but of course not too much. I dont really need/want access to the funds for another 20 years, when I will perhaps by a house. I will most likely be in full time education until 2019, and upon graduation will hope to rent.
I have a 'meeting' with Barclays just to open a Current account and then a Euro account (as im currently with NatWest who dont even offer such facilities!!). Once the funds are in this Barclays account, from there would my best bet be to move 20/25% it into an all world tracker? The only future plan, currently, it to use the funds for a masters - the rest I would like to tie up in investments.
The key thing is to match your expected liabilities with your savings and investments, this is what undid northern rock eventually.
So work out what you are likely to need in the short, medium and long term and allocate those funds appropriately. Short term in cash savings, currently current accounts and regular savers assume you qualify for them, long term into the all world tracker for example, medium term then maybe a mix and potentially some p2p as well.0 -
Convert the EUR to GBP you're going to get an excellent rate now.
1. Spread an amount of cash you're willing to risk into a basket of FTSE100 stocks. E.g., BP for example currently paying 6.8%. Use an ISA build it up as a 2nd pension for your future retirement. I started in 2009 (in my early thirties) putting cash in almost every tax year to date a total of £88,320 with current book at £139K (around £50K profit tax free).
2. Get a buy to let have an agent manage it for you. Put enough equity such that the rent covers the mortgage plus cover your tax bill. You should still (double check though) be able to offset interest against the profit with commercial property. I did this whilst in my 4th year at University, bought a cheap commercial property for £59K earning rent at £860 per month now and property is valued at £145K
3. Keep the rest as cash to support your years at University0 -
inflationbuster wrote: »Convert the EUR to GBP you're going to get an excellent rate now.
1. Spread an amount of cash you're willing to risk into a basket of FTSE100 stocks. E.g., BP for example currently paying 6.8%. Use an ISA build it up as a 2nd pension for your future retirement. I started in 2009 (in my early thirties) putting cash in almost every tax year to date a total of £88,320 with current book at £139K (around £50K profit tax free).
2. Get a buy to let have an agent manage it for you. Put enough equity such that the rent covers the mortgage plus cover your tax bill. You should still (double check though) be able to offset interest against the profit with commercial property. I did this whilst in my 4th year at University, bought a cheap commercial property for £59K earning rent at £860 per month now and property is valued at £145K
3. Keep the rest as cash to support your years at University
Thanks for this advice. Really clear and concise, and good ideas. I am in the process of setting up a Euro account, now with HSBC. They have offered to give me professional financial advice to help best invest the funds and grow them, especially as I'm not really looking to use much of it at all over the next 15-20 years. Does anyone have any recommendations, or have any of you yourselves had this sort of advice before? I dont want to pay for a service that is just as useful as using these forums and doing my own research.
RE: property. I have been looking into similar ideas like you have done, even purchasing a student property as it is cheap and rents out vey well. However I'm not too sure where to start, whether its best to approach an agent outright or even speak to my current landlord for his ideas
Thanks for your help0 -
Thanks for this advice. Really clear and concise, and good ideas. I am in the process of setting up a Euro account, now with HSBC. They have offered to give me professional financial advice to help best invest the funds and grow them, especially as I'm not really looking to use much of it at all over the next 15-20 years. Does anyone have any recommendations, or have any of you yourselves had this sort of advice before? I dont want to pay for a service that is just as useful as using these forums and doing my own research.
Take everything you read on these forums with a pinch of salt - ie don't treat it as gospel, feed it into your model of what to do. Maybe what one poster says is a good idea and maybe it isn't - you should aim to work out whether it's right for you.
That said, a bank is likely a bad place for advice because they're usually tied sales agents - ie they have a limited range of products and any meeting is an attempt to sell one of them to you. If you want professional financial advice, find an independent financial adviser (IFA). You'll have to pay, but better to pay upfront than the bank sales agents who are being paid through commission on whatever product they manage to flog you.RE: property. I have been looking into similar ideas like you have done, even purchasing a student property as it is cheap and rents out vey well. However I'm not too sure where to start, whether its best to approach an agent outright or even speak to my current landlord for his ideas
Research is the main thing. In particular, BTL is basically running a business - finding tenants, deciding whether they're a good bet, maintaining the property, fixing up things when they break, suing tenants who don't pay the rent. It is not purely an investment strategy, you have to do various regulatory and maintenance tasks too. You can farm those out to agents and maintenance companies, but at a price. You should aim to calculate the yield you might get - ie what annual return on cash invested you have, after expenses. Then take into account void periods and bad tenants - how does it look now?
Maybe rental is something you're already familiar with, being in the student rental market as a tenant already. But bear in mind it's quite different being a landlord. Also property comes in quite large lumps, so a house in the wrong area or a bad set of tenants can have quite an impact on your returns.0
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