Your credit card; the interest rate is going to be higher on a credit card so the less interest the better. A loan generally comes with structured repayments so the interest is pre-arranged however a credit card has minimum payment requirements; meaning as long as you pay these the bank is happy and the interest can continue to build for the rest of your life.
Not necessarily, you can do both. Compound interest in any savings/retirement plan is hugely beneficial so the earlier you start the better. A loan has structured payments and although you could clear interest early in some cases the benefits to starting your retirement plan are much greater.
Compound interest, tax relief and peace-of-mind. The benefits of compound interest are extreme; by John starting his pension at 25 rather than 35 (at 5,000 per year) his pension pot was $1.1m instead of $600,000. Yes that extra 50,000 over 10 years almost doubled his fund. With tax relief you take some of the tax you’re paying today and put it into your pension fund, yes really. The tax is added to your own contributions and both earn the rewards of compound interest between now and retirement.
Doing something now, means no more procrastination, no more shying from conversations. You have it sorted,
it’s done, relax.
Yesterday. There is no other answer; as long as you can afford the contributions you should start putting something into your pension fund right now. The quicker you start the quicker you can reduce your tax bill and earn interest on your contributions. If retiring early is on your wish list then this isn’t up for discussion, sipping Margaritas on a beach at 55 doesn’t happen without a plan.
If you put in €118 per month to your pension fund, your PAYE (Pay as You Earn) will reduce by €72. This is added to the €118 to make a total of €200 per month.
€200 per month earns your pension fund €2,400 in your first year. Let’s assume this grew by 7% last year…now you have €2,568. Now add your second years contributions of €2,400 to give €4,968…only this grew by 7% also last year so now you have € 5,315. So you continue to earn interest on your last year’s contributions and tax + all previous contributions and tax + all interest earned on previous contributions. Until in ten years you have put in € 14,160 from your own pocket but now you have € 50,216 in your pension fund..
No, would be my first answer. If you have to ask that question then you should be leaving it to people who are paid obscene amounts of money to manage the stock markets for you. Even you are investing the stock markets might not suit your risk tolerance. If your risk tolerance is high you’re your portfolio will likely hold some equities/stocks. If you are more conservative then the markets could be too risky a play
History tells us market crashes will happen, just hopefully not as severe as our last one. Your pension fund manager should know that the closer you get to retirement the less risky your fund should be. More of your allocation will be assigned to cash rather than equities. Learn what your fund is doing. There is no magic formula however, just know that markets go up and markets go down, but time should be your best friend
Trust and reputation go a long way. You need to be comfortable with your decision; therefore you need to be informed. A company that is open and transparent about their fees and performance is a good start. There has been too much grey matter in the complex investment world of late and not enough attention for the man/woman on the street.
When it comes to your funds potential performance then the past is the best indicator of future performance. Look at how the fund has done in previous years and how it has performed against any indexes e.g. S&P, FTSE, ISEQ.
No, definitely not. You worked hard for your money so you should make your money wok hard for you. Savings from a standard bank account are very poor, generally 0.5% real growth per year. If inflation is 3% then you lose 2.5% of your money every year. Investment plans come in all shapes and sizes; you can choose ‘lower risk – lower returns’ funds if that is what you like, but even these will outperform bank accounts ten-fold. ‘Higher risk – higher returns’ are for the more risk-accepting of us who may have a longer period before we need the funds.
Because we never know what tomorrow will bring. Let’s just suppose that the worst does happen, having a will in place dictates exactly where any and all of your assets will go. If you don’t then law dictates who gets what and what proportions, and it can get messy. A will eradicates any uncertainty of what goes to whom.
Use online resources to calculate your tax, there should be plenty. Failing that create an account on MyMoneyPlatform and look at the ‘My Income’ tab to see if it matches your pay-slip. In Ireland the first 32,800 of your pay is taxed at 20, the rest is taxed at 41%. Now you deduct your total tax credits from this amount and that is the income tax you pay over the year.
E.g. I earn 40,000.
32,800*20% = 6,560; (40,000 – 32,800) *41% = 2,952
Gross tax = 9,512
Tax credits; Single Person (1,650), PAYE (1,650), Rent (200). Total = 3,500
9,512 – 3500 = 6,012 tax per year.
Tax relief is an incentive by the government to provide a tax break to encourage you to partake in a certain activity; e.g. saving for a pension. The purpose is to incentivise you to increase payments to your pension so when you retire (young or old) you won’t be dependent on the state pension alone.
How it works; if you contribute €118 to your pension per month the government will take €82 from your tax bill and add these together. Now your total contribution is €200 per month and it only cost you 118. Plus when you think about it earning interest on €200 is better than the interest on €118.
Compound interest is interest earned on the capital plus interest from last year, not just the capital. It is what gives any savings fund legs. This rolls into next year and you earn interest on the total of (1st years contributions + 1st years interest + 2nd years contributions) and so on.
E.g. you have an investment that earns you 10% per year, you invest €10,000 per year
Year 1 = €10,000 earns 10% interest = €11,000
Year 2 = €11,000 earns 10% interest = €12,100
Year 3 = €12,100 earns 10% interest = €13,310
Time of investment and compounded interest are of huge benefit to long term plans. By starting your pension 10 years earlier you can retire 10 years earlier, so why wouldn’t you. Even come 55 you don’t want to retire then at least you have the option and security to whenever you want. By John starting putting €5,000 per year into his pension fund at 25 instead of 35, he retired with €1.1 million in his fund rather than €600,000. The best part is he got tax relief on his contributions and didn’t even notice the few hundred per month from his payslip
This is your emergency fund, in case something happens. It is an amount that should be easily accessible if any case arises where you need it that day. It could be hospital expenses, your car packs in and you need a replacement, damage to the house etc. At least 3 months of your total expenditure is considered a minimum amount, however 6 months would be better.
This is your perception of risk, do you love it, hate it or sit in the middle. Every individual has a different attitude to risk and has differing experiences with risk. You knowledge of how investments work will impact as will the proposed length of your investment. At the end of the day if you hate the thought of your money on the stock market you are better off in a low risk fund. If you have a long-term plan and hope to reap the biggest rewards then higher risk funds are probably for you. No matter what your tolerance is there are thousands of funds to suit your needs specifically, the trick is finding the best one
You have to factor in what debts you need paid off as well as what extra you want to leave to your family should the worst happen. For example, any mortgages, loans, credit cards or overdraft should be totalled and then take away the total amount of cover you have in place. If there is not enough cover then you need more. You also could factor in the impact the loss of your income to others; If you’re married, would your spouse have to gain more employment, would there be extra childcare costs etc. A rough guide is to estimate ¾ of your total salary due until your youngest child is out of college.
The total amount you need to cover; short-term and long-term debts and also if your loss of income will impact on others e.g. spouse and children, dependents. If it does then you could add on up to ¾ of your total income due until your children are out of full-time education. The direct and indirect costs must be considered. So as well as loss of income, add on mortgages, loans, credit cards, overdrafts. Knowing the total life cover required you can upgrade your cover, get a new quote for the total amount or decrease the cover you already have. If you do get a new quote never, ever cancel an old policy while applying for a new policy. Always be double-covered instead of in between policies.
No, no , no , no….no. Definitely not, always wait until your new policy comes in and you are 100% certain that you are covered until you cancel your old policy. I would go as far as to say make sure you are in possession of your new policy documents and don’t just have verbal understanding that you are covered. Always, always b double-covered rather than none. Worst case if something tragic happens and you die during that window, your estate gets 2 payouts. However if you cancelled your old policy your estate doesn’t get a single penny
Unfortunately the world revolves around money, and your world is no different. If your income stops everything else will stop too. You may have some short-term cover from work (usually 1-3 months) but what happens after that? If you had an accident or illness that prevented you from working then potentially you will have no income between now and retirement. An income protection policy will guarantee you receive up to 75% of your current salary until you retire. 75% is certainly a lot better than 0%.
Some advantages are obvious; if you cannot work for whatever reason you have a guaranteed income until retirement age, this is likely to be hundreds of thousands of euro. Some policies will carry extra benefits like a built-in death benefit that acts as extra life cover. You gain peace-of-mind knowing you will always have an income. Security in the knowledge that any repayments on large debts will always be covered. The disadvantage with any cover is that you will pay for something you might never need. And we too hope you never need it but just in case you are better having the cover
Yes. The government recognises the importance of protecting your income so much that you can use money from your tax bill to pay the premium. If you were paying the higher level of tax and your policy cost €30 per month you would pay only €17.70 from your pocket and the tax man pays the other €12.30 directly from your tax outgoings
Finding the right health insurance is a mix of personal desires, needs and costs. Basically the more you want the more you’ll pay. First you have to consider how many people the policy covers, just you, you and your spouse or the entire family. Then accommodation types can range from ‘Semi-private room in a public hospital’ to ‘Private room in a high-tech hospital’ (crème de la crème). There are then various add-ons you can avail of, each pushing your premium higher. Some only need the basic cover some want all the bells and whistles; you should also consider what are you comfortable paying for this cove
There are a few players in the Irish market, VHI, Aviva, GloHealth, Laya Healthcare. The Health Insurance Authority (HIA) have been set up to monitor the health industry have a website (www.hia.ie) that makes it easy to compare plans across the different supplier
Our advice is that yes health insurance is required to provide the best or most appropriate cover for you and your family if the need is required. We don’t know when an illness or injury will happen, we all hope it never does but we know that if it does the medical costs can run into the tens of thousands. Having the cover in place means that you don’t have to worry…if something happens, you’re covered
Stop! Honestly, this is unsustainable. You should always live within your means. The mistake a lot of people make is they get an income, any income, and then they spend and spend and spend. Spend too much; they get a loan or credit card…and continue to spend. This is a vicious cycle and will end in a crash. You need to plan; List out all your out-goings per month and categorise into the essentials and what you could do without. If you think there is nothing you can do without, look harder, there is. Your total income minus your essentials is what you have left for luxuries per month, and this has to stretch the entire month not just the first week. If after this exercise it’s apparent that you need a larger income to sustain your lifestyle, then do just that get a larger income by getting promotion, changing jobs or doing extra part-time work.
The first thing is don’t worry. There are a tonne of options for you and at the end of the day it is only money, paper scraped from a tree and given a value. There are structures set up to help you.
-First you should b sitting down and going through your income and outgoings in detail. Can you do without some of your luxury spending and direct this towards your debts. Can you pick up extra income through overtime, a job switch, another part-time job?
-The second thing is to talk to your debt provider and discus your options with them. Discuss the situation of your income versus your outgoings and debt outgoings also. They will want to see that this is a real problem, that you are not spending your money on other luxury items and foregoing the money due to them. They will want to see that you have been making a genuine effort to repay the loan you promised to pay back. Depending on the provider you may be surprised at how helpful they can be. At the end of the day they would rather you pay back all the money over a longer term (smaller repayments now), or even pay back some of the debt instead of declaring yourself bankrupt, in which case they will get nothing or very little.
-Third, In Ireland www.mabs.ie can walk you through all options in front of you and help put a plan in place
-Bankruptcy is an option yes, but should be the last one. You can also reach out to bodies built specifically for people in your situation..
If you know you need to start saving then congrats, because that’s half the battle. What are saving for; your kid’s education, new car, holiday…what are the timelines? Next decide on what you are comfortable putting away each month. Remember this amount is not fixed; you can increase/decrease it whenever you want.
Once you have found the amount you need to choose your risk tolerance. Do you want high risk or low risk and how long before you need the money? These will all weigh in on what kind of savings fund you invest in. With the vast amount of different types of funds for you to put your money into you will have to do your homework and choose one you are comfortable putting your hard-earned money into. Look at the past performance as well as fees and any penalties for early withdrawal..
The fact that you have one is good. You have many things to consider in your financial world, but some take priority over others. Protect your income first because if this stops then you have no income never mind some disposable income. Make sure you have the right life and health cover in place. Start or top-up your pension contributions to suit your retirement desires; the tax relief means your contributions grow up to 69% before they even hit the fund. What savings goals do you have? Getting your money into an investment fund is better than leaving it in a bank account which won’t even beat inflation (meaning you actually lose value on your money every year).
In our software we apply a weighting system depending on the prioritisation of each area of you finance. Below we list the priority table with a simple explanation to back them up Income Protection – if your income stops everything stops Life Cover – Ensure all short and long term debts as well as loss of income aren’t a burden to your family Pension – Benefits to retirement planning are extensive and necessary to have any standard of living at retirement. Rainy Day fund-at least 3 months expenditure should be immediately accessible in case of emergencies Health Insurance – Illness or injury can strike at anytime and bills can run into 5 figures in some cases Savings-Get your money working in a fund rather than rot in a bank account losing out to inflation
Rather than getting into a never-ending tail-spin of spending and debt, discover how much of your wages you need for necessities every month and subtract that from your net income. You should thn be considering protection of you income and life cover and discover if you can afford to start putting something small away to start a pension. It might sound premature but it will be the difference of you retiring at 55 or being forced to work until you are forced out at 70. Plus you get tax benefits as soon as you start.
Wrong. Starting your pension at 25 instead of 35 can mean you retire with €1.1m in your fund rather than €600,000. (assumes €5,000 per year at 7% growth) I know which one I would rather. The interest earned over that 10 year period as well as it being invested for an extra 30 years until retirement nearly double your overall fund size. You could retire early and not have a financial care in the world
To give you the best advice possible we need to consider everything. We offer a comprehensive financial review, meaning we take all variables into consideration to give you the best view of your finances.
Yes, 100%. We pride ourselves in our security and any information you give us is treated with the utmost respect and privacy. We encrypt the data using bank level security and all information is stored in Irish data centres for extra peace of mind.
The majority of calculations used in the personal finance industry are the exact same, the only thing that really changes is the input; that is the data from each person. After all there are only so many ways to calculate a fund. What we have done is advanced these formulas to include market best practices and central bank regulation. Financial advice is subjective afterall however we are more than certain that our sophisticated formulas and weighting systems provide you with the most accurate view of your financial needs.
Follow the steps in the software and let it do the hard work for you. We are automating the entire end-to-end process of financial planning so everything can now be done from the armchair
That is entirely up to you, but yes we would love you to be with us. We are only new but we have many big plans for the business and the software. We will continue to provide upgrades and new features.
The software provides you with an action plan for your finances, our advice is to follow that plan and implement the necessary policies if any. We will provide you with a bi-annual report of your finances based on the information you have already provided to us. Check in every now and again to you update your information so you always have access to the best-advice for your finances at that time