Now Ye're Talking - To a Financial Broker

tailgunner

I've just turned 30 and really need to start a pension. The company I work for doesn't have a pension scheme, so I'll have to organise it myself. Thing is, I currently live in the UK, though I intend to move home within the next five years.

I want to set up a pension fund at home, and pay into it from the UK. Is this feasible? To be honest, I'm pretty clueless about the logistics/legalities around paying into an Irish pension fund from abroad, particularly around tax.

Please ignore if this is outside the scope of the thread, really enjoying it so far.

Bacchus

Very interesting AMA...

How do mortgage brokers make money off of clients? I've spoken with one and he's great, I'm getting all this advice and leg work done sending out applications to banks and he's not charging me a thing. Is it going to come to the point where he says, right we've done all this work but to do the next step you'll need to pay €X? Or is it a case that the banks pay him a "finders fee" of sorts for bringing in business?

I'm A Financial Broker, AMA

NotCominBack wrote: »

Whats the point in Life Insurance, as when I'm dead I cant collect it?

Life Assurance is mainly for the people left behind (family/children/wife) and to bury you.

If I died there would be no income coming into my family. If my wife died, I would have to pay somebody to take care of my children!

I have life cover to pay off my mortgage in event of either of us passing away. We also have life and Serious Illness cover that would keep us going for 10 years (billwise).

If my wife got cancer, it would be nice to think I could take time off work (or work less), to take care of her. Having extra finances would facilitate that!

Life and Serious Illness cover are not things you want to be claiming on, but its those left behind who will really appreciate it.

Incidentally, for anybody applying for these covers, never let a life company penalise/rate you if you are getting checkups due to an inherited gene issue. My wife inherited the BRCA2 gene and I applied for Life & Illness cover immediately. They tried to medical load her because she was getting regular breast checkups and the life company said that it meant "her doctor has good reason to suspect she might get breast cancer".

I pitted one underwriter off another and made the argument that the only reason she was having the checkups was because of the gene, not because there is anything physically wrong. Got her in at normal rates, but it shows you have to be on the ball with medical stuff like this!

I'm A Financial Broker, AMA

Tompatrick wrote: »

What was your salary last year?

My salary is different to what the company made. I drawdown a small salary because there are significant expenses (including paying for goodwill of client base I got) that wont be around forever!

My accountant is always pushing me to drawdown more income, but I am trying to build up a reasonable credit (don't do overdrafts!). I've actually already paid my taxes until next year!

Lets just say, if there were no extra expenses I could make €80,000+ (Gross) a year. Currently I am getting much much less then that!

I am not particularly sales driven as a broker, so most of the business I get is maintenance of existing clients or referrals of new clients. If you are driven to get sales and people like you (character) you can make a killing in this industry.

Unfortunately the reason many rogue/bad brokers succeed is because they have a certain personality traits and optical looks (flashy suit, flashy car, certain confidence/arrogance) that people are "sold" on what they see. That's why my strategy of working with clients (inform, discuss and review) is less successful (financially for me). People want to be sold a dream and I just don't do that!

I'm A Financial Broker, AMA

somesoldiers wrote: »

In your experience is it a deliberate policy of Health Insurers to refuse every large claim in the first instance and constantly change health plans so that no one knows where they stand?

I cant speak from a professional perspective as that's not my area of expertise (I presume you mean health insurance like VHI etc?).

However, I have an extremely cynical view of major corporations , particularly when there are only a few of them running the show. If there wasn't a regulator, they could rip everybody off and make things extremely difficult for their customers. Does anybody think these companies would be better if they self regulated ?

In the case of your query, I agree completely that it suits the Health providers to have confusion in the marketplace, particularly about available plans. I refer people to www.hia.ie to compare plans.

I must say that my mother has never had a huge hospital claim refused and she would be in hospital on average once a year. But that's not to say that it doesn't go on.

I'm A Financial Broker, AMA

somesoldiers wrote: »

What do you think of the proliferation of financial "educators" that have sprung up in Ireland in the last 10 years, offering to train people on spread trading, risk management and the psychology of trading etc? Has anyone ever come through this that you have heard of and actually made any money or are they better leaving it to the professionals?

That's an interesting question and the short answer is that I haven't had any dealings personally or with clients who have come across it.

I suppose I can only speak from the culture I have grown up in. I don't get into advising about specific Stocks/shares because I don't want to get into stockbroking and that's a service I don't want to provide. I have specialized knowledge in mainstream funds of the mainstream Life & Pension providers.

I feel that the kind of service I would like to provide is more about helping to guide people through their investment Journey. Some people like to take more risks then others and I try to tailor my advice to each person.

Some people might say to me stuff like "well I heard I can make 10% on this investment or that stock" and I say to them, "have you considered that might go down 10%?".

One local businessman who I do personal business with, said he would like to reciprocate and place business with me. He moves all his Pensions to me. I told him that one of them was setup wrong and tried to review what he was invested in. He refused to accept it was setup incorrectly and didn't want to change around his pension at all!

In short, he moved his business to me in his mind "as a favor", but didn't want to take any of my advice. His accountant was putting pressure on him to meet up with a broker about "wealth management". I asked him what he meant by wealth management (can mean a lot of things) and he couldn't tell me.

So he moved to this broker. Phones me a few months later "you were right". The pension was setup incorrectly, he ended up with a tax bill and he wasn't happy with the way this broker administered everything. "I couldn't get a hold of him once he got paid".

I said I would help him get it sorted, but things settled down. After a while he decided to stay with that broker. Anytime I see him he complains about the broker but he doesn't move and change. I sent him a letter confirming that he has no business with me currently because clients like that will turn to me when the sh*t hits the fan but revert back to the flashy salesman when it comes to do business.

I know that's slightly off topic, but what I am trying to say is, if you want to play the markets yourself, start off with a lump sum that is not majorly significant to you. Peoples personal investments create emotional responses that can lead to gambling behaviour - I lost 10% in this investment, how can I make it back? Can you make investment decisions based on an objective understanding of the options or is there a chance you might make emotional decisions based on how you feel about the performance?

An adviser is not for everybody, but if you find one you trust, I believe they can be very helpful when you are trying to decide where to put your money. If your value drops and you get concerned, an adviser can help you make a professional decision (not an emotional decision based on losing money).

I'm A Financial Broker, AMA

Gebgbegb wrote: »

3 Questions

1. What do you think of presentation in the material sense (suit,shoes,watch,pens etc.). Do you think it's necessary to 'present' some expensive bling to show the client that you have the resources/acumen to afford good quality stuff?

2. Conversely... would you be adverse to taking advice from someone dressed in what you would consider a 'cheap suit'?

3. What type of car do you drive? (I'm guessing Audi:pac::pac::pac:)

1. I hate wearing suits. I wear slippers and comfortable clothes in my office (at back of my house). This is the part of business that I dislike because I dont want to be a part of it, but in many senses I have to wear one so people dont think they have an "inferior" broker.

It harnesses smuggy, self important sales people who get a confidence to the point of arrogance that they have done little to deserve. That said, we have to awknowledge that its successful. Most people judge salespeople on how they look, not on how they perform. Its no different to asking why dodgy policticians keep getting elected. People will vote or do business with people who they either like or like the look of!

2. I am quite odd in that I enjoy figuring out human behavior. I never go with a pushy sales person, in anything. Even if its a good deal, I instinctively withdraw from engaging with people of that nature (thats just me). How a person dresses is not as important as how they act. That said, if a person is too relaxed (messy clothes, less then average attention to their appearance), they would have to really resonate with me personally for me to engage in any business.

3. I have a Nissan Primera, but would love an Audi.:o For all my whining about those kind of brokers, I have always wanted an A4 or A5. In saying that , my own accountant is always saying to me that I need to buy a car that projects the image that people expect. I was talking to him about buying a family car and he said, make sure it "looks professional". People might think my accountant is being cynical, but hes completely right. I can give the right advice , the right way and have the looks.

I'm A Financial Broker, AMA

December2012 wrote: »

What percentage of my income should I put into a pension? I have about 400 each month after childcare / mortgage. I'm currently saving that. Late 30s.

In theory, people should try and put in as much as they can into their pension. You can put anywhere from 15%-40% of your income into your Pension, but its all dependent on peoples personal circumstances. There is no point in me suggesting you put the maximum into your Pension if you cannot afford it! People who value Pensions put more into it and people who dont either dont have one or don't put too much into them. I hope this does not come across as condescending, I am just trying to say that its not as straight forward as giving you a specific number.

Bearing in mind I know nothing else about you, I will try to give you an idea of what you need to consider.

Step 1. Have you 3-6 months emergency savings on deposit or easily accessible? So for example if you needed roughly €3,000 a month for priority bills, you should try and build up anywhere up from €10,000 - €20,000 in savings.

Step 2.Are you self employed? If so, have you looked at Income protection? How would a drop in income due to illness or injury effect your family? If this is not a priority, move on to step 3.

Step 3. Have you Life Assurance and/or Serious Illness Cover? Have you enquired about the cost? Do you understand what these covers can do for your family? If you are happy you understand these benefits and dont need them, move on . .

Step 4. Now you are ready to look at the pension question. If you are on the higher rate of tax, you will be entitled to up to 40% relief on your contributions (usually closer to 33% net after other taxes taken into account). If you have €400 disposable income (after tax) to put into a Pension, in theory you should be able to contribute up to €600 (gross) into a Pension at a net cost of €400.

I wouldn't necessarily recommend that you put all disposable income into a Pension purely because I think it makes sense to diversify your savings. Being younger and having children, it would be prudent to consider continuing to save a portion of that in your "emergency fund" I mentioned.

There are savings plans with Life & Pension companies but they are only ok in my opinion. If you want to grow your savings and dont intend on using it for 20 year+ (college fund, alternative savings fund thats not for emergencys) then its worth looking at.

Just to give you an example. I have one client, divorced, living on their own, coming up to retirement. They have a huge pension pot, but also have other significant savings that means their Pension will compliment their savings (two differant forms of income after retirement).

This woman makes €60,000 a year and puts €24,000 into a Pension annually. She knows she gets 40% relief on the €24,000 and that she will be getting a subtstantial tax free lump sum when she retires.

I think thats where most of us would like to be at her age, but she started saving small into Pensions at an earlier age. She always valued a pension and she constantly increased what she put into it!

Just contributing to a Pension can help you get an appreciation for what it is and why you are doing it.

Thargor

Thanks for doing the AMA:

1. What would you advise a 30 year old with no dependents or debt saving 1200 a month to do when they have no pension scheme and their employer does not offer to match pension payments or any form of pension at all.

2. What would you recommend for a 30 year old with 75k sitting in prize bonds earning nothing.

Open to all suggestions, med-high risk appetite. would be more interested in gains now than a comfortable retirement.

mahamageehad

I'm 25 and living in Germany for work for now. I foresee quite a bit of travel over the next few years. I'm in an industry where you tend to move after a few years. No kids so a lot of disposable income. Should I be thinking about pension now? I mean, it seems so far away. And even if I should, what about the logistics? What if I don't know know where I'll live when I'm old?? How much should I be putting away (I currently save nothing except into my travel fund). Sorry if these are all really basic, I've never thought about this before until this thread!!!

I'm A Financial Broker, AMA

orthsquel wrote: »

Do mergers and acquisitions of life and pension companies (e.g. Canada Life absorbed into Irish Life and Permanent, which is owned by another entity) make your job harder or easier (since they may have similar and different offerings and different underwriting criteria)? I would assume it would be up to you to update yourself with any changes, but would they be forthcoming in any requests for information you make (or whatever way you go about it)?

Out of curiosity, do many people when seeking financial and other advice from you, volunteer where the money comes from? I assume you obviously don't and can't legally ask, but do people willingly tell you anyway as a means to provide context and background? Do you get many people seeking financial advice after winning a big sum on the lottery? What would be the most common reasons - where people have volunteered the information - they have the lump sum and need the financial advice?

You mentioned about fraud in a post above... do you ever get people looking for financial advice to launder money or put money out of the reach of the tax man, or away from family members? If someone you suspect is looking for financial advice and has indirectly indicated or declared or accidentally revealed the money is from criminal activity (e.g. theft, embezzlement, general criminal activity asset and money laundering) are you obliged to inform the authorities of suspicions? Maybe you have never been put in that situation, but would something like that be fairly common and something to expect?

Mergers dont effect me too much, but they can be a bit of a pain during the transfer over period from an administration point of view. You can also see a differant change of strategy/service depending on what organisation is taking over!

In many cases when people come to me to do an investment there is a question asking where the funds came from. I have to take it on good faith that people are telling me the truth (won money, inherited money etc), but if I suspect that there is anything dodgy, I am obliged to report it. Reporting it does not imply guilt, but it means I have highlighted it and made the authorities aware. Its up to them what they do with it then.

Never had a lotto winner, but do get people with significant inheritance money. Most of my clientbase would of been with my dad and are very happy to discuss all aspects of their finances (including where they got their money). I am unapologetic when I ask people personal questions about their savings. If I don't have all the facts I cant advise you properly and if you have something to hide I don't want to be your broker!

I dont get people asking me directly about money laundering but have had people ask for example "whats the most efficient way of getting money out of a safety deposit account?". I clarify that I cannot help people money launder and that they are obliged to pay taxes on all income.

Luckily for me, I dont have a client account so I never have anybodys money. It goes directly into the company its being invested in and usually it has to be a bank draft or personal cheque. So in that case the banks or financial institution has had to do its own money laundering and there is an extra level of protection (for me) in this regards.

If a person wants to money launder, they are better off using a broker who only focuses on the commission they will get from the investment. It might sound like I am being self righteous , but while I am not perfect/infallible by any means, I value the clear conscious i get with trying to do best by my clients within my own ethical compass. I accept that if this profession doesnt work out for me, I at least tried it my way . .

I'm A Financial Broker, AMA

johnny osbourne wrote: »

could you loan me a fiver?

No.

Thanks for that. . Easiest post yet . .

I'm A Financial Broker, AMA

gordongekko wrote: »

Why are pension charges so high? Looks like the financial industry is on the win win when its the customer that takes the risk.

Yeh, I dont know if this is as clear cut as "are the charges high"? I have a friend in a very similar situation working in his own brokerage and he thinks they are high and reverts to cheap as chips pensions for clients.

There are some things to consider. If you are looking to protect your capital (not lose or make money) , then yes, they can be proportionately high.

But if you look at the fund in proportion to the expected and consistant performance it sort of gives you a broader idea of "cost". By that, if you are in a fund that generally performs between 5%-7% per cent per year, is a 1%-1.35% management charge, is a net gain of 3.65%-5.65% worth this cost?

Is it unfair that a Life & Pension company makes money whether a fund does good or bad? In some regards it is, but in another they arent in my opinion a direct comparison to stocks and shares. The idea of many of the funds I advise on is that they can be like a supermarket (one shop for everything) for people not looking to pick and choose with stocks to purchase. They have a little bit of everything (diversification is the buzz word!).

As I said in a previous post, I prefer the newer real return funds that have a build in risk strategy to remain within a certain volatility. Most people don't want to play the markets or do their own research, so a big part of the management fee is paying for the expertise of others to do that work.

So, in summary, I think the cost of a policy in most cases is more dependent on the fund return then the charge. Whats the point in being in a cheap (0.5%) fund that regularly makes nothing or has erratic performance? There are more often then not positive years then there are negative so even if we changed to performance related management charges I think people would end up getting little benefit (as companies would make more in the regular positive years). Its mainly when the fund values go down that people focus on the charges.

I'm A Financial Broker, AMA

Nichard Dixon wrote: »

What (4 ) key questions with a 6 figure sum should a customer ask a financial advisor about proposed investments?

I will give you some questions, but before anything I would recommend that either you trust the broker/adviser or have been recommended them by somebody you trust.

If you are challenging me to give you 4 key questions (in no particular order):

- Charges
- Strategy/recommendation (Why this?)
- Flexibility of recommendation (access to funds - alternative options within this strategy?)
- Strength of company money is being invested in

These are some sort of questions you should consider:

What is the worst performance year of this fund?
How do I know my investment is safe, particularly if it is not a mainstream investment company ? ( the company offering the investment)
How long should I leave the funds invested in this fund?
Is it locked away or can I get access to the funds at any stage?
Can I move the funds around this strategy or am is it limited to this fund?
What are the charges of this fund/option?
How did you decide that this was a suitable strategy for me ?
What companies do you advise on ? (at least you know what the broker is limited to).


I think the more questions you ask, the more informed and confident you will be in the recommendation.

I'm A Financial Broker, AMA

To Elland Back wrote: »

Is there any chance of the various Health Insurers being compelled to reduce the number of plans available and simplify their description of cover? At present it is impossible to shop around at renewal

I am afraid this is not my area of expertise. That said, I wouldn't hold your breath! I would refer you to www.hia.ie but I cant honestly say if they will be able to answer your question. Sorry . .

I'm A Financial Broker, AMA

tailgunner wrote: »

I've just turned 30 and really need to start a pension. The company I work for doesn't have a pension scheme, so I'll have to organise it myself. Thing is, I currently live in the UK, though I intend to move home within the next five years.

I want to set up a pension fund at home, and pay into it from the UK. Is this feasible? To be honest, I'm pretty clueless about the logistics/legalities around paying into an Irish pension fund from abroad, particularly around tax.

Please ignore if this is outside the scope of the thread, really enjoying it so far.

I am not aware of any mechanism (that's not to say there isn't, I will stand corrected!) where you can work in the UK and put money into a Pension in Ireland.

However, the key thing with a Pension is the tax relief on Income. If you are paying income tax in the UK, it stands to reason that you can only claim tax relief within a pension in that country.

If you save in a UK pension you should be able to transfer it across to Ireland if/when you return home. I cant say I have ever processed one of these transfers, but our industry is always maintaining that there is an agreement in place between Ireland and other countries (including the UK) that facilitates a smooth transfer.

If we all accept this, you should not be concerned with saving into a UK pension because you should be able to transfer it to Ireland. Its a question you should ask the UK pension provider when you are looking to set it up. "Can I transfer my Pension to an Irish Pension provider if I move country and if so what is the process of doing so?.

Obviously your Pension will be in sterling, but you will get whatever the Euro rate is at the time of the transfer.

I'm A Financial Broker, AMA

Bacchus wrote: »

Very interesting AMA...

How do mortgage brokers make money off of clients? I've spoken with one and he's great, I'm getting all this advice and leg work done sending out applications to banks and he's not charging me a thing. Is it going to come to the point where he says, right we've done all this work but to do the next step you'll need to pay €X? Or is it a case that the banks pay him a "finders fee" of sorts for bringing in business?

Most Mortgage brokers get paid a commission from the mortgage lender. It can be a percentage of the mortgage, 1% seems a fairly standard fee. Most mortgages are around €200,000 and many mortgage brokers can also do your life cover.

If a person comes to me for a mortgage in above example, I might get €2,000 commission for the mortgage in above example and then a life policy of say €50 per month might pay me €600 in commission. So thats €2,600.

The gas thing is that if a person goes directly to a mortgage/insurance provider , they end up spending the exact same (or possibly more in life cover case) and not getting assistance from a broker. I know commissions aren't always best for the client, but the way they are setup in this scenario makes it more worthwhile for a person to use a broker at a neutral/cheaper personal cost!

I'm A Financial Broker, AMA

Hi guys,

Thanks for all the questions.

I will try and get back to answer more questions later today or over the weekend.

December2012

I'm A Financial Broker, AMA wrote: »

Bearing in mind I know nothing else about you, I will try to give you an idea of what you need to consider.

Step 1. Have you 3-6 months emergency savings on deposit or easily accessible? So for example if you needed roughly €3,000 a month for priority bills, you should try and build up anywhere up from €10,000 - €20,000 in savings.

Step 2.Are you self employed? If so, have you looked at Income protection? How would a drop in income due to illness or injury effect your family? If this is not a priority, move on to step 3.

Step 3. Have you Life Assurance and/or Serious Illness Cover? Have you enquired about the cost? Do you understand what these covers can do for your family? If you are happy you understand these benefits and dont need them, move on . .

Step 4. Now you are ready to look at the pension question. If you are on the higher rate of tax, you will be entitled to up to 40% relief on your contributions (usually closer to 33% net after other taxes taken into account). If you have €400 disposable income (after tax) to put into a Pension, in theory you should be able to contribute up to €600 (gross) into a Pension at a net cost of €400.

........

Thank you very much, that's what I had thought. I was going to save for a few years first to get the nest egg up and running. Have the life cover, need to look into income protection!

I opened a PRSA a few years ago, which I had to reduce to nominal contributions a few years ago when the recession hit.

Do you think people in Ireland don't plan for retirement enough?

Solomon Pleasant

I'm starting business in college next week.Would that be a relevant quailification that would enable me to work in your field?

bungaro79

thanks for the great info so far.

what would you say are the top 3 things someone in the 30's, with a young family and 5 years into their mortgage, needs to have sorted financially?? and where are people getting ripped off by their lack of financial knowledge ??

orthsquel

Very interesting AMA, thanks for the responses!

You mentioned and I've interpreted that the best way to get a broker is by getting a recommendation and see how you get on with them... what if you don't know anyone who knows or engages a broker? How would someone best go about finding one? (I wouldn't necessarily trust what google came up with) I did find the IBA and the PIBA, both which are representative bodies for Brokers, I don't see what the difference is and am a bit puzzled that there are two separate entities doing the same thing (I found IBA first last night and PIBA just now) but both provide a database of Brokers (members) to choose from. Is there any difference from a consumer's point of view?

secman

Just reviewed my annual statement from my life assurance provider... as well as having the main policy on myself and wife there is a policy referred to as a Cap policy. The monthly payments have jumped considerably over the years, but the pay out remains the same , unlike the main life cover policy which is indexed. I looked at the current encashment value and took into account what I would pay over the next 7 to 10 years.. I would only get roughly the same
Current value plus my monthly instalments back in 7 to 10 years from now
But the buying power of the current encashment
Value would be greater than that of the future value. Seems a no brainer to cash it in now.
Don't get the purpose of a CAP policy ?

Ken.

I have €500 to invest in cheese. Which cheese would you recommend?.

RedXIV

When should I look into engaging with a financial consultant? I'm on a good salary with 3 kids, no mortgage at 28. Have a rough plan but never gotten any financial advice before.

FURET

What expertise do you feel you have, exactly?

How would you make the case to yourself for recommending actively managed funds over low cost passive index trackers?

And now, how would you make the case to your clients for actively managed funds over low cost passive index trackers?

Also do you think that having a client who is ignorant about investing fill out a questionnaire is a satisfactory way of gauging their ability to take risk?

I'm A Financial Broker, AMA

Thargor wrote: »

Thanks for doing the AMA:

1. What would you advise a 30 year old with no dependents or debt saving 1200 a month to do when they have no pension scheme and their employer does not offer to match pension payments or any form of pension at all.

2. What would you recommend for a 30 year old with 75k sitting in prize bonds earning nothing.

Open to all suggestions, med-high risk appetite. would be more interested in gains now than a comfortable retirement.

Again, bearing in mind I don't have all the variables, I will try and give you some suggestions to consider in relation to Life & Illness, Income protection, Savings/Investment and Pensions.

1. Since you dont have ANY dependents, for you personally, the most important things to consider is the following:

Serious Illness Cover - Why ? - If you have certain loans/liabilities (which I know you said you dont, just including it!) you can take out cover that will clear them if you get ill. Its also good to give you some financial reserves if you are unable to work for prolonged periods due to a serious Illness.

I must stress, this cover only pays out if you are really badly sick. It covers things like Heart Attacks and cancers (two main illnesses we all get!), but some cancers & heart attacks are not aggressive or bad. The way I advise people on this is that to get a payout you will of had an illness that will effect you for the rest of your life.

So, for example, lets say you got a severe form of cancer and were entitled to a €250,000 serious Illness lump sum payout, it would certainly give you some breathing room financially! €250,000 serious Illness cover for 10 years for a 35 year old non smoker could be gotten for as much as €68.42 per month.

Income Protection - Why? It pays you a subsidized income potentially up to age 65 if you are unable to work due to illness or injury. This is more relevant for self employed people or people who's employer does not pay them when they are off sick for long periods of time.

Depending on the terms looked for Income protection can be expensive enough, but you can claim tax relief on the premiums (so if you are on higher rate of tax it works out much cheaper)

Life Cover - Why? Since you have no dependents you may not really need it. However some people like the thought of leaving things behind for relatives/friends. Its not imperative but just being mindful that it is cheap if you were thinking about it.

Its also worth considering this if you are a director or business partner in a business. Keyperson and Co Directorship Life Assurance are relatively cheap (just did one for 4 younger directors recently). I can elaborate if anybody likes, just ask.

Just throwing this in there for people reading but for anybody self employed (particularly sole trader) or working in a job where an employer offers life cover, consider Personal Pension Term Assurance. Its basically life assurance where you get tax relief on the premiums. For employers they can get corporation tax relief on the cost of premiums (if they pay for it for employees).

Pension - Why ? You currently have a lot of disposable income that suggests you might be on the higher rate of tax. Lets presume you put €200 of your €1200 asides for other assurances mentioned here. I am going to suggest (for the time being) that you split payments between a savings plan and a Pension.

If you have Net €1200 of disposable income, you should be able to contribute €600 a month to a Pension at a net cost of less then €500 (may even be as low as net cost of €360 if you are higher rate tax!). Lets say you are putting €600 a month into a pension, you will see the savings in tax relief (you will still see €600 go out, but will just pay less tax!).

So, we have circa €500 a month to put towards a savings plan. Since you already have €75,000 in prize bonds, you have to consider what your long term plans are with regards to property (you dont say if you own your own house). Lets presume you may want to purchase a property in the future.

Ok, I recommend you keep 6 months of expenses in an easily accessible demand deposit account. Why? If something happens that means you are not getting an income or an emergency arises, you have funds to access as you need them. Lets say that €20,000 is enough. So there is €55,000 left over and the question is are you willing to take a risk with these funds?

Leaving them in prize bonds is a risk. I am not sure of the odds of winning things so I cannot say if it generates a decent return or not! Lets say you are comfortable with prize bonds and want to maintain some of them, perhaps leave €25,000 (one third of your savings) in them.

With the balance of €30,000, you could put them in a savings plan that will be setup for your €500 per month. The level of risk you take will be determined by how long you want to invest and how comfortable you are with fluctuations in value. you would have access to the funds if you needed them, but if you were not prepared to give it 5+ years (for ups/downs to even out) you might be better off remaining in deposits and prize bonds.

In this scenario you are investing circa 40% of your savings in medium-high risk investments (your own request), trying to grow your investment. I would suggest you consider putting your Pension in high risk investments (because you cant touch the funds for 15+ years anyways!) and your savings in medium risk to match your medium-high risk strategy.

A Pension is important, but the younger you are the more important that you factor in/out life/illness/Income cover FIRST. If you have only €200 a month disposable income and you put it into a Pension for 4 years, its no good to you or your family if you get sick, ill or die. I am not saying dont save for retirement at a young age, I am saying consider all variables and priorities policies as they are relevant to your needs.

I know the figures are general, but I am just trying to give you some ideas! This is not advice you should take without further consideration and discussing it with a professional.

I'm A Financial Broker, AMA

mahamageehad wrote: »

I'm 25 and living in Germany for work for now. I foresee quite a bit of travel over the next few years. I'm in an industry where you tend to move after a few years. No kids so a lot of disposable income. Should I be thinking about pension now? I mean, it seems so far away. And even if I should, what about the logistics? What if I don't know know where I'll live when I'm old?? How much should I be putting away (I currently save nothing except into my travel fund). Sorry if these are all really basic, I've never thought about this before until this thread!!!

My suggestion is, particularly if you will be moving regularly, take each country/move as it happens. You dont know for sure if/when you will be moving again.

As it stands, I believe Ireland has agreements with most European countries and its in theory supposed to be easy to transfer Pensions between countries.

So, if there is an opportunity to save into a Pension heres a few things to ask a Pension provider:

• What tax relief do I get on my contributions?
• If I move country, can I move my Pension?
• If I can, what will I need to do at that time?
• What are my retirement options?
• At what age can I take them on this Pension?
• How safe is my investment?
• How safe/large is the company administering my Pension?
• Is there a transfer cost/penalty if I move my Pension to a different Pension/country when I leave employment?
• If I leave my Pension here until retirement, will it continue to remain invested in a fund that will go up/down?

If you can move a pension around with you, why wouldn't you avail of the Tax relief available? In normal cases, when you leave employment your Pension remains going up/down until you draw it down!

f you have 10 Pensions in 10 different countries and are confident that no matter what happens you will be able to avail of your pension options at retirement (by transferring back to your base country), I dont see any reason to refrain from contributing to one.

Keep a record of your Pension details and keep the documents you get annually. I would also recommend you keep contact details of each Pension provider and when you leave the country contact them.

It might be easier (if you will be travelling alot!) to move each pension (once its a neutral cost) to the next pension (assuming its possible) but decide that as it crops up.

the thing is that you can only make decisions based on where you are today. Maybe you will move around regularly or maybe you will remain longer in the country then you plan. Look at where you are now, find out about flexibility of the Pension arrangements (using questions above) ,make provisions for retirement and deal with any issues as they arise.

I'm A Financial Broker, AMA

December2012 wrote: »

Thank you very much, that's what I had thought. I was going to save for a few years first to get the nest egg up and running. Have the life cover, need to look into income protection!

I opened a PRSA a few years ago, which I had to reduce to nominal contributions a few years ago when the recession hit.

Do you think people in Ireland don't plan for retirement enough?

Most people don't plan for retirement until their later years. I think its human nature. None of us want to think of getting old, dieing or getting ill. Thats why I find it can be a difficult conversation for some people to have because taking out these covers and saving for a Pension is admitting/awknowledging that one of these things may happen!

The government has upped the retirement age and people in their 30s (like me) will be lucky if the state contributory Pension is below 75 by the time I am retiring.

Saving into a Pension is not perfect and in some cases isnt always value for money. But it is, as it stands, the most tax efficient way of saving and growing investments for people paying income tax.

I'm A Financial Broker, AMA

Solomon Pleasant wrote: »

I'm starting business in college next week.Would that be a relevant quailification that would enable me to work in your field?

I have a degree in Business management, but its not specific to this field.

For me, when I finished my degree, I got a job in a Life & Pensions company. Sales/Broker Support areas are the hardest but best areas to get into if you want to be a broker. You deal with the best/worst queries and they can be easy or extremely technical so you are forced to learn alot fast!

While I was in this department I worked on my QFA diploma. This is the minimum required to be a broker and give advice. Depending on how much you study and how quickly you want to get the exams, I would imagine you could get these within a year and a half to two years if you do them systematically (quicker if you study/work harder).

You could study for the QFA's while in college, but that would depend on how much pressure you want to put on yourself!

There are plenty of extra qualifications you could get, but I believe above is enough to get most people started!