# Invest €500 pm for 20+ yrs. Worth going to financial advisor?



## LilySP (13 Jun 2016)

Hi All,

I'm early 30s, working in the public sector, so have a public sector pension. I would like to start saving to have additional money to either use in my retirement or perhaps to allow me to retire early. I'm concerned about investing in an additional pension as I would like to have the option to access my money, potentially, before retirement age. So I am considering investing it long term to have a nest egg built so that I can use it how I choose.

I am thinking of putting €500 per month aside for 20 years and obviously want to invest it wisely. I'm thinking that maybe the best bet would be to go to a financial advisor, but I'm not sure if they only deal with large investments! Do people here think it would be worth my while or have any advise for me? I'm also wondering if I do go to a financial advisor, would I be better to go with one who has a fee based system or one who charges commission? Would it make much difference for the sort of sums of money that I'm talking about.

Any advise would be greatly appreciated.


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## Techhead1 (16 Jun 2016)

Open a trader account and invest in indices or etf like the vanguard s and p 500 or the FTSE(if you are feeling brave before brexit). Investing in the same indexes over time is called dollar or euro cost averaging. If the stock drops then the impact is marginalised as you have bought it at different price points over the years. Degiro acc is the cheapest. If you must invest in individual stocks I suggest solid companies with high dividend yields. Compound interest is your friend over 20 yrs. Be prepared for ups and downs and remember that the person investing your pension is likely seeing the same.


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## LilySP (16 Jun 2016)

Thanks for the reply Techhead1. I would be interested in investing in ETFs, but I feel that there are a number of issues, particularly if I want to invest regular amounts each month, rather than a lump sum up front. The lack of loss relief & the deemed disposal after 8 years (particularly awkward if I am investing monthly) is really putting me off going down this route. I've thought about US ETFs as they seem more feasible tax wise, but then there are currency exchange considerations.

I'm half thinking of going with a unit linked fund through the likes of Irish Life or Zurich, but the high fees associated with these are also off putting. But at least there is loss relief as everything is treated under the same umbrella and the tax is taken care of directly. Also, this is suited to regular monthly investments.

I'm new to all of this and still learning so i'm not sure if there are other options I should be considering. Hence why I'm wondering if I would just be better off going to a financial advisor. However, I'm interested in learning and doing this myself, but I'm not sure what other options I should be thinking about. Any other advise welcome!


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## Boyd (16 Jun 2016)

I don't think unit linked funds are good value. Their charges are very opaque IMO. Also, there are lock in charges in that they charge you in the event you need need to access the money early (less than 5 years I think).
I went through all of this exact thought process about a year ago. ETF, unit linked funds, UCITS, US domicilied, deemed disposal, DWT, direct share purchase etc etc. Its very overwhelming initially. Investing outside a pension is a pain by my investigation, unless you are buying shares directly, which I didnt want to do.
In the end I got disheartened and gave up. Someone on here suggested that overpaying an SVR mortgage is effectively a ~ 3% guaranteed investment return annually. You'd need to be getting ~ 7% annually on your investment to match this (taking tax into account). This may be something to consider.
Having said that, I dont have a mortgage currently. However, I plan on buying a house at some point in the future and have decided to save any money I had previously intended on investing monthly and use it to buy the house outright instead, thereby saving myself years of interest payments and hopefully almost 100K over the time of the same mortgage term. This is my approach to "investing" in Ireland outside a pension.


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## LilySP (17 Jun 2016)

It all sounds a bit disheartening alright. I see a lot of people here were looking into ETFs about a year ago but when Revenue issued guidelines on the tax treatment, most seemed to be turned off them. There was also some discussion back then on investment trusts as an alternative. I haven't really looked into this yet, so I might explore that option a bit further.

The advice on overpaying the mortgage is definitely good. I've actually been doing that for a few years now and my mortgage will be fully paid off in about 6 months, so I am looking for somewhere else to invest my money from then on. Some I will probably keep in a savings account (with rubbish interest!) which I can dip in and out of, some I will use to enjoy life a bit more and the rest I would like to invest for the medium to long term but this is where I am struggling to find something.


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## Techhead1 (17 Jun 2016)

I don't buy etf. They charge you for doing nothing. Buy stocks yourself in solid companies that pay dividends. Etfs are basically just the top companies in a currency. Rule no.1 is keep your costs down.


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## LilySP (20 Jun 2016)

Thanks all. Lots to think about over the next few months before I make any decisions.


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## Steven Barrett (20 Jun 2016)

Techhead1 said:


> I don't buy etf. *They charge you for doing nothing*. Buy stocks yourself in solid companies that pay dividends. Etfs are basically just the top companies in a currency. Rule no.1 is keep your costs down.



That's not correct. The weighting change all the time and the traders have to keep the tracker error as low as possible. If their tracking error is too high, no one will invest in them as the ETF will not reflect the index they are supposed to track. 


Steven
www.bluewaterfp.ie


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## aristotle (20 Jun 2016)

ETFs have a purpose too if you want diversification and\or a focus on a particular market, sector or type of company etc.

Say you only have 1k to invest and fancy Oil then buying an oil related ETF provides probably better exposure and probably less risk than putting all your 1k into 1 company.


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## Donnie16 (20 Jun 2016)

Look at something like LifeSave Savings plus from Zurich. you won't save anything by going direct so worth discussing with a broker.


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## Steven Barrett (21 Jun 2016)

The market for regular savings plans is quite poor. It obviously isn't a big market for insurance companies and not that profitable, so the contracts aren't very competitive. The best of the lot is Zurich Life. 


Steven
www.bluewaterfp.ie


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## LilySP (22 Jun 2016)

Does anyone know of brokers who are are doing execution only policies for Zurich? I've seen a few old websites offering this, but I'm not sure if anyone is still doing this.


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## Steven Barrett (22 Jun 2016)

The charging structure for the Zurich plan includes a commission structure for the advisor. There is no nil commission structure in the contract, it's one charge for all. 

Remember that execution only is no advice at all, not only with the contract but with the fund choice as well. I have had plenty of clients ask me for execution only and then pick 50% Performance 50% Balanced funds for diversification. Both funds buy the same, just different equity/ bond weighting. 

If you are putting in €500 a month, get proper advice, the advisor will be getting paid by Zurich anyway. 

Steven
www.bluewaterfp.ie


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## GSheehy (22 Jun 2016)

LilySP said:


> Does anyone know of brokers who are are doing execution only policies for Zurich? I've seen a few old websites offering this, but I'm not sure if anyone is still doing this.



Yes, I have a Zurich Life savings product available via InvestAndSave.ie on an execution only basis.

If you invest a minimum of €5,000 at the outset and contribute a minimum of €100 per month there are no entry or exit charges on the the product and the basic Annual Management Charge (AMC)is 1% of fund value per annum. Some external funds do carry a higher AMC.

In addition, if you contribute the minimum premiums we will (currently) absorb the 1% Government Levy by giving an allocation rate of 101% on each contribution for the duration of the contract.

There is a handy *'Risk Profiler'* on the Zurich website to assist with your investment decisions.


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## LilySP (24 Jun 2016)

Thanks, will look into this.


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