I have a similar Irish Life PRSA policy to MandaC and am also questioning the point of continuing.
Perhaps someone can answer this question which might allay our worries: is it true that more investment units are bought with a monthly contribution at present since the value of the fund has dropped as I assume have the unit prices and, therefore, we would have more units than had the values remained high?
I have a standard PRSA with Irish Life which I took out only at the start of this year. It is invested in the standard Fund(Consensus Fund S)
Since I took it out my value has dropped over 25%.
I am paying €400 per month into it before tax relief. Given the current state of the market, should I reduce my payments or freeze this.
I know Pension is for the long haul (I have almost 28 years left on it) but to be honest I am sorry I took the thing out now instead of just sticking my money in the Bank. Only good thing has been that I get the tax relief, I suppose.
[Personally, for what it's worth, I think bank shares were overinflated much like the .com bubble shares were over inflated, and the bank share prices were high because a lot of people who invested in them weren't in the know about their exposure to sub prime. So if you have confidence in the banks, invest in the market, if not, you probably shouldn't.
PS I am not a vested interest!
Luckily its not worth much, if only great minds like yours were around in the banking commumity maybe this global crisis would have been averted all would be rosy in the banking sector
If you are concerned about market performance switch to a cash fund with no risk on your investment performance (again not advisable for someone investing long term), it makes no sense to stop your contributions if you are a high rate tax payer, surely anyone can see the benefit in that.....
That 5k was tax free so depending on what tax bracket you were on you gained 1k or 2.2k straight away so you haven't 'thrown away' €1,250 as such. Of course in a years time you could be saying that it's worth 10k now. That's the nature of the beast.No its actually worse - I pay €333 per month - but what is cheesing me off is that I paid a lump sum of €5,000 bonus through work (whereby I had an option of taking this another way and would have got the value of the full €5k) so out of that €5K I thrown away a quarter of this ie, €1,250. My fund is actually down approx €2,500 since February.
What part cash & depposit based funds didnt you understand, i thought i made that point earlier, a person doing a PRSA does not have to invest in the markets if they are concerned about risk, although as LDferguson points out this is the correct strategy over the long term, By the way i am an accountant and a QFA for what it's worth, i do believe in pensions for people over the long term. I think the problem here is fear and lack of knowledge, no one wants to see people lose money, but you have to put it into context over the long term.
Your comment re losing 41% etc are not benificial to anyone trying to decide on a strategy to fund for retirement.
I do not want a slagging match my friend your entitled to your opionion of course
If you're on the lower tax rate you've actually paid in €2,960 (Tax relief 20% & PRSI relief 6%) if you're on the higher rate you've paid in €2,120 (Tax relief 41% & PRSI relief 6%) . So either way you've made money
That 5k was tax free so depending on what tax bracket you were on you gained 1k or 2.2k straight away so you haven't 'thrown away' €1,250 as such. Of course in a years time you could be saying that it's worth 10k now. That's the nature of the beast.
In my opinion you have your answer right there.My poor boss is up for retirement this year and his fund has literally evaporated before his eyes. I know the funds can rise and fall, but what if there was another financial meltdown like this one in the year I am due to retire?
I'm never sure about that logic. Surely the tax relief attached to pension contributions is just tax deferred. You don't pay tax on it now but you will when you come to draw down the pension - so the only advantage is that you might be paying then at the lower rate. Surely the tax advantage on the whole is only the difference at most between the lower and higher rates at best?
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