How much to keep on deposit?

wigsa100

Hi everyone,

Last week was a big one for me in that I finally started putting my money to work. I had accumulated 22000 in savings that was just sitting in the Credit Union. My net income is 3900/month and I usually have around 2600 to set aside. I have a car loan of 700/month until about next April. So I decided to:

Start a pension of 500/month
Stick 12000 into an easy access investment fund
Start an easy access savings fund alongside that of 200/month

Now, I was planning on continuing to hammer roughly a grand a month back into the credit union to keep the savings building. But my question is, how much money should I really have on deposit? I have pretty much 10k left already after sticking the lump sum in a fund. Do I really need more or should I just be throwing it into the savings fund instead?

I don't plan on having any big expenditure in the near future and because the funds are easy access, I can get at the money if I do need it. Is there a rule of thumb for how much savings you should have on deposit?

Any advice or personal experiences would be much appreciated.

Thanks!

caddy16

wigsa100 wrote: »

Hi everyone,

Last week was a big one for me in that I finally started putting my money to work. I had accumulated 22000 in savings that was just sitting in the Credit Union. My net income is 3900/month and I usually have around 2600 to set aside. I have a car loan of 700/month until about next April. So I decided to:

Start a pension of 500/month
Stick 12000 into an easy access investment fund
Start an easy access savings fund alongside that of 200/month

Now, I was planning on continuing to hammer roughly a grand a month back into the credit union to keep the savings building. But my question is, how much money should I really have on deposit? I have pretty much 10k left already after sticking the lump sum in a fund. Do I really need more or should I just be throwing it into the savings fund instead?

I don't plan on having any big expenditure in the near future and because the funds are easy access, I can get at the money if I do need it. Is there a rule of thumb for how much savings you should have on deposit?

Any advice or personal experiences would be much appreciated.

Thanks!

In a past career in the financial services industry we would have advised 3 x Net monthly salary or min €10k. Obviously not feasible for a lot of people but might be useful for someone like yourself.

wigsa100

Thanks for that Caddy. I was thinking something along the same lines. I think I'll stick another 1k in there and start putting the lot in the easy access savings fund after that in an effort to continue making it grow.

Thanks again, much appreciated.

skippy2

looking at doing something similar may i ask what inv fund / saving fund you used and was it easy to set up. Are there fees etc. Many thanks

Henry Ford III

Might be an idea to pay off the car loan?

wigsa100

Henry Ford III wrote: »

Might be an idea to pay off the car loan?

It's only with the credit union at 5% and the total duration is only 10 months so I'm happy enough to tip away at it!

wigsa100

skippy2 wrote: »

looking at doing something similar may i ask what inv fund / saving fund you used and was it easy to set up. Are there fees etc. Many thanks

Sorry Skippy I tried posting a reply earlier but it obviously didn't work.

I'm putting both the lump sum and savings plan into the Zurich Life Balanced Fund

I'm not allowed post links but google it to see details.

It has 100% allocation and there is a management fee of 1 and a half %, that's it. Using a financial broker in Cork that my family have used for a while and done well with. Give me a DM if you want his details.

Stay well clear of anything that doesn't have 100% allocation. I remember I met an innocent enough fella from Irish Life last year who was trying to tell me 95% allocation and a 1% management fee was normal!

murphaph

wigsa100 wrote: »

It's only with the credit union at 5% and the total duration is only 10 months so I'm happy enough to tip away at it!

Still makes no sense to have outstanding loans at 5% while leaving cash on deposit earning less. You should figure out your rainy day sum, keep that on deposit and from the rest clear the car loan.

bcklschaps

wigsa100 wrote: »

Sorry Skippy I tried posting a reply earlier but it obviously didn't work.

I'm putting both the lump sum and savings plan into the Zurich Life Balanced Fund

I'm not allowed post links but google it to see details.

It has 100% allocation and there is a management fee of 1 and a half %, that's it. Using a financial broker in Cork that my family have used for a while and done well with. Give me a DM if you want his details.

Stay well clear of anything that doesn't have 100% allocation. I remember I met an innocent enough fella from Irish Life last year who was trying to tell me 95% allocation and a 1% management fee was normal!

I'm probably asking kinda stupid questions here but ...

- What happens to the other 4% with Irish Life? is it kept in cash etc. ?

- I think, depending on the age profile of the person don't Insurance companies recommend different ratios of high risk (Equites) and low risk (Cash) percentages ? that way you can even out any spikes.

- the 1% Management fee with Irish Life is 50% better than your current 1.5% Mgmt Fee with Zurich

- Also why do you need a broker, can you not just go to these Insurance companies yourself ?

wigsa100

murphaph wrote: »

Still makes no sense to have outstanding loans at 5% while leaving cash on deposit earning less. You should figure out your rainy day sum, keep that on deposit and from the rest clear the car loan.

You speak a lot of sense!

wigsa100

bcklschaps wrote: »

I'm probably asking kinda stupid questions here but ...

- What happens to the other 4% with Irish Life? is it kept in cash etc. ?

- I think, depending on the age profile of the person don't Insurance companies recommend different ratios of high risk (Equites) and low risk (Cash) percentages ? that way you can even out any spikes.

- the 1% Management fee with Irish Life is 50% better than your current 1.5% Mgmt Fee with Zurich

- Also why do you need a broker, can you not just go to these Insurance companies yourself ?

95% allocation means that they take 5 euro out of every hundred euro you invest with them. That means for every hundred euro you invest, you're actually only investing 95. Think of how much more lucrative a fund has to be for you to make the equivalent that you would with 100% allocation. That, I imagine, is why the management fee is lower at 1%.

You decide what level of risk you want yourself. Obviously people closer to retirement and with bigger funds would usually go lower risk but it's completely at the discretion of the customer.

It doesn't cost you(in my case anyway) anything extra to go through a broker. They are paid out of the management fee. You also benefit from the expertise and advice that the broker can give you, which is invaluable in my case.

wigsa100

And when I say they take 5 euro out of every hundred, they're keeping it. It's gone.

bcklschaps

wigsa100 wrote: »

95% allocation means that they take 5 euro out of every hundred euro you invest with them. That means for every hundred euro you invest, you're actually only investing 95. Think of how much more lucrative a fund has to be for you to make the equivalent that you would with 100% allocation. That, I imagine, is why the management fee is lower at 1%.

You decide what level of risk you want yourself. Obviously people closer to retirement and with bigger funds would usually go lower risk but it's completely at the discretion of the customer.

It doesn't cost you(in my case anyway) anything extra to go through a broker. They are paid out of the management fee. You also benefit from the expertise and advice that the broker can give you, which is invaluable in my case.

So Irish Life are really charging you 6% to manage your fund. As they charge a 1% Mgmt fee and trouser another 5% thru simply not allocating it.

Thats madness. Add in the Government pension charge and the Fund has to gain about 7% per annum straight away to even break even. I doubt many can achieve that kind of return consistently ?? I know my own Pension fund has lost money on investments in several years.

I know, you save paying the tax on the initial contributions so you are up 20-40% straight away ... but it does make you wonder how they can be soo bad at investment that they cannot at least break even !!

wigsa100

bcklschaps wrote: »

So Irish Life are really charging you 6% to manage your fund. As they charge a 1% Mgmt fee and trouser another 5% thru simply not allocating it.

Thats madness. Add in the Government pension charge and the Fund has to gain about 7% per annum straight away to even break even. I doubt many can achieve that kind of return consistently ?? I know my own Pension fund has lost money on investments in several years.

I know, you save paying the tax on the initial contributions so you are up 20-40% straight away ... but it does make you wonder how they can be soo bad at investment that they cannot at least break even !!

Yeah it's scandalous. It's the difference between your fund growing nicely or, as you say, not growing at all or even contracting. The thing is I spoke to the guy that put me in touch with him and he said that he's such a nice guy, he probably didn't know any better.

It certainly seemed that way when I was talking to him. Absolute madness is right, and just think of all the people that don't know any better and hand it over no problem at all. It's frightening to say the least!

Duckett

fund management fees should be circa 0.75% or else you are unlikely to achieve sustainable growth. take a look at the rules governing UK fund managers