Best place to invest 100k in Ireland! Tips from financial experts

Got €100,000 sitting in your bank account and wondering what to do with it? You’re not alone. It’s a great position to be in, but leaving that much cash idle can be a missed opportunity. The question is, where’s the best place to invest €100,000 in Ireland? What options are available, and what should you watch out for?

Let’s dive into some investment strategies tailored for the Irish market, ranging from low-risk to high-risk opportunities.

1. Risk-free to low-risk investments

If your money’s just sitting in the bank, you’re probably not getting much interest. But did you know you could earn up to 4.20% in euros? You can check our list of brokers paying interest on cash. But now, we will focus on just two options that stand out for Irish investors:

Trade Republic – Risk-free option

Trade Republic offers 3.75% (as of September 2024) interest on uninvested cash up to €50,000. Since you’ve got €100,000, only half will earn interest, so it’s also worth considering other options. Your money is held in a deposit account with a financial institution and is protected under the German deposit guarantee scheme, which secures up to €100,000 per depositor.

Keep in mind, that the interest rate is tied to the European Central Bank’s (ECB) moves. For example, on June 6th, 2024, the ECB cut interest rates by 0.25%, and Trade Republic quickly adjusted its rate to 3.75%.

However, Trade Republic is now starting to invest clients’ money in money market funds (MMFs). These are still low-risk but carry a bit more risk compared to traditional deposits.

Want more details? Check out our full article on Trade Republic’s interest.

Trading 212 – Low-risk option

Trading 212 is another solid choice, offering 4.20% (as of September 2024) on uninvested cash, regardless of the amount. Whether you have €1 or €1,000,000, you’ll get the same rate.

Irish investors can receive a free fractional share worth up to €100 by signing up with the Trading 212 promo code: IITW.

Trading 212 uses a mix of qualifying money market funds (QMMFs), time deposits, and current accounts to provide these rates. QMMFs are low-risk and invest in short-term government bonds, aiming to keep stable share prices.

Your funds and assets are protected by the Cyprus Investor Compensation Scheme (ICS) and the UK’s Financial Services Compensation Scheme (FSCS), with coverage up to €20,000 and £85,000, respectively.

For a deeper dive into Trading 212’s interest rates, check our detailed article on Trading 212 interest on cash.

2. Low to intermediate-risk investment

Ready to take on a bit more risk? Bond ETFs might be the next step up for you, and they’re easily accessible in Ireland.

Bond ETFs

Bonds are essentially loans you give to governments or companies, and in return, you earn interest. At the end of the term, you should get your money back, plus the interest earned along the way.

Bond ETFs bundle several bonds into one product, making it easier to diversify. Instead of putting all your money into one government bond, you can invest in a Government Bond ETF that includes dozens or even hundreds of bonds.

Here are four things to keep in mind when choosing a bond ETF:

• Credit Rating: This tells you how likely you are to get your money back. The higher the rating, the lower the risk.
• Yield to Maturity (YTM): This is the average expected return of all the bonds in an ETF’s portfolio if you hold them until maturity.
• Duration: This measures how sensitive a bond ETF is to changes in interest rates. For example, if the duration is 5, a 1pp increase in interest rates could lead to a 5% drop in the ETF’s value. On the other hand, if interest rates decrease by 1pp, the ETF’s value could increase by 5%.
• Annual cost (TER): The cost of running the fund. If it is 0.10%, it means that €100,000 invested would have a yearly cost of only €100.

Examples of Bond ETFs available in Ireland:

iShares Core Euro Government Bond UCITS ETF (government bond ETF):

The ETF seeks to track the performance of an index composed of Eurozone investment-grade government bonds. Data as of July 2024 (factsheet):

• Credit rating: AA
• Yield to maturity: 3.20%
• Duration: 7.25 years
• TER: 0.07%

One of the top 10 holdings includes Ireland:

iShares Core EUR Corporate Bond UCITS ETF (Corporate bond ETF):

The ETF seeks to track the performance of an index composed of Euro-denominated investment-grade corporate bonds. Data as of July 2024 (factsheet):

• Credit rating: BBB
• Yield to maturity: 3.81%
• Duration: 4.49 years
• TER: 0.20%

3. Intermediate to high-risk investments

For those willing to take on more risk in exchange for potentially higher returns, equity ETFs or diversified funds might be your best bet.

Invest in an ETF tracking the S&P 500

The S&P 500 is a major US index that includes 500 of the largest publicly traded companies in the U.S. Investing in this index is straightforward through Exchange-Traded Funds (ETFs), and it comes with a low fee – usually around 0.10% per year.

Our guide on “How to Invest in the S&P 500 from Ireland” has all the details you need to get started to invest in the S&P 500 index.

Invest in one of Vanguard’s LifeStrategy Funds

Vanguard LifeStrategy Funds offer a mix of stocks, bonds, and cash, which are automatically rebalanced over time. These funds let you pick an asset mix that suits your goals and risk tolerance. For a small management fee, you get a diversified portfolio.

Here are the Vanguard LifeStrategy funds available to Irish investors:

• Vanguard LifeStrategy 20% Equity UCITS ETF
• Vanguard LifeStrategy 40% Equity UCITS ETF
• Vanguard LifeStrategy 60% Equity UCITS ETF
• Vanguard LifeStrategy 80% Equity UCITS ETF

These funds offer stock exposure ranging from 20% to 80%, with the remaining portion invested in bonds from both developed and emerging markets.

To invest in these or any S&P 500 ETFs, you’ll need to open an account with a brokerage available in Ireland. Make sure to compare fees, minimum deposits, and the security of the platforms before you commit.

We have developed a tool that allows you to fully compare multiple brokers, which you can access here.

Common mistakes in investing

Investing isn’t just about picking the right assets; it’s also about avoiding common pitfalls. Here are some mistakes you’ll want to steer clear of:

Emotional trading

Investing is not only about choosing the right assets but also about avoiding pitfalls that can derail your financial goals. Here are some common mistakes to watch out for:

• Understand market cycles: Markets go up and down. Don’t panic during downturns and sell off your investments at a loss.
• Stick to your plan: Have a well-thought-out plan and stick to it, even when the market is volatile.
• Patience is key: Investing is a long-term game. Avoid making rash decisions based on short-term market moves.
• Don’t follow the herd: Just because everyone else is buying or selling doesn’t mean you should. Base your decisions on research and your strategy.

Chasing returns

Chasing the latest hot stock or sector can be tempting, but it’s risky. Here’s how to avoid buying high and selling low:

• Diversify: Spread your money across various assets, like an S&P 500 ETF or a Vanguard LifeStrategy fund.
• Think long-term: Don’t get caught up in short-term trends. Remember, past performance doesn’t guarantee future results.
• Be wary of hype: Remember the buzz around EV stocks? Be cautious of investments that are heavily hyped in the media or online.

Best trading platforms in Ireland

If you’re ready to invest your €100,000 but want a closer look at the top brokers in Ireland, check out our review of the Best trading platforms in Ireland in 2024. We compare each platform and offer practical reviews to help you make the right choice!

Bottom line

There are plenty of ways to invest €100,000 in Ireland. From risk-free cash accounts to high-risk equity funds, the key is to diversify and align your investments with your goals and risk tolerance.

For most retail investors, a diversified portfolio of cash, bonds, and equities is a smart approach. It’s less about trying to beat the market and more about staying the course.

And don’t forget, if you’d like to open an account with Trading 212, you can receive a free fractional share worth up to €100 by signing up using the promo code IITW.

This article isn’t financial advice, always do your research or consult with a professional before making any financial decisions.

For more resources, check out our recommended books and courses. And if you have any questions or feedback, feel free to reach out – we’re here to help!