What could €5k invested today be worth in the long term? (Real client case study)

We recently came across a client that invested a lump sum of €6,348.69 (£5,000) in the summer of 1985 (that’s 36 years ago!). 


The client invested in a unit-linked fund which was primarily invested in equities (i.e. stocks and shares). They left their investment and didn’t need to take any withdrawals over the years.


Today it is worth €81,890!


That’s AFTER  tax and charges. A growth of over €75,541 (nearly 13 times the initial investment, equating to 33.15% per annum).


This clearly shows that you will generally be rewarded for taking risk in the markets – admittedly we don’t all have a time horizon of 36 years :)! 


Even though this client didn’t plan on investing for this length of time initially –they stuck with it over the years.


It’s about time in the market – not timing the market !


What are the ‘don’ts’ of investing? 


There are many, but here are a few:

  • Don’t invest in something you don’t understand!  It’s crucial to research and fully understand any investments.
  • Don’t sell simply because the market has fallen – you may be selling at the wrong time.
  • Don’t assume that today’s rates of return will be tomorrow’s.
  • Don’t try to time the market, by jumping in and out of investments when you think it is going up or down.
  • And finally – don’t listen too much to gurus who are saying that they have found a way to outperform the markets!

Unless your investment decisions line up with your personal goals and needs, no guru can help you!.


Why is a lump sum investment something you should consider?


Because over a long-time scale, even small amounts can add up to a significant amount.

Consistent saving will inevitably lead to a large capital sum and the power of compounding is a major key in building wealth (as shown in our example above).

When it comes to investment, stick to your long-term plan and ignore short-term volatility or short term gains. Easier said than done. The financial world is full of the  short-term noise, but if you can distance yourself from it and remain focused on long term planning, success will be yours to have!

If a lump sum isn’t feasible for you right now, monthly investments may be more affordable.  Paying in on a regular basis, no matter how small, will help you to achieve your goals. And if you continue investing regularly and actively, your capital will grow faster than you think.



What are the steps involved in investing?


Step one is to understand your risk tolerance. This will ultimately be the key determinant in choosing the best investments for you.

After this, set a budget with an achievable long-term goal in mind. With every goal comes a ‘why’- get really clear on why you have chosen a specific savings goal- many people overlook this!

Then it’s time to choose the right investment mix based on your age, financial goals, risk tolerance and capacity for risk.

That is the starting point for building your very own investment portfolio.


What are the main advantages of investing?


Investing is an excellent way to save for the future which can help accumulate assets and allow you to enjoy a higher standard of living.   It will allow you more freedom and give you security allowing you to enjoy life and perhaps even early retirement !

Most importantly, reach out for advice and support when the time is right, and avoid doing anything on a whim.

If you have any questions on lump sum investments or your best options with your hard-earned cash, send us a message or email grainne@sunrisefinancialplanning.ie and we will be happy to listen.