Long term savings plan (10yrs+)

hurlingfan11

My son is 6 years old and daughter is 3 yrs old. I'd like to investigate options for long term investment plans for their education (third level). Is there any site that compares and contrasts the various options and give pros/cons? I'd like to pay somewhere between 100E-200E each per month. Not sure if you could reduce amount if something came up. Thanks.

lucky john

http://www.askaboutmoney.com/forumdisplay.php?f=69

You might find info there of use. Most likely a regular saver deposit account is your best bet. Its money you can't afford to loose I assume so anything else is going to involve risk. The fees on small amounts would be off putting to invest in shares or funds. Unfortunately interest rates are really low now and for the next few years Save a lump sum for 5 years and then at that stage you could have €12, 000 to invest and equities would be more cost effective to look at.

SBarrett

The selection of regular savings plans isn't great. I use the Zurich Life one which I find to be the most competitive in the market.


Steven

topper_harley2

SBarrett wrote: »

The selection of regular savings plans isn't great. I use the Zurich Life one which I find to be the most competitive in the market.


Steven

Can you explain? NUK offers a 4% regular saver which is the market leader at the moment, without needing a current account. I looked at Zurich Life website and their regular saver products couldn't be more vague e.g. http://www.zurichlife.ie/savings_and_investments/regular/savings_plus.jsp:

A regular premium unit-linked savings plan that invests in a range of investment funds.

Unit linked to what i.e. what is the asset allocation? What range of investments vs attribute to risk? What is expected return? Is the capital guaranteed? What are the charges, if any?

I don't see how you can recommend this to the OP without explaining it in alot more detail.

hurlingfan11

Thanks for the responses. KBC: Regular Saver Account looks a good bet but personally I'd be looking maybe at something with a bit more risk - investment products (stocks/shares) Any good site that gives some examples. Would this option be more suited to a lump sum investment rather than regular savings which is fixed/variable amount €/month?

SBarrett

Unit linked to what i.e. what is the asset allocation? What range of investments vs attribute to risk? What is expected return? Is the capital guaranteed? What are the charges, if any?

It is a unit linked fund i.e. your money is pooled with other investors and you buys units in the fund that you pick.

The asset allocation is up to you, based on your attitude to risk and goals. The risk and expected return is related to the asset allocation you choose. You have full access to all of Zurich Life's funds. No capital guarantees, it is not a deposit account.


Charges: 101% allocation, AMC from 1.25%

topper_harley2

Thanks for the reply Steven. So with an AMC of 1.25%, I assume this is a managed fund, as opposed to tracking the S & P or similar? Isn't the general consensus that index linked funds are better performers and cheaper to buy into as well?

Am I correct in saying that the 101% allocation means Zurich buy an extra 1% units to top up your investment, but make this money back with the AMC, and any exit charges, or penalties for withdrawing < 5 years etc.?

SBarrett

The AMC is Zurich Life's charge, it is not the TER which is the cost of the fund. Whether you invest in indexed or active is up to yourself. The TER under an indexed fund will be cheaper than that of an actively managed fund.

If you believe in long term market efficiency, then indexed funds are where to invest. The problem with active managed funds isn't that they can't outperform the average, it's that they don't try. Their target and bonuses are based on beating the average, so why try to shoot out the lights. If you get it wrong, you won't get your bonus, so just stick with what others are doing and you should be alright.

Yes, 1% is added onto the policy and Zurich would envisage making this money back through the AMC over the years. There are early exit penalties in the first 5 years. Seeing as the OP wants a 10 year investment term, this shouldn't be an issue.

As most regular savings amounts are relatively small, most people don't have enough capital to get adequate diversification or make it cost effective to trade on their own. That is why I mentioned the Zurich Life savings plan. You have to pay them to manage your money but you get access to more funds and greater diversification.

Steven