Long term regular investment for 19YO

The general consensus is that long term low cost passive investing is the best option. Unfortunately not as simple in Ireland as other places, I recently made a post suggesting that the best option in Ireland depends on your timeframe - will paste it here.

I now believe the best way to invest in Ireland is very dependent on the timeframe in which you need the money.

Less than 5 years: The general advice is that if you need the money in less than 5 years you should avoid the stock market. The best place for your money is probably a deposit account in the bank.

Exactly 5 years: If you know you will need the money in exactly 5 years it probably makes sense to put the money in a savings certificate which gives a guaranteed tax free return of 0.59% tax free each year.

5-15 years

I think for this timeframe ETFs such VWCE can be a good option, while the deemed disposal tax after 8 years is annoying as is the 41% rate, in this timeframe it’s impact is not so detrimental as your investment does not have as much time to compound. Ideally if funds are available you would pay the tax in year 8 from seperate funds and allow the investment to continue its growth.

15 years plus : Investment trusts or BrkB . As deemed disposal is due every 8 years holding ETFs in the longer term isn’t great because paying tax in year 16 and 24 will really eat into the compound returns on your investment. UK investment trusts such as Monks, F&C or Scottish Mortgage or the American company Berkshire Hathaway are subject to CGT rather than

30years plus- If the savings are for the long term and you are sure you won’t need them by far the best place for them is within a pension wrapper. While fees can be high the fact that the money can continue to grow tax free is a huge incentive to use them.

Obviusly in Ireland property is a great store of wealth - but have avoided that and things like crypto or gold here as I think it’s a whole other topic!

So your daughter would probably benefit from a mix of approaches, if she really is thinking long term then then majority into a pension makes sense- but possibly only if she is paying tax.

Then maybe some in savings account for short term needs, a holiday , a car etc.

Some in ETFs for the slightly longer term - thinking buying a house(another one), getting married or having kids in 10- 15 years.

And the some in something like investment trusts or Berkshire Hathaway for the longer term (to avoid deemed disposal) but still having accessible before retirement.

Invest in:

• Travel and Experiences
• Education / Skills development. (and at 19 you are at a time when you are making choices that massively impact your earning potential)
• Any other passions that make life enjoyable

Early 20's is a time of opportunity for new experiences and personal growth. If there is money to spare then keep it in a deposit account, so that when the opportunity and desire to do something fun comes up, she will be in a position to pay for it.

Worry about the pension when your career starts and your earnings break into the high tax bracket.

Totally agree on the life objectives. I just think it would be unfortunate for a 19 year old to lock up their money in long term investments at the cost of opportunities at a key stage in life.

Point taken on the tax bracket part, although these days if money is a consideration for career choice, you will be in the high tax bracket very early in your career. And if you want to get out early, the easiest way to do it is skill yourself up in a high wage profession and live frugally. And not pay irish rents!