lukesfinops
Registered User
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That is correct. There are no Accumulating US ETFs. US ETFs must, by law, distribute dividends.I thought that Accumulating ETFs were only an EU thing and that in the US that are obliged to give Dividends in the majority of cases?
The pension fund vs personal fund argument is nonsensical.
Critics of the pensions regime love to cite the idea that the rules could be changed but, in reality, if the pensions world comes under attack the personal investing world is likely to also.
I earn €100; I end up with €48. I can invest that in an accumulating fund. The State takes 41% of my gain every 8 years.
Instead, I give up the €48 and €80 goes into my pension. That €80 grows tax-free. Then at retirement I can tax 25% of what’s there, largely tax-free. The balance is drip-fed out to me as taxable income and the underlying monies continue to grow tax-free. Because I’m old and no longer working, the tax rate on my retirement income is far less than 41% and I don’t pay PRSI at all or much USC.
It’s no contest.
Hi Gordon, I agree, pensions are superior vehicles.
Given this, why do you believe there is so much interest in ETFs/indices/property as investments and comparatively little talk of pensions...especially amongst younger people.
Hi Gordon, I agree, pensions are superior vehicles. Given this, why do you believe there is so much interest in ETFs/indices/property as investments and comparatively little talk of pensions...especially amongst younger people.
I think the problem is where people get their information these days. When I started to learn about investing \ ETFs \ Indices etc. it was all American sites where I got my information from. I listened to American podcasts, read their blog posts and follow them on YouTube etc. It was simple all I had to do was a) get my finances in order, save more than I spend, b) get an emergency fund in place and c) invest in an all-world ETF and just let the money ride for 20 years. It all sounded so easy to implement.
Fast forward 2-3 years and I have finally had my finances in order and could afford to start investing albeit at a modest rate (250 or so a month). However now I have learnt (still learning) that the US approach doesn’t work at all for Ireland really and instead of investing in an EFT \ Index I should be maximising my pension contributions. Right so next step was to learn about how pensions work and see if I can maximise them. Fast forward another 6 - 9 months and I think I have learnt that my pension fund is already at the limit (Public Sector post 2004) so now I *think" I'm going back to just investing in ETFs \ IT etc. and \ or paying down mortgage. It is all confusing.
I don’t think I am unique, and out of my group of friends I am the only one who is even half interested in trying to figure it out. The problem, as I see it, is that people doesn’t understand the importance of financial planning until too late, they miss out on the good years (20-30) to save towards a pension. When you start to learn there is a mountain of information to climb before you figure out what you should do or more importantly what you should not do (pay high % charges on pension) or which pension fund should I pick?
This is not a dig at all but the Financial Advisors I have looked into seem to deal with people who have a lot of money saved and who cost ~€1500-2000 to work with. Again, not a dig, I completely understand that they need to earn a living. In fact, most of the ones I follow are very generous and give away for free a lot of their hard work and expertise.
It would be fantastic, for everyone, if you could get a grant or tax incentive towards seeing a Financial Advisor once a year. Imagine if everyone could go to someone they trust and get independent financial advice on their exact situation at that time for a low cost. How better off would society be?
On the other hand, one can easily get a mortgage, buy a property and rent it out. Easy to understand and relatively easy to manage. It is not like you have virtually sell the property every 8 years and pay tax on any gains…
Until there is a simple way to understand pensions and for everyone to get financial advice, I don’t think things are going to change. Perhaps if they brought in saving schemes like those in the UK, ISA and Junior ISA, people would use them as stepping-stones to greater savings and pensions but again something would need to change first.
A quick introduction. I'm 25, have recently moved to Ireland, and want to start my retirement plan. Currently, I can save up to 50% of my salary (~2K EUR) monthly, and as a FIRE follower, want to retire earlier (before my 50s). There's another important information, I don't know whether I'll be in Ireland when time for retirement comes (probably not).
Do you have any good resources for understanding Irish pensions?
Thanks all for your comments.
I've learnt a lot here. What I can tell now is that for Irish investors, maximising their pension contribution to get the advantages of a company match, and tax reliefs is indeed lucid. For example, my company matches 5%, so I'd ended up contributing 10% (note that the tax relief for my age is up to 15% of contributions). Even if I don't count the interest rate, I would have at least 233% of capital growth comparing my original contribution with the tax relief, and matching benefit. No discussion here.
So I'm still studying/deciding which other investments (after maximising my pension contribution) is the best tax-efficient for retirement.
Im in a similar situation, actually considering if I should join pension funds as my company also matches it. The problem, or trick I have encountered is, there may be limits about if you can move your pension with you when you are moving to another EU country
Im in a similar situation, actually considering if I should join pension funds as my company also matches it. The problem, or trick I have encountered is, there may be limits about if you can move your pension with you when you are moving to another EU country. I couldn't get much info as I had to talk with sales person of the funds, but let's say you want to go to France (as EU country) you need to be sure that you can move your pension fund with you so when you are at France, you can continue contributing to your pension fund. I assume your company is offering pension fund match with a company like Zurich etc. so you should ask them if/how you can move your pension fund with you when you leave Ireland. If you are planning to move to a non-EU country, then afaik you can't take the fund with you, then you will have to cash out the money and pay tax for it.
Thanks all for your comments.
I've learnt a lot here. What I can tell now is that for Irish investors, maximising their pension contribution to get the advantages of a company match, and tax reliefs is indeed lucid. For example, my company matches 5%, so I'd ended up contributing 10% (note that the tax relief for my age is up to 15% of contributions). Even if I don't count the interest rate, I would have at least 233% of capital growth comparing my original contribution with the tax relief, and matching benefit. No discussion here.
So I'm still studying/deciding which other investments (after maximising my pension contribution) is the best tax-efficient for retirement.
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