Financial Planning for the Future

reilig

I'm meeting an advisor these day about planning my financial future. I don't have a whole lot to invest, but I'd like to think that I'd have enough to survive on when retirement comes or if my time is up that my family would have a bit to live on - kids through college etc.

Off farm job doesn't have a pension. I started a PRSA 5 years ago and am paying €25 per week. Its not a lot, but its a start. I'm not really impressed with the broker or the provider, but they were the company's preferred supplier. This has changed in the last few months and I am free to go with who I like, so I'm going to shop around. Anyone recommend a provider?

I'm also looking in to income protection. I have a friend who was sick for the last 12 months, and his income protection has kept him afloat. Anyone got this or recommend a company for it?

My thinking on pensions and insurance like this was that I can't really afford to do it. Its only when you see someone's misfortune that you ask yourself if you can afford not to have it. I have always seen the farm as my retirement pension -something that I might be able to draw an income from into my late years, but it might be nice to have a small bit put aside for a rainy day too!

Red Sheds

We all should plan for the future and its a good idea to do it as early as possible. The younger you start the easier it is to build up a fund. I have been paying into pensions and various other plans for the past 14 years and my expereince is this.

• They never perform and reach the expected investment targets that the investment advisor tells you when you are taking them out. Dont heed any of their talk about they performed well in the boom times but lost value in the bust and that you are now buying in at a good time when prices are low.
• Investment manager are well paid and to be honest i have never seen one that has really outperformed any of the major stock exchange indices or property indices.
• Beware of the charges, they are high, it might look small on paper but read the fine print, especially in relation to future charges and charges on accumalted investment return

I have one 20 year bond to mature in 3 years time, currently its worth 10% less than I have paid in, this has nothing to do with the downturn, it has never been worth more than I paid in. I was sold it on the basis that it would yield 3.74 times the investment I pay in over the 20 years. cant see this happening. My pension funds are worth 40% less than total paid in, Ok that has something to do with the declines in stock markets etc, but I can tell you that over the last 10 years, my total fund value never exceeded how much I paid in.


So going foward, This is my strategy. I really feel thati can make a much better job managing my own money and retirement funds that paying fund managers a large commission. After this year pension contributions I make will be slashed and invested personally. Again more than likely the tax relief on pension contributions will be cut in the budget and that was one of the big attractions of pension investment for me. Will strongly consider cashing in other policies and use whatever i get back to invest personally.


Right now, I do think there are some really good value to be had in property in large towns and cities in the right place. If you can manage a good located apartment in Dublin or Galway, it will be a good investment and something for children if they perhaps go College there. In my view far better than many of the funds, plus you share teh risk with a bank.


For retirement planning, try and look at having income from say at least 3 different sources and build your portfolio accordingly. Look at how much you will need to live on:- hopefully mortgage gone, College fees etc gone, so then see what you need.

• Contributory OAP in todays terms €250 per week
• Can you make say another €150 per week at least from farm, either renting it or via working it
• Can you have say another €100 per week in todays terms coming in form somewhere else

Thats €500 per week in todays terms, so should be adequate enough plus what your OH has.


I hope this helps but to sum it up, your a better investment manager for yourself that any of the goons, trying to sell you these products.

grange mac

I manage my own money, atm stopped paying into pension due to being laid off. but had a few quid to invest and everyone I approached wanted to lock it away for5 years.

So i went away and put my money where they said myself. It is not capital guaranteed as you pay a serious premium for that. I have an euro stocks etf and use rabodirect.

I am learning (the hard way) that things go in cycles, when in growth stage i buy when they gain 30/40% i reduce risk and wait for things to fall before i invest again. I just look at monthly performance and judge from that. Otherwise you could be buying and selling daily but that would take too much time.

I find have a target, dont be greedy and it will grow steady.

25 week is small but wait and see how the budget effects you before you do any changes.

financial advisors can be biased on depending on who they are working for.

thats just my experience.

JohnBoy

I've been paying into an eagle star pension since I was around 24, (33 now) I honestly have no idea what it's worth right now, probably f*ck all though

As I've been doing it since forever I dont actually miss the money every month, as my salary rose (remember when salaries used just rise) it increased too.

I dont have the time, knowledge or interest so far to manage it myself, but if the tax relief keeps dropping on it then I think I'd be as well off pulling out and going over to something simple like the rabo managed funds, the fees on the pension could rapidly outweigh the tax benefits of paying into it if the releif is cut to 20%


Anything I move over to will have to give me the freedom to do what I want with the money on maturity. My dad retired a few years ago with what he thought was a huge private pension pot. The thing is that the law basically forces you to buy an annuity with most of that pension pot, and the best annuity he could get left him with a private pension that's paying out only a few hundred a month.

the whole experience left a sour taste to be honest, so when I decide to do something about it all I want to make damm sure I'm in as much control of my retirement as I can possibly be.

hillclimber

Would echo what red sheds has said. My experience of so called financial advisors has been completely negative. I have managed my own finances for the last six years and would urge anyone else to do the same. Always bear in mind that the product providers and their reps are solely interested in what they can get out of you. The majority of investment products are constructed to rake in fees. Any reasonably competant person can do a better job than these clowns, all it takes is a bit of time to educate yourself.

Red Sheds

I forgot to mention about income protection, its very expensive and when you meet advisors they will tell you that your need it, you need a pension, need life assurance need health insurance, and every other thing going. They dont seem to think one has to live as well.

My view on the income protection is that while it would be nice, I am not prepared to pay for it right now as I have much more important committments for that money, like family. Any of us that are used to working will take the approach that, there is going to be something really wrong with us if the day comes that we cannot work.

Again make sure you understand the full terms and conditions of income protection and what it will and will not pay out on and also the period you have to be off work for before you get a payout.

reilig

Red Sheds wrote: »

My view on the income protection is that while it would be nice, I am not prepared to pay for it right now as I have much more important committments for that money, like family. Any of us that are used to working will take the approach that, there is going to be something really wrong with us if the day comes that we cannot work.

My view on income protection:

My best friend is an engineer. He earns €60k per year. He works for a small private company and has paid income protection of approximately €20 per month since he started there in 2001. He got married last summer. Leading up to that, he bought a house for almost €300k. He spent a lot of money on the wedding too. 9 weeks before the wedding day, he was diagnosed with a grade 3 Glioma (Brain Tumour). He had surgery carried out and luckily it wasn't malignant. However, the surgery had to go deep into his brain and he has had some side affects. His speech and coordination are not as good. his memory isn't as good as it was either.

Like myself, the company that he works for is small. he got 10 days of paid sick leave. After this, his income protection kicked in and he got 3/4 of his salary for the 6 months that he was off from work.

When he was finally strong enough to go back to work, both his employers and himself realised that he would not be able to do the work that he had been doing. He is now on a desk job which would normally command lower pay. however, the payment protection insurance that he has covers the difference in his income that he now earnd and that he used to earn, meaning that he still comes out with almost €60k.

When I think about him, I realise that this could have happened to me or to any other person. This guy was 32. A small amount of his salary every week now means that he is covered against a drop in pay due to illness. When I look at it, I'd much prefer to be reassured with cover like this than to have an iphone which might cost me €50 per month, or isn't it better for me to stay in one weekend a month and invest into this.

I'm used to working. I have never taken a sick day in 15 years of work. I want to do this for my family to ensure that if I get sick, they won't have to lower their standard of living. I'm doing it to ensure that my children will have enough money to go to college. I'm doing it to make sure that my wife would be financially ok if i ever got sick.

While you may be "used to working", unfortunately that does not exclude you from heart problems, cancer, accidents etc in the future! The day that there is something really wrong with you which stops you from working is the day that you will need income protection.

kerryjack

I think farmers are better prepared than most for their retirement and the rainy day as most of us are asset rich and cash poor, we are lucky down here in Kerry we have Kerry Group who looks after my pension and is up about 40% on last year that's very pleasing after such a bad year on the farm. But i am all for the here and now and don't mind cashing some of them in for holidays and spending money on the kids and if they ask me in a few years time well dad where did all that money go well i can tell them do you remember that holiday we went on to Australia , and we have the photos to prove it .

Miller80

Income protection was unavailable to farmers until recently. Aviva are now quoting farmers but it will be expensive. There are 4 different occupation classes 1 to 4. accountants, office work etc are class 1 and relatively cheap. famers used to be declined but aviva are now classing them as a 3. Income protection is a long term protection plan and premiums get tax relief the same as retirement plans. I work in a brokerage so it will be interesting to see if farmers are interested in this type of insurance.

PMU

johnboy, you can contact eagle star(zurich) and they will give you a valuation
for your pension

bob charles

I have enough money to keep us going until about 12 o clock friday, my future financial planning is currently that short:D

I also havnt a good word to say about the pension advisors con artists. Seen my dad has money currently un-accessable due to government policy. The lovely people managing it turned a profit of 0.05% last year, FFS last year was a decent year in stock-market and a return of half a %.

pakalasa

Stay well clear of financial advisers. Remember interest rates are extremely low so anyone (in the financial world) can get their hands on money very easily. They don't need to pay you a premium, but they can sure as hell take risks with yours.

locky76

kerryjack wrote: »

we are lucky down here in Kerry we have Kerry Group who looks after my pension and is up about 40% on last year.

Jaysus Kerryjack, if i read you correctly you have all your investments in Kerry shares...
Is that not a big & unnecessary risk given to all the good people who lost their shirts on BoI & AIB shares?
Why not spread the risk over 5 or 6 different industries etc.. (all eggs in one basket)

kerryjack

locky76 wrote: »

Jaysus Kerryjack, if i read you correctly you have all your investments in Kerry shares...
Is that not a big & unnecessary risk given to all the good people who lost their shirts on BoI & AIB shares?
Why not spread the risk over 5 or 6 different industries etc.. (all eggs in one basket)

ya all in the one basket, we know the risk and its a chance we are willing to take.

locky76

kerryjack wrote: »

ya all in the one basket, we know the risk and its a chance we are willing to take.

rather you than me...

kerryjack

locky76 wrote: »

rather you than me...

What kind of industries had you in mind, I had a few Eircom and Irish life & permanent shares i took a big loss on them but was lucky to offload them when i did and i said to myself stick to the ould farming and leave the shares to the so called experts. it use to make me laugh to see some of these lads setting up as financial advisers, x county footballers and lads straight out of collage, mad stuff. The story comes to mind about john F Kennedy senior in the US and the shoe shine boy asking what shares will i buy to day sir and John F said to himself if the shoeshine boy is buying shares its time i got out of them and he did just before the big crash in the 1930s .

Timmaay

Ha thats true, when the taxi men in Dublin were giving out property advice during the boom that was another sure sign to get out!

On the whole eggs in one basket with Kerry Group, Warren Buffett once famously said "Diversification is Nothing More Than Protection Against Ignorance", he was basically eluding to the harsh reality that your good performers would be balanced out by the poor shares, and you'd end up on average the same as everyone else! Which of course is useless if your not ahead of inflation, which will eat any returns over a pension timeframe!

Red Sheds

reilig wrote: »

My view on income protection:

My best friend is an engineer. He earns €60k per year. He works for a small private company and has paid income protection of approximately €20 per month since he started there in 2001.

Thats very good value for income protection of up to 60k, if I could get that i would, I think my last quote was something like €170 per month for €50k cover that kicks in after 6 months, so you see my point now, I feel if I have to wait 6 months for it and am still unable to work, I'm f***ed anyway.

Red Sheds

Red Sheds wrote: »

reilig wrote: »

My view on income protection:

My best friend is an engineer. He earns €60k per year. He works for a small private company and has paid income protection of approximately €20 per month since he started there in 2001.

Thats very good value for income protection of up to 60k, if I could get that i would, I think my last quote was something like €170 per month for €50k cover that kicks in after 6 months, so you see my point now, I feel if I have to wait 6 months for it and am still unable to work, I'm f***ed anyway.

Box09

bob charles wrote: »

I also havnt a good word to say about the pension advisors con artists. Seen my dad has money currently un-accessable due to government policy. The lovely people managing it turned a profit of 0.05% last year, FFS last year was a decent year in stock-market and a return of half a %.

If your father was invested in an appropriate stock related fund last year he would have made a handsome return. Average managed funds returned 12% last year. Not all pension advisors are con artists so tell him to shop around, go to a different provider and possibly even cut out the broker if he is using one. The reason his money is unaccessable is because it is a pension, not a savings product.

reilig

Red Sheds wrote: »

Red Sheds wrote: »

Thats very good value for income protection of up to 60k, if I could get that i would, I think my last quote was something like €170 per month for €50k cover that kicks in after 6 months, so you see my point now, I feel if I have to wait 6 months for it and am still unable to work, I'm f***ed anyway.

I look at it that we could probably scrape by for 6 months if i had no income with only illness benefit. But beyond that we would be f***ed for covering the mortgage without some type of income coming in. I have been quoted €21 per month for €20k cover after 6 months or €27 per month for €25k after 6 months.

€170 per month is crazy. You must be a lot older than me or else you have some serious loadings???? I couldn't justify €170 per month - better to put it into a rainy day account or pay extra towards the mortgage!!

F.D

Reading This and looking at my own situation i am seriously considering cutting VHI, Life and assurance let alone investing in something else like income protection, I will leave the small assurance policy for the mortgage something like 13 euro a month and i will keep paying into my pension..(Part of my employment)
My opinion after seeing endless friends and relations investing in these things and having less than they put in to show at the end of it a complete waste of money, say you put 250 a month away into a bank account its 3k per year saved in 5 years its 15 k you can pull out of it when ever you like its not dead money even put it into your loans and pay them quicker, you will save more in the long run, yes there is always the risk something will go wrong, but for health care you are paying PRSI, and private hospitals do accept cash, if the need arises, i think either have your debts at a reasonable level or have money put aside for the rainy day.

pakalasa

Timmaay wrote: »

...On the whole eggs in one basket with Kerry Group, Warren Buffett once famously said "Diversification is Nothing More Than Protection Against Ignorance", ...

I love his quote on risk - "Risk is for people who don't know what they are doing".

Toplink

I love this thread as I am hitting 35 next year and need to plan ahead...

Bits of pension plans here from different companies I have worked in but nothing major. Maybe 20k worth.

God granting me my health the mortgage will be paid when I am 49. But regarding the kids I will be in my late 50s before they are off the books!

The plan would be to retire from the job on a handsome with a nice redundo and go farming full time when I am 55. (I suppose you cant help but dream anyway!)

Relig, I like those quotes you got for income protection. Would you mind sending me a PM with company names. I could well afford upto 40 a month based on current salary.

caseman

I'm self employed outside of farming and have no pension in mid 30's.
Currently have offers an a few houses away below asking price hoping to get value.
Plan is to have a house or two to sell when i reach retirement
I don't trust pension funds or advisors.

locky76

kerryjack wrote: »

What kind of industries had you in mind, I had a few Eircom and Irish life & permanent shares i took a big loss on them but was lucky to offload them when i did and i said to myself stick to the ould farming and leave the shares to the so called experts. it use to make me laugh to see some of these lads setting up as financial advisers, x county footballers and lads straight out of collage, mad stuff. The story comes to mind about john F Kennedy senior in the US and the shoe shine boy asking what shares will i buy to day sir and John F said to himself if the shoeshine boy is buying shares its time i got out of them and he did just before the big crash in the 1930s .

Nothing personal KerryJack, it's just an observation, a few suggestions below:

• Educate yourself on the stock market and sell some of your Kerry shares, use an indepndent trader like Fexco and re-invest them in stocks (non-agri) which you have an interest in and which you think have potential for growth
• Use some of the share capital as a down payment on a property or maybe a small plot of land?
• Put some into Irish government bonds
• Buy some mature forestry
• etc. etc.

As i say it's just an observation, I don't mean to cause offence, keep an eye out for items of interest to you, read the buisness sections of the sunday newspapers. Kerry could go wallop if they stretch themselves too far- hard to imagine but the same was said of computer shares in the late 90's and construction in the mid 00's...

milkprofit

F.D wrote: »

Reading This and looking at my own situation i am seriously considering cutting VHI,
f money, say you put 250 a month away into a bank account its 3k per year saved in 5 years its 15 k you can pull out of it when ever you like its not dead money even put it into your loans and pay them quicker, you will save more in the long run, yes there is always the risk something will go wrong, but for health care you are paying PRSI, and private hospitals do accept cash,


15 k would keep u in private for about i week if u need much treatment

Joe the Plumber

Looking after your own investments and being able to control them defo the way to go.

Surely property has to be the way to go. houses are below cost atm.

shares are ok but all you have is a piece of paper, you cant sleep in it or eat it.

Long term population increasing, baby boom in Ireland, in 15/20 years housing and land for producing food has to be thing to have...anyone agree?

reilig

milkprofit wrote: »

F.D wrote: »

Reading This and looking at my own situation i am seriously considering cutting VHI,
f money, say you put 250 a month away into a bank account its 3k per year saved in 5 years its 15 k you can pull out of it when ever you like its not dead money even put it into your loans and pay them quicker, you will save more in the long run, yes there is always the risk something will go wrong, but for health care you are paying PRSI, and private hospitals do accept cash,


15 k would keep u in private for about i week if u need much treatment

My wife had surgery 2 months ago. It was urgent but non life threatening. In the public system she would have had to wait at least 12 months. Because we have VHI she met the consultant and had her surgery within 3 weeks. Total cost to us was €150. Total cost to VHI was in excess of €20k for consultant fees, surgeon fees and hospital stay for 5 nights in a semi private room.

pakalasa

Be careful switching policies aswell with VHI. I know people who switched policies to cover other family members, to find out they didn't have the same cover themselves, as they originally had.

Box09

VHI / health insurance is a necessity for me. I would go without other things to ensure i am covered. Like Reilig i have seen some costs covered for my parents and it really does highlight the importance of having health insurance.

Farmer Pudsey

The pension industry in Ireland is a massive scandal. Level of fees is crazy about 80% of first years investment goes on fees and 2% of the total fund evert year after that as well as the buy/sell spread on your yearly contributions.

At the end you have to buy an annunity which is about 4-5% of the fund paid to you yearly. if done at 60. You have to do this with 2/3 of the fund when you reach seventy I think. So for a 100K fund you would get around 5K per year. I know that half of this is a widow/widower pension if anything happens to the main benificary. However when you consider that at present ( and I cannot see it changing inthe next few years) that banks pay around 3% on deposit money the pension industry has your money for 2% and gets to keep it when you pop the bucket and I am not sure what happens if they go bust( I have a fair idea you be left hanging)

theaceofspies

"Financial Advisors" come with a health warning. Have experience of some of these and they are nothing but snake oil salesmen; a depressed monkey could return better returns than some of them.
Money is better going into cold storage in the bank even at 2% - at least you know that you'll get to see it again some day.
I think Health Insurance is vital to have. Lots of people have dropped their policies in the last year - the fallout will hit them when they get sick. Like the fella who said after the accident and wasn't insured "Sure I never thought I'd need it!".

pakalasa

theaceofspies wrote: »

"..Money is better going into cold storage in the bank even at 2% - at least you know that you'll get to see it again some day....

Exactly.

reilig

theaceofspies wrote: »

Money is better going into cold storage in the bank even at 2% - at least you know that you'll get to see it again some day.

Personally my preference for the largest proportion of my pension savings is to invest it into my own farm where I will be able to control its return. I'd like to have my farm in a way that it would support me to retire early and viably from my off farm job and even into my golden years return a salary to me either through rental of the farm to my kids or an outsider or through me still working the farm if health allows.

Yet, if I can afford to put €25 or €30 per week aside into a pension so that I will have liquid money when I retire, I intend to do it also.

hillclimber

reilig wrote: »

Personally my preference for the largest proportion of my pension savings is to invest it into my own farm where I will be able to control its return. I'd like to have my farm in a way that it would support me to retire early and viably from my off farm job and even into my golden years return a salary to me either through rental of the farm to my kids or an outsider or through me still working the farm if health allows.

Yet, if I can afford to put €25 or €30 per week aside into a pension so that I will have liquid money when I retire, I intend to do it also.

I think this is something most farmers should do. I have a similar plan, any spare money is going into more land and improving farm layout so that I can continue to work hopefully well into old age. If needs be it can be rented out, but at least we are in control. I think the tax incentives have blinded a lot of people to the rip off that the pensions industry is.

kerryjack

reilig wrote: »

Personally my preference for the largest proportion of my pension savings is to invest it into my own farm where I will be able to control its return. I'd like to have my farm in a way that it would support me to retire early and viably from my off farm job and even into my golden years return a salary to me either through rental of the farm to my kids or an outsider or through me still working the farm if health allows.

Yet, if I can afford to put €25 or €30 per week aside into a pension so that I will have liquid money when I retire, I intend to do it also.

sound advice there relig , making life easier on farm good cattle handling facility's roadways , and housing all things to make life easier as we get on a bit . Electricity is a big cost for us going forward and a wind turbine might be a worth while investment but these will get better and cheaper in the next few years, I don't think that they are just there yet, performance wise.

keep going

i started a pension when i was 20 and gave it up at 30.i tend to look at it ddifferent-instead of thinking i want to invest so much per year to give me so much when i am 65,i just try and find a(what i think is) good investment and then try and find the money for it.some are doing ok while others are well not good but at least there is nobody making a soft killing out of me(maybe indirectly).i try and spread investment types and countries and split locked in money and on demand money.by the way whats the best rate for say 25k on demand at the mo.would think i have alot of the heavy lifting in on farm investing done but then do you ever stop

Toplink

keep going wrote: »

i started a pension when i was 20 and gave it up at 30.i tend to look at it ddifferent-instead of thinking i want to invest so much per year to give me so much when i am 65,i just try and find a(what i think is) good investment and then try and find the money for it.some are doing ok while others are well not good but at least there is nobody making a soft killing out of me(maybe indirectly).i try and spread investment types and countries and split locked in money and on demand money.by the way whats the best rate for say 25k on demand at the mo.would think i have alot of the heavy lifting in on farm investing done but then do you ever stop

Government savings bonds give you 10% return after 3 years. (DIRT exempt AFAIK???)