Starting a PRSA with zero earned income

[Robovac rider]

Sally's plan is to immediately invest a lump sum into a PRSA for 15 to 20 years. If this is invested into 100% equities it could give a better return based on the average yearly returns in the past, even if she eventually pays 40% + USC after taking 25% tax free, compared to investing into a life assurance providers bond which is subject to the 8 year rule and exit tax.
It is highly likely that she will in the future gain tax relief on some or all of her PRSA.

 

[Sarenco]

So, you think 40% income tax, plus 8% USC, plus (possibly) PRSI is better than 38% exit tax?

Also, an ETF will be a fraction of the cost of a PRSA.

 

[Corola]

Also, an ETF will be a fraction of the cost of a PRSA.

All the analysis so far has ignored this. The difference between 0.07% and 0.75% AMC after 20 years is difficult to overstate.

 

[Savvy Sally]

If we get a U.K. style ISA you would need to think about which option works best for you.

Very helpful case study, thank you Marc. Your point on the expected savings and investment scheme is valid.