Q – I have € 18,000 to invest – a present from my mother-in-law for our new daughter born on Christmas Day. Don’t really know what to do with this as deposit interest rates are poor at the moment and getting worse next year as ECB continue to cut rates. Maybe buy prize bonds buy on the stock market ? Thanks. Catherine – Portmarnock Co Dublin
A – Congrats on the new daughter Catherine – the money will be tax exempt first of all to you or your daughter. If the gift is to your husband, it can be deemed part of his Capital Acquisition Tax threshold of € 400,000 from parents to son. If it is to your in-laws’ grandchild, the exemption is € 40,000, so no tax liability there either. As regards investing, there are a number of factors that must be considered in making investment decisions. If you want growth, you MUST take some risk. As you stated, interest rates are poor ( best demand account currently –An Post Money at 0.75%, net 0.5025% after 33% DIRT tax – while best rate is NTMA’s 10 year National Solidarity Bond offering 22% tax free on maturity. Both interest and capital are guaranteed by the government. Minimum is € 500 and maximum € 120,000 but grossed up equivalent to an annual rate of 3% each year. As regards Prize Bonds, you are subject to the vagaries of chance. While you DO have a greater chance than the Lotto, plus your stake is guaranteed, you could win …the prize fund was tripled last October year ! You could also take advice on the best asset class of them all – the stock market ( between 1991 and 2020 the average annual growth was 10.72% ) Email me for details. Best of luck and what a nice mother in law !