David McCarthy gives advice on Galway Talks, 25th October 2012

Question:  I retired from the public sector some time ago and have had my lump sum on deposit.  I’m wondering what options I would have to invest these monies long term?

Answer:  If you have no need for the funds over the next few years you would be better off to move some funds off deposit into a longer term investment over circa 4 years.  Interest rates on 1 year deposits at the moment are in the region of 3% but will continue to fall over the next year or so.  A longer term investment might be more suitable for your circumstances and if you are conservative then you could opt for a bond that provides a Capital Guarantee.  There are quite a number of options currently available all of which have different features.

Question:  A listener contacted us to advise that he presented his bank with a proposal to borrow €1m for an investment property.  This individual has considerable assets and could in fact purchase the property outright however it would be far more advisable for him to borrow at least a portion of this sum.  The bank in question would only give him 60% of the monies he required.  As a result he is not proceeding with the investment.

Answer:  This is quite a common problem whereby the Banks are not providing what I would describe as ‘normal’ finance on acceptable terms.  Essentially they are telling this individual that they do not want to provide him with the finance when they offered such a low lending facility.  Once again this points to the overly conservative attitude on behalf of the banks, which is stifling both the property markets and small businesses.