Question: I made an investment in a Life Assurance Fund in 2009 and I have made a reasonable gain on it. I can encash it without penalty. Do you think this would be a good idea?
Answer: I am a great believer that you should take your profit and go into something else, if you can do so without penalty. There is a saying in the stockmarket “Leave something in it for the other fella” and I think there is a lot to be said for that. So my advice to you would be to take your profits and look at some other alternative investment.
Question: I have a tracker mortgage and the repayments have fallen significantly over the last few years. However, I have the ability to make higher monthly repayments; do you think this is a good idea?
Answer: Whilst you are paying an extremely low interest rate on this loan, obviously it is in your interest to clear it as quickly as possible. If you have the ability to top-up your regular repayments then I would recommend that you do so, provided this does not cause any stress to your monthly finances. Those who may have variable rate mortgages, increasing the repayments will have a far greater impact on the total interest paid as the interest rates of these loans are so high.
Question: I have heard you mention a number of times about the alternative to bank deposits for investing money. Can you give me some idea of the type of investments that are available?
Answer: In the last year we have seen the arrival of Soft Capital Protected Bonds, which are a far more viable alternative to bank deposits. These bonds expose you to a level of risk which is determined by the terms of the bond but also provide elements of protection. If you want full capital protection there are a number of options available, however you need to expect much lower returns. The third option is to look at Life Assurance Funds which again vary in risk and structure.
Leaving monies on deposit, as I have always said, is something you do for a convenience rather than as an investment decision. Recent figures show that there has been a considerable drop in bank deposits, which is primarily due to the fact that people are realizing that they need to make better use of their money rather than leaving it sitting in a bank account.
Remember: investing is not just for those with a lot of money but for everybody and most investments have an entry point of €10,000.