Future Planning

1

149oaks

Registered User
Messages
263
I’m currently reviewing fully my savings. Based on approx €150k this is the summary of currently where the money is spread.
Where
What
Total​
Breakdown​
Comments
Quinn Freeways

17.6%​
​


Biotech
​
12.05%​


China
​
7.95%​


Emerging
​
11.14%​


Euro
​
5.45%​


Latin
​
11.14%​


US
​
19.09%​


Technology
​
13.18%​


Clean
​
5.45%​


UK
​
14.55%​



​
​

Post Office Bond

16.3%​
​
matures Mar 2013
Post Office Cert

16.3%​
​
matures Sept 2015


​
​

Equities

3.4%​
​


Standard Life
​
66.1%​


Ryanair
​
18.8%​


Vodafone
​
15.1%​



​
​

Deposit A/C

46.3%​
​
very recent amount at 1.5%


​
​

Total

100%​
​



I’ve recently been made redundant and so I’m looking to 2 “invest wisely”.
Some of the relevant factors are:
- Aged 50 and have built up good Pension Entitlements separately so this no a big concern,
- 3 children entering 3rd level (hopefully) 1st in Sept, 2nd Sept 2013 and 3rd 2015.
- Lets assume the worst possible scenario is I don’t get another job,
- Mortgage is cleared and no outstanding loans,
- I’m interested in Financial planning but inexperienced as regards direct investing, monitoring, rebalancing etc. As this is a once in a lifetime stage (big pot and future commitments) I’m nervous.

What do I require and what profile would I be:
- Obviously move money out of the low rate deposit (it’s in there right now for quick and easy access only),
- A flow/availability of money over the next 8-9 years for college costs (living away from home). I’m thinking that the Bond, Cert and Freeway amounts will do this in addition to Grants.
- Accessability to some extra for living expenses – again the same with Bond, Cert & Freeway – not sure if there’s enough.
- After that I don’t mind taking some risk (e.g. ETF’s) with a long term view on the balance.

I think I may be spread too much across the Freeway Funds.
What I’m looking for is advice, pointers etc. As well as what would be the benefits and costs be of going to a Professional & Independent Advisor?
 
Whilst you have mentioned the Freeway funds, these IMO are the best of a bad lot. All these Managed Funds rake up large portions of Fees for the Investment / Assurance Companies concerned. There is a report on AAM which clearl;y shows that over a 10 year period 43% of any potential gains goes in Management Fees and Charges.

You have asked concerning the use of an Independent Professional Adviser. I'd would say yes but they will not provide the advice for nothing. Coupled with this, bear in mind that Agents operating / selling Investment Policies work on Commission for selling a Policies. So in essence you are indirectly paying the Commission in the fees been charged, otherwise known as the TER.
 
Your percentages are not very clear....they add up to alot more than 100...It might be better to list the actual figures for each line, or alternatively recalculate the percentage of your total assetts for each line, e.g. if std life is 15k, then it is 10%


After that, the main issue here IMO, is when are you going to need access to the money, and how much you will need. It is only if you know these figures that you can create a wise plan. But that depends on several things...

1. What type of income will you get from your pension? What type of pension is it? (is it a guaranteed monthly payment?)
2. When does your pension payments kick in? (some can be accessed from age 50...)
3. Are there other income earners that you should include in your planning?
4. How much cash will you need every year for the next ten years (I honestly think you should make a stab at budgeting this...)

Then you could start to plan better about how much you should keep in cash, and how much you should keep invested.

The standard advice is too move your investments from high risk to low risk as you approach retirement, to protect against big falls in the market. i.e. less and less as a percentage in the stock market.

But, FYI, I have seen academic papers, which suggest that if you withdraw <3% a year from your assets, and keep the vast majority of them in the stock market, you will have managed to weather nearly every past storm without running out of your pension pot. The 3% figure is from memory now, so YMMV. I think the value of the 3% was recalculated every year, i.e. in good years you were allowed to withdraw more, and in bad years less.

But if your existing pension was going to meet your day to day finances, it would be an argument for investing heavily in the market with the rest. Obviously only investing in passive index tracking funds.
 
Tks for the replies.
SPC 100 the cut n paste didn't work and yes the %'ages are confusing. This is what they are:
Freeway is 17.6% in Total and following is the relative % in each of the Funds.
Post Office Bond 7 Cert 16.3% each.
Equities 3.4% - with following breakdown similiar to Freeway
Deposit 46.3%.
This total to 100%.

Pension is Defined Benefit of 17 years and in addition I have an AVC Pot of approx €120k. It unfortunately won't kick in until normal retirement.
There are no other income earners.
Yes I will make a stab at the budgetting suggested.
So basically I have to get to retirement age with this and thats why I'm looking for pointers etc. To illustrate where I'm at lets say I come up with I won't need €20k for 5 years and another €20k for 5 years after that. What should I do with this €40k?
 
Normal retirement is 65? Are you sure you can't access AVC till then.

150k/15 years to go is 10k a year ( ignoring inflation which likely will have a very negative affect), I am assuming you will not qualify for social welfare untill you "run down" your assets. Is their another earner in your tax-unit? If not, it might make sense to transfer the money now to a fund your kids own, in order to qualify for social welfare sooner, as social welfare would fund you about the same, as what you can fund yourself. You might need to check into any possible issues are that though.

Do you need to cover day to day living costs (excluding accomodation) from this 10k p.a.? If so I am not sure how much stock market "risk" you can realistically take here. Arguable you should take some, to try and protect yourself from inflation. If you got another job, I would be suggesting to keep a high percentage of your existing pot into the stock market (knowing that your existing pension will fund you wish cash when you reach 65).

Normally, If I knew I had certain cash requirements on certain dates, I think I would look to start rolling some of my cash into the best fixed rate deposit accounts I can get. e.g. 1yr, 3y, 5yr, so I would have decent rates, with cash maturing as required. But given the state of Irish banks, I am not sure I can advise that to you...
 
You appear to have Cash (PO bonds + deposit a/c) 78.9% and 21% in equities, i.e. Euro equities (QL EU fund + RYN) 1.6%; Emerging Market Equities (i.e. QL China, Latin America , Emerging Market funds) 5.32%; Foreign Developed market equities (i.e. everything else) 14.1%.

As you have lost your job unfortunately, unless you have a separate emergency fund, you should consider moving say 6 months expenditure minimum to a separate emergency fund (i.e. the highest paying instant access a/c you can find). You could increase this if you think your re-employment prospects are low. Personally, if I were unemployed I wouldn’t transfer cash into risky equities. So anything over the emergency fund from your cash holdings could be allocated to higher paying long duration deposit accounts or state savings, which you can get from the Best Buys thread.

As for your allocation to other asset classes, if you take cash out of the equation you’re very high on foreign developed markets equities relative to euro market equities. So you could switch some of your winners when they peak from the foreign developed market funds to the euro equity fund. This will reduce foreign exchange risk from your equities. Although honestly this is slightly academic. If you think you will need money in addition to your current cash holdings, it might be better to work out a disposal plan for your equities.
 
Thanks for the replies.
As far as I know the AVC's are unavailable until normal retirement.
My wife is on Invalidity Pension so there is something there but in pratical terms this will affect my ability to get a job as I can't work fulltime due to her condidtion though I can get JSB for 1 year. After that I could try for Carers Allowance I think? Not sure what you mean by run down assets?

So if I was to summarise (I am working througrh a Budget Plan) I should be thinking of security and accessability rather than equities/etf's of funds?
 
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