saving approx 600 p/m for 2 yrs - options?

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marcellaf

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hi all,

This is my first post here although I've been lurking around this board for quite a while.

Brief synopsis of my financial situation:

Earning approx 2100 euro a month.

Saving 600 a month at the moment, direct debit in to a credit union account which has poor return (2%). Currently have 12k in there earning nothing really.

I do not own a house, nor do I intend to buy in the current housing climate. That is bar my dream house comes on the market for less than 250k, and in Galway that is just not going to happen.

I would like to continue saving but want to get a better return and also want to have access to some of the money at least without being penalised. I may possibly have to change my car in the next year or so and would need approx 5 or 6k to do that.

I am 28 years old and do not have a pension.

Could anyone advise me what my best options are from this point? I have a current account with AIB, so was considering signign up to their regular saver account and putting 300 euro a month in there. Would this be a good move do you think?

all/any suggestions welcome,

thanks.
 
You say you have an AIB account so it would be the best option to save their max of €300 per month (7.10%). If you have a spouse/partner another account could be opened bringing to your figure of €600 per month. If not you could open another one with Bank of Ireland for €300 per month (6.5%). Anglo Irish Bank and Halifax both offer 7% but their terms and conditions are more restrictive and probably would not suit you. Always be aware of the terms and conditions.
 
thanks for that. Do I need to have a Bank of Ireland current account first, or can I transfer to BOI from my AIB current account?

thanks.
 
Also make sure that your current a/c is the new "High Interest A/C" at least while your funds (up to €1500) are sitting there during the month waiting to be transferred to various locations they will be also earning a bit of interest!

If you have anything over and above in a particular month after feeding your regular saver a/c's you could transfer it into the aib on-line savings a/c (just set up the monthly dd for min amount €20)

Put the €10k in your cr union into Rabo and the balance into NR.
 
Marcellaf - the advice so far is good ... one question re your pension. Does your employer have a scheme?

One other point as well, there is no point transferring between BOI and AIB if you're already in AIB. Just set up a "regular savers" account with AIB for the first 300, and then put the other 300 in to one of the other accounts mentioned above (e.g. Northern Rock).

Bob
 
Thanks very much everyone, great to get some ideas to go on.

Bob, my employer does not have a pension scheme (only access to employee only contribution PRSA), but I was wondering if should still consider putting say, 100 a month in to a PRSA? And then the remaining 500 in to savings?

I will go ahead with the AIB regular saver for 300 for sure.

As for the other 200 per month, not sure if I should go with Rabo or Northern Rock.

If I was to move the money that is sitting in the credit union - or, 10k of it, should I move it all in one lump sum to Rabo/NR or what would be the best option?

thanks again.
 
ok, I went down to AIB this afternoon and am set up for the regular saver, first installment to be taken next week.

I will probably move 10k out of my credit union account in to Rabo direct.

After that, I plan on putting 200 each month probably in to Rabo also, and will continue to put 100 in the credit union in case I ever need a loan from there.

Does that sound like a reasonable plan? What about pension?
 
Why 200 into Rabo every month?
Once you go over the 10k savings with them then your interest rate drops to 3.75%.
Better rates on offer out there (BOI, Anglo) for regular savings even if you want instant access. You will have instant access to the 10k with Rabo in any case.
 
ok, I had forgotten the lower interest rate once you go over 10k with Rabo.

With bank of Ireland, can I just open 1 account and transfer to that account each month from my AIB current account? Or do I have to have a current account with BOI aswell as a saver account?

thanks.
 
If you want to open a BOI regular saver account as far as I know you must call into your branch personally with the relevant documentation etc., It is not necessary for you to open a BOI current account - you can feed it from your AIB current account. Give BOI the details of your AIB current account and they will set up the montly deductions mandate for you.
 
What about investing in shares? Say, bluechip companies like banks and large multinationals..
Seeing as you have chosen to go down the Rabo route you could also invest in some of the funds that they offer..you can start with as little as €100.
You don't seem to be planning on spending your lump any time soon so stocks and funds might be worth looking at.
 
I did think about shares alright but figured since I was only talking about small money that it wouldn't be worth my while. Plus, I know nothing about investing, and can't seem to get my head around it.
If I was to invest, the most I would be prepared to 'risk' would be 2k. Would the fees not outweigh any possible returns for this low amount?
 
Marcellaf - on the pension thing, if your employer doesn't contribute then I'm not too sure - it's marginal in my opinion, at your age, and given that you don't own a house. It might be better hanging on for another couple of years and investing your cash in a deposit for the house when you feel ready to get in to the property market. Pensions or not, you might want to have some kind of idea about retirement planning (maybe join the civil service :) ).

Bob
 
Bob_tg said:
Marcellaf - on the pension thing, if your employer doesn't contribute then I'm not too sure - it's marginal in my opinion, at your age, and given that you don't own a house. It might be better hanging on for another couple of years and investing your cash in a deposit for the house when you feel ready to get in to the property market. Pensions or not, you might want to have some kind of idea about retirement planning (maybe join the civil service :) ).

Bob
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I don't think it is marginal at all. At 28, you should have started saving for a pension and it is also the most tax efficient saving scheme there is. Even better than the SSIA! Not saying that you shouldn't continue saving for house etc but you should certainly put money into a pension. Check out the pensions board website to see how much you need to save to give yourself a decent pension. Gives you quiet a fright!
 
Sunny - Not sure I agree with you.

It may be tax efficient, but at 28 years of age, over the next 25-30 years inflation will erode any such advantage.

It might be a different story for a 35 or 40 year old, but my opinion is that anyone with surplus cash in their twenties without a house should think very carefully before handing over their hard-earned cash to a PRSA where the employer doesn't contribute.

Bob.
 
The Pensions Board is a body sponsored by the Government. It's in the Goverment's interest to get as many individuals as possible looking after their own pensions.

General Government interests and best financial planning for individuals don't always go hand in hand.
 
Bob_tg said:
It may be tax efficient, but at 28 years of age, over the next 25-30 years inflation will erode any such advantage.Bob.
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Bob,
Does inflation not erode all returns. I would have thought it does and therefore one may as well have the 'before tax' pension investment working for you over the next 25 years rather than a smaller after tax personal investment.
 
marcellaf said:
I did think about shares alright but figured since I was only talking about small money that it wouldn't be worth my while. Plus, I know nothing about investing, and can't seem to get my head around it.
If I was to invest, the most I would be prepared to 'risk' would be 2k. Would the fees not outweigh any possible returns for this low amount?
Click to expand...
Not necessarily - investing indirectly in shares through a low charges unit linked fund while choosing a fund with a suitable risk/reward profile that matches your specific needs might be an option. Probably should be part of a well balanced portfolio for most people.
 
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