Pension or investing

Darth Rabbit

I'm 30 years old and have decided to start contributing seriously to a pension. I will put €5k each year but wonder should I just set up an account Goodbody or Davy and decide where I would like to invest .. cautiously I might add.

AngleseaStBull

Darth Rabbit wrote: »

I'm 30 years old and have decided to start contributing seriously to a pension. I will put €5k each year but wonder should I just set up an account Goodbody or Davy and decide where I would like to invest .. cautiously I might add.

Who's going to look afteryour money more diligently? You? Or a commission driven trader?

AngleseaStBull

Darth Rabbit wrote: »

I'm 30 years old and have decided to start contributing seriously to a pension. I will put €5k each year but wonder should I just set up an account Goodbody or Davy and decide where I would like to invest .. cautiously I might add.

Who's going to look afteryour money more diligently? You? Or a commission driven trader?

Cute Hoor

This is a no-brainer imo, invest in a pension fund, if you are paying tax at 41%. You will get a tax refund on all your pension investment so effectively your €5,000 annual pension investment will only cost you €2,900. The pension fund will be investing that money for you and hopefully getting a reasonable return. Pension funds have been doing relatively well over the last 2 years (up 25% in the last 15 months!), this is obviously no guarantee of course of future growth and pension funds dropped something like 35% in the crash.

You would need to be doing pretty well investing yourself to beat those rates particularly when you take the tax element into account. That tax break may not last, serious discussion over the last couple of years of standardising the pension tax relief at something like 30% to give lower earners a more equitable break.

I have no connection with the pensions industry, just my thoughts.

Frogdog

I'm going with the pension also, simply because of tax reasons. With my employment, my pension contributions (AVC) are taken from my salary before tax.You might be in a similar situation.

robp

Darth Rabbit wrote: »

I'm 30 years old and have decided to start contributing seriously to a pension. I will put €5k each year but wonder should I just set up an account Goodbody or Davy and decide where I would like to invest .. cautiously I might add.

I suspect higher pretax returns would achieved by investing (S&P500 up 29.60% in 2013 ) but as mentioned twice already taxation probably would make a pension fund superior after taxation. I guess it also depends on what you want the money for?

RobertKK

I have two accounts, one for self investment and one for self managed pension.

At least that way one has access to money if needed, while looking after one's future with the pension.

The J Stands for Jay

You mention Davy in the OP. They have pensions where you can do the investing yourself. Possibly the best of both worlds.

Johnny Jukebox

Irish Life also offer a self investing pension product.

SBarrett

There's loads of self directed pension options where you can do all the investments yourself. Your danger of course is a lack of diversification. You won't get too much of a spead with €5,000 a year, whereas with a unit linked fund your money gets added in with everyone else's and you get economies of scale.

Or you could go with passive funds or indexes.

Goodbody and Davy use a huge amount of funds themselves instead of buying individual shares


Steven