# Long term financial guidance



## Guest116 (19 Oct 2009)

Hi,

I am 31, employed and looking for advice on how to manage my money for the long term.

I currently have a fair chunk of savings in the bank (115k) but no pension or any other investment. I have a mortgage with 26 years remaining and a total of 248k remaining on it, the mortgage is under control.

I want to build up a long term savings fund either through a pension or I was also thinking about investing something into an ETF. Should I invest 30% of my savings and future spare cash into an ETF? Should I start a pension? Do both?

Also, would anyone recommend a good independent financial advisor in the Dublin\Kildare area?

Thanks
Aris


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## goingforgold (19 Oct 2009)

Hi,

That is one large amount of money saved for somebody your age, I want to know your secret!

I think you should put your money into a pension, very tax efficient, and at your age you should start one.Because you have not been contributing to a pension you can also put a lump sum in before October 31st (20% of your income) and gain tax relief on this (For the 2008 financial year). You will need to consult your pension scheme/PRSA adviser to get more information on this.


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## The Edge (20 Oct 2009)

Aris,

I am in a similar position. The responses in this thread may also be relevant:

http://www.askaboutmoney.com/showthread.php?t=122950


However, I am also curious regarding the position regarding ETF's - how to invest, who are the best brokers to use, etc.


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## spursman (20 Oct 2009)

pay 100 grand off your mortgage.


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## Guest116 (20 Oct 2009)

Thanks for the replies. I have ruled out paying anything off the mortgage, or at least anything as high as that amount. I am on a low tracker rate of 1.55% (ECB + 0.55%) but I can get 3% on deposit. And as mentioned the mortgage is manageable.

I am more concerned about long term retirement funds either through a pension, shares, both or something else.

Maybe there are no easy answers.


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## Superman (21 Oct 2009)

aristotle25 said:


> Maybe there are no easy answers.



Yes there is - get a PRSA started before the end of October - look at LAtrader on this forum (I think...) for a low cost PRSA. They'll send on some documentation which you have to fill out and send on to pension provider (Zurich Life I think).  Make a lump sum of 20% of your salary into that.  All this must be done before the end of October. 

Also note you MUST contact Revenue about this payment before the end of October and tell them it is for 2008.  

This is the most tax efficient thing you can do - DO IT NOW.


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## ariidae (21 Oct 2009)

Nice position that you are in! Personally if I was you I would:

-Look at my current situation in life. In the next few years are you planning on getting married (needs money), having kids (they definitely cost money), needing a bigger house (stamp duty and the cost of moving). Do this so you know to keep some of your cash in accessible investments like a 30 day access deposit account as opposed to putting everything in a 10 year bond.

-Definitely contribute to a pension. Based on your age you will be able to contribute 20% of the salary you earned last year. The basics of what a pension is is located here: [broken link removed]
Once you understand the different types of pensions you then need to pick one. Look at the long term performance and the management charges. Some pension funds might be all equities, some all bonds, all property, a mixture. I personally would pick a mixed fund. The general investment rule is if you are younger you should invest in riskier asset classes (e.g. equities) but as you get older you should move to more secure asset classes (e.g. bonds).
As discussed above, you need to get moving on this asap to make a payment for 2008.

-Reduce the term on my mortgage. You did say you didn't want to pay off any of the mortgage but why don't you consider reducing the TERM on the mortgage (26 years is a lot). It will increase your monthly repayments but play with Karl Jeacle's calculator and you can see how much money you will save over the long term. http://www.drcalculator.com/mortgage/

-I would take a look at the Business expansion scheme to see if there was any interesting companies. It is tax efficient but risky. Personally I have always been interested in small businesses so that is why i'm including it here. More information here:
[broken link removed]

-I would definitely keep some money on deposit with the best rates I could find.

-I would look at something like a capital secured investment fund the banks often offer - something like:
[broken link removed]
[broken link removed]
Please note I have only just linked these to show you what a capital secured product is structured like, i'm not encouraging you to invest in these ones in particular. Research all the banks, call them up and ask them what capital secured products they have, what the minimum & maximum deposits are and what the performance is like to date.

-I have an interest in share trading, for e.g. if I like a particular company, I might buy some shares. I would open a cheap online broker account (people have researched them on askaboutmoney before) and buy some shares. This is very risky and only do it if this is something you might be interested in.

Basically if I were you I would diversify, diversify, diversify .. risky investments, not so risky, risk free (savings accounts).


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## Guest116 (21 Oct 2009)

Thanks for all the info espiecially ariidae.


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## Bronte (22 Oct 2009)

I too think your mortgage term is very long at 26 years remaining.  You say it's manageable, is it manageable if interest rates rise or you have a pay cut?

I assume you have no other debt?

In relation to financial advice what are your long term goals?


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## Guest116 (22 Oct 2009)

Bronte said:


> I too think your mortgage term is very long at 26 years remaining. You say it's manageable, is it manageable if interest rates rise or you have a pay cut?
> 
> I assume you have no other debt?
> 
> In relation to financial advice what are your long term goals?


 
I didnt think 26 years was too bad considering all the 35 and even 40 years mortgages that were taken out in the last 3-4 years. I have been paying the mortgage when rates were 4.25% and using some online calculators I have roughly figured out I would probably pay off some principal if ECB rates shoot up to 5% +.

I have no other debt besides the mortgage. I find it manageable because I also rent out two rooms in my house and also my salary has increased a good bit since I took out the mortgage in 2005. So I could handle a pay cut even back to 2005 levels.

Long term goal is to build up a good retirement fund. I would also like to buy a second property in 10 years time and rent out my current one.


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