Q – Where can I get the best return on € 42,000 ( inheritance from an aunt )? I don’t need this sum for at least 5 years. What would you suggest – An Post, bank deposit or would I be better off sticking it in Prize Bonds and hope for the best ..perhaps the stock market ? Michael – Dun Laoghaire Co Dublin
A – Well done on the inheritance Michael – you only have a € 660 CAT tax liability on your inheritance…( don’t forget, aggregates count so if another aunt bequeaths a similar amount you will have 33% Capital Acquisition Tax to pay on that full amount ). As regards what to do with it and for 5 years, deposit interest rates are now low and getting lower – the State Savings investments which are guaranteed by the government and managed by government body NTMA have the best return for your term in their 10 year National Solidarity Bond yielding 22% tax free on maturity but the gross return is only 3% each year. The stock market is quite easily though the best return of any asset class over any long term period (between1991 to 2020 – the average annual growth was 10.72%) or as Warren Buffet stated it is a mechanism for transferring money from the impatient to the patient ! If you do not need that money in the next 5 years, then you will also avoid any penalties for early withdrawals if you find a suitable stock market investment…managed funds with one of the insurance companies would fit the bill. Take expert advice or email me. Putting it into prize bonds might certainly be more fun than leaving it on a demand deposit account – best is An Post’s 0.75% – after DIRT tax it’s 0.5025% ! Prize Bonds are government guaranteed and you only need 7 days’ notice to withdraw your money after the initial first 3 months. Unlike the bookies, you never lose your stake but you could win ! Best wishes