Is this strategy sound?

[Left_Blank]

I'm 24 years old. My net worth is approx. €130k and I'm on track to clear approx. €150k this year (in total). My risk tolerance is very high and I plan on putting some money away for a long time (>20yrs). I have no debt at all.

I've been researching investment possibilities for a while now. What I want to do I think is invest a lump sum right now (say €5k) and then dollar cost average into my investment account month by month (say €1k or €500 per month).

Initially I looked at getting index funds and also put a % in a bond fund but I think the only way I can do that in Ireland is with ETF's. I can get them through a stockbroker here in but if I want to dollar cost average into the account I'm gonna get raped on fees. I think the cheapest I can find has a €25 minimum charge per trade.

So I think a better idea is to just put my money in some mutual fund with low management fees. Best I can find is a the InvestandSave.ie 'dynamic' fund with a 1%/year management fee and no exit and entry charges or restrictions. The fund is described as

an aggressively managed fund with a high equity content (75% to 100%) that aims to achieve long-term capital growth and income through investment in a well-diversified global portfolio of quality equities and equity-based financial instruments. It may also include from time to time some bonds issued by governments, supranational bodies and other investment grade corporate and non-sovereign bonds and/or bond based financial instruments. In terms of currency, the fund is managed from the point of view of a Eurozone investor.

Sorry I don't want to link to it in case this is taken as spam. Their fact sheet tells me that the fund has returned 10% annualised over the last 20 years. (It also warns that 'returns are based on offer/offer performance and do not represent the return achieved by individual policies linked to the fund' but I don't understand what that means??)

Will this setup be suitable for my needs? Sorry for the length of this post.

Thanks in advance for any help I get.

 

[Marc]

Hi Left Blank,

Well done on being in such a strong financial position.

"Offer to offer" means that the fund performance is being illustrated before the bid/offer spread or initial charge is applied. This spread can be as much as 6% of each contribution depending on the actual fund.

In terms of your age and projected income, I would also be looking at any tax planning you might be able to achieve especially pension planning.

I also agree with you in terms of putting your money into a mutual fund with low management fees and to answer your question, it is possible for Irish investors to invest into low-cost index funds without having to use an Insurance Company or an ETF and we offer a range of low cost equity and bond funds which allow precise tilts to higher risk asset classes such as smaller companies and emerging markets with annual management charges typically around 0.4%pa.

The core of a portfolio should be a global equity fund and the one we recommend holds over 7000 stocks offering considerable diversification.

Have a look at some of my other posts on askaboutmoney.com or visit our website:

[broken link removed]

All the best,

Marc

 

[spursman]

u are going to earn 150k this year but can only afford 500-1k a month. i do 1k a month and i earn 50k. forget about a pension, have you seen their return records recently, all they are able to do is lose money hand over fist.

people who are broke and have lost their jobs are trying to draw down their "pension" only to be told that its not there anymore.