Hi there,
I started a thread last last week ("Tax-advantaged retirement accounts, or, a general 15-yr plan") on this forum and got a lot of useful information -- many thanks to everyone here.
The conversation has changed subject a bit and now warrants a new thread -- specifically, the "optimal" way to allocate assets in a pension fund.
This thread will hopefully provide some good generic advice, but for the purposes of discussion I'll start by listing out my own circumstances and assumptions.
- I am going to invest 20% (€14k) of my gross salary (€70k) into an occupational pension, my employer will provide 5%, meaning a yearly total of €17.5k invested
- I do not need to access this for, let's say, 25 years (I am 31).
- I am not totally risk averse, and I can handle market volatility during these 25 years.
- When I retire I want to stay retired (from the "rat-race", running a small business is fine) -- going back to the job market shouldn't be a backup plan.
Given I am 31 at the moment, I would start off this discussion by suggesting a 50/50 split between world equities and European, and with a low management fee -- my provider has a fee of 0.65% on these two passive index funds, I can go slightly higher but most definitely not above 1%.
In ten years or so, at 40, I might suggest reallocating these towards a 40/40/20 split between world and European equities, the remaining 20% going into government bonds -- assuming global markets are in a slump when it's time to withdraw, having some invested in bonds seems to be a good insurance plan to weather that particular storm.
I am Irish and live in Ireland. I am not necessarily looking to retire early or hit any specific figure here -- this is to be a backup for my eventual retirement or my beneficiaries.
I have other money I can invest on a monthly basis and I am interested in learning more about ETFs and how they work in Ireland (e.g., on a tax basis, and what providers here are worth using), which may affect how I allocate my pension -- any comments on that topic will be greatly appreciated.
This thread doesn't need to be specific to my circumstances as such, though, I just hope to get some general information on the topic and put it all towards making a decision in the next few weeks.
Thank you!