Moneymakeover Investment Advice - Interested in Passive Index Funds

[aine45]

Age:
58
Spouse’s/Partner's age:
N/A

Annual gross income from employment or profession:
E60,000

Type of employment:
Public Sector pre 2012

Expenditure pattern:
Not a huge spender

Rough estimate of value of home
E320,000
Mortgage on home
None

Other borrowings – car loans/personal loans etc
None

Do you pay off your full credit card balance each month?
Yes

Savings and investments:
PTSB €151,000
Trade Republic € 53,000
Lightyear € 20,000
Credit Union €13,000
Standard Life PRSA (from previous employment) €59,000
Zurich €32,000

Do you have a pension scheme?
Yes, I’ll have a small defined pension (I’m not sure exactly how much. I’m pre 2012 but took time off) and I pay AVCs of €630 to PRSA Zurich which only began a couple of years ago

I will also receive a small UK pension of approx. £100 p.w from age 67. I don't have a full Irish pension but will contribute the shortfall for this year and next.

Do you own any investment or other property?
No.

Ages of children:
None.

Salary Protection insurance:

Yes but may cancel this year as I’m taking a year career break for the academic year. Will do some substitute work and travel overseas.


What specific question do you have or what issues are of concern to you?
I think my money could be better invested. I realise some needs to stay on deposit because I don’t want to risk losing all of it but I’m interested in passive Index funds covering a broad base of international companies and looking for the best way to do this. Also I think Royal London may offer better PRSA costs than my current one at Zurich.

I am a total novice and would be very grateful for any advice you can give me. I do have a financial advisor who I’ll be speaking to soon but I want to educate myself as much as possible before we speak so that I know what I’m talking about.



Thanks in advance

Á

 

[GSheehy]

Your Zurich Fund has 75% in (actively managed) equities and your Standard Fund has 75% in (passive) equities. That's hardly a coincidence? The advice of the advisor based on the information you gave him/her re appetite for risk?

You can change your PRSA whenever you want to. The advisor will give you a price on that. You can't buy a life assurance investment wrapper product via Royal London (yet). It may be awhile before they're in that space but other companies would have access to the same index trackers you're talking about. The selection on one of those is important as you don't have the same freedom to move as you would have on a PRSA.

PS: What fund were you in with Standard that made no money over 20 years? Was it a with profit that there was an MVA on or GARS?

 

[aine45]

Thanks GSheehy.
Re: Zurich, I asked my advisor to move it into equities. I don't want active so I might change that. The Standard Life one, I changed it myself. I actually don't know what fund it was in..I must investigate but it was less than useless anyway. Not with profit. I don't think either of the others, maybe some kind of bond.

Thank you for the information about investment wrapper product. Could you suggest or two that I could start looking into?

 

[BIG-notorious]

Yes, I’ll have a small defined pension (I’m not sure exactly how much. I’m pre 2012 but took time off)

Well I'd figure out what your defined benefit pension will be first. Depending on your scheme & service it could be anywhere from €30k per annum from 60 down to €5-10K per annum. Knowing that number will give you a good preliminary picture of what gap (if any) exists in your retirement financial planning.

You should be able to get confirmation of your length of service and the scheme your in from your employer. You should also be able to get an estimate of your current accrued benefits from your salary/pensions section pretty easily too. Just ask. Depending on your length of service you're already reasonably well set up for retirement I'd say.

After that I'd start by investing a big chunk of the €164k you have sitting in cash and then honestly I'd get to work on spending the rest. You can't take it with you and there's not really any point in leaving behind, especially when you don't have a spouse of child to provide for. The whole point of having money is to enjoy it, it's not there to look pretty on your monthly statement.

 

[GSheehy]

What role has the advisor to you if you're the one that's self-advocating what you actually want in terms of provider/products/funds/asset mix?

Aviva, Irish Life, New Ireland, Standard and Zurich Life would all have life assurance investment products that have access to Index Tracking Funds. It's really down to costs then, in terms of what you're quoted as an Alloation Rate and Annual Management Charge. You have to buy these through a regulated entity, so that could be a direct sales person or an intermediary/broker. Take your time on this choice as products can have early exit charges in the first couple of years and the tax regime makes it difficult to move if you find something at a lower cost later.

 

[ClubMan]

Yes, I’ll have a small defined pension

Defined contribution or defined benefit?
You should probably clarify your likely or actual pension entitlements will be in case you need to put more aside in pension savings/investments to provide for your likely expenditure in retirement.