Managed investment options?

Squall Leonhart

I currently pay monthly into a PRSA pension fund. I have a certain amount of freedom to pick and choose which of 27 predefined (Irish Life selected) funds to split my money into as a % of money already invested, or going forward where monthly payments from now on will go (see attached - pdf's are available for each fund with more detailed info about them).

Well and good... but I cannot cash out until I am in my mid 60s (I'm not half that yet).

Is there any equivalent type managed investments where I can log in online, see my performance, and the crux of the issue... cash out at any time I choose? I want to put a small steady monthly amount into this type of thing if it exists, which I'm sure it does. I pay a fixed fee of 5% of my investment a month on my pension, I'm happy with this and would like similar fees.



Can anyone advise where to begin?

alb

Squall Leonhart wrote: »

I pay a fixed fee of 5% of my investment a month on my pension, I'm happy with this and would like similar fees.

???

Squall Leonhart

I make a monthly contribution to an Irish Life PRSA.

Since I knew nothing whatsoever about pensions I went with them. 95% of what I pay to my pension monthly is invested for me by Irish life, the other 5% is their fee for the managed account.

That's what I mean, I'd like to find another (non-pension) managed investment fund for a similar cost, if this is even possible. I just do not know where to start.

Frogdog

If I'm reading this right, you're paying Irish Life a fee of 5% every month?!?!?! And this is on top of the management fees from the funds I'm guessing?

OP, you're being taken for a ride. Those fees are massive. You're looking for something with similar fees, or lower, if possible? It'd be hard to find anything that isn't lower in fees!

Squall Leonhart

Frogdog wrote: »

If I'm reading this right, you're paying Irish Life a fee of 5% every month?!?!?! And this is on top of the management fees from the funds I'm guessing?

OP, you're being taken for a ride. Those fees are massive. You're looking for something with similar fees, or lower, if possible? It'd be hard to find anything that isn't lower in fees!

:eek::o

I pay 400/mo to Irish Life, 380 of which is invested..

Being taken for a ride - while probably true - is not nice to hear...
I take it from your exclaim that there are managed pension funds with much lower fees? If so, what's the best thing to do? Do I set up a new pension fund elsewhere, in which case the 3,000 odd I've invested so far this year gets left there for 30 years or can it be transferred to another pension scheme? This was totally beside the actual original question I was asking but has become more important!

But, back to the original question, is there any advice here? So I can go in with my eyes open this time? I was just trying to do the 'smart' thing and get a pension started, seems I haven't been exactly savvy..

Thanks for the replies.

Prezatch

Squall Leonhart wrote: »

:eek::o

I pay 400/mo to Irish Life, 380 of which is invested..

Being taken for a ride - while probably true - is not nice to hear...
I take it from your exclaim that there are managed pension funds with much lower fees? If so, what's the best thing to do? Do I set up a new pension fund elsewhere, in which case the 3,000 odd I've invested so far this year gets left there for 30 years or can it be transferred to another pension scheme? This was totally beside the actual original question I was asking but has become more important!

But, back to the original question, is there any advice here? So I can go in with my eyes open this time? I was just trying to do the 'smart' thing and get a pension started, seems I haven't been exactly savvy..

Thanks for the replies.

My two cents is that you should probably ditch the 'managed fund' you are currently with in Irish Life. Books have been written about whether investment managers can consistently beat the market over the long term (a popular one being John Bogle - Little book of common sense investing). I wouldn't necessarily preach to you to go out and read that book, it's pretty one sided. But the fact remains that you are being charged such a high fee because your fund is actively managed and the return over the long term (30 years) will more than likely not beat the market whilst also charging you this fee, thereby desolating your returns.

You'd be much better off going for a passively managed, well diversified fund for your pension. I'm guessing you're young so it should be heavily weighted toward equities. I'm pretty sure Irish Life have a good selection of large passively managed funds so just ask to change investment strategy. Confirm they don't charge any fee for this and what the charges are in the new fund... Hopefully much lower than 5%!

"There are a few investment managers, of course, who are very good – though in the short run, it’s difficult to determine whether a great record is due to luck or talent. Most advisors, however, are far better at generating high fees than they are at generating high returns. In truth, their core competence is salesmanship."

- Warren Buffet in 2014

Prezatch

FYI - they are referred to as indexed funds here:

https://www.irishlife.ie/investments/fund-prices-and-performance

Squall Leonhart

I don't know how you'd class young (most of what I'm reading online would have me believe I'm very late to the game and have lost a decade of compound interest already), I'll turn 30 early 2016. I feel like I am a bit behind on financial matters.

Thanks for your replies and advice.

I know I'm probably asking ignorant questions here, but with the index funds you mentioned, are these still pension funds or can they be "cashed out" at any point?

I'd be hoping to start something smaller separate to the pension, and something a little more short term (7-10 years maybe) that I can cash out of when I want/need to. I understand in order to make gains I'd need to be involved with higher risk investment which I'm okay with. I assume equity is not the best for this? Begs the question am I better off just putting money into a savings account (a less interesting option!)

Prezatch

I'm 29 myself and haven't been on the pension bandwagon for very long so I wouldn't write yourself off just yet!

Yes the index funds are still pension funds. For instance the Consensus Fund is one of their largest however it can also be invested in by other means.. for example through AIB's Portfolio Invest (see pdf link at the bottom of this page - http://personal.aib.ie/our-products/investments/portfolio-invest). But of course they will charge you a fee for this pleasure.

If your employer is paying a decent percentage into your pension every month along with your own contributions then 100% keep your pension as you're taking extra income with it and also it will have taxation benefits in the future.

You have mentioned that you'd like to separately invest savings. The three options really are:

Deposit accounts (KBC will give you 3% http://www.moneyguideireland.com/best-savings-rates/regular-savings)

Shares

ETFs (very similar to pension funds mentioned above but without the fees!)

In terms of risk, shares are the riskiest of these 3 options as you need to be diversified and able to pick decent shares but definitely the most lucrative. This is due to the fact that ETFs are taxed heavily under current Irish rates. Read around a lot more on the board taxation of ETFs - it's a minefield. There is also tonnes of advice on what to do with savings (http://www.boards.ie/vbulletin/showthread.php?t=2057505260). You should probably spend a few months reading before committing to any strategy. Askaboutmoney is also a good resource - investments section.

Focus on equities or ETFs that are heavily if not all equity weighted for the next 20 years or so. The best of luck to you

PaulM1977

Hi Squall Leonhart,

I would recommend getting independent financial advice about your pension, you can definitely get 100% allocation for your pension contributions, instead of Irish Life taking a chunk of it to line their own pockets, on top of the annual management fee.
This 5% they are taking is significantly reducing the pension pot you will have at retirement. This is your money, that you work hard for, so why should they take 5% a month of this, from you, on top of an annual charge?

The fund options should also be discussed, passive is a better option than the "actively" managed funds that have become popular in the last couple of years. They will do the same thing as passive funds but the annual management charge will be higher by 0.20% to 0.35% depending on the level of risk you take and the provider.

Thanks,

PaulM

FRI Investments

Hi,

We are a new company based in Dublin that focus mainly on Short / Medium term investments and am outraged with some of the charges, fee's, commissions, etc on investments in Ireland. I worked here for many years in the IFSC in the trading industry, moved to London and returned to Dublin a few years ago.

Reading some of the stories on here of 5% a month charges is madness. Normal investment products shouldn't cost more than 2% a YEAR.

5% could be justified if and only if the investment manager is generating huge 10-30% gains per month. FYI if they are generating this performance it is a very high risk investment with a large drawdown (high risk/reward)

From what we have researched in the market a lot of individuals don't know what they are being charged.

Squall Leonhart

PaulM1977 wrote:

I would recommend getting independent financial advice about your pension, you can definitely get 100% allocation for your pension contributions, instead of Irish Life taking a chunk of it to line their own pockets, on top of the annual management fee. This 5% they are taking is significantly reducing the pension pot you will have at retirement. This is your money, that you work hard for, so why should they take 5% a month of this, from you, on top of an annual charge?

Hi Paul, thanks very much for your advice and input. It really is appreciated. You're right, it's painful at times to fork that out every month. I've made 9 payments at this stage. 3,600eur of which 3,420eur has been invested. Current value of my investment is 3,485eur. Just about a 2% return. I need to look at getting some independent financial advice.

FRI Investments wrote:

Reading some of the stories on here of 5% a month charges is madness. Normal investment products shouldn't cost more than 2% a YEAR.

FRI Investments wrote:

From what we have researched in the market a lot of individuals don't know what they are being charged.

Holding my hands up in embarrassment here. I knew diddly squat about starting a pension and just made an appointment to get the ball rolling with Irish Life. I put my trust in who I believed to be the professionals. I'm sure they are very competent, but ignorantly I was unaware of how much it appears I'm being ripped off.

FRI Investments

Squall Leonhart wrote: »

Holding my hands up in embarrassment here. I knew diddly squat about starting a pension and just made an appointment to get the ball rolling with Irish Life. I put my trust in who I believed to be the professionals. I'm sure they are very competent, but ignorantly I was unaware of how much it appears I'm being ripped off.

Most people don't. I used to work in the pension industry and the first couple of years investing goes towards cost's. When compared to other countries/ jurisdictions we are unfortunately getting ripped off. Most of the pension funds are not proactive. They'll throw good money at bad money. At least you seem your on top of it.

PaulM1977

Squall Leonhart wrote: »

I've made 9 payments at this stage. 3,600eur of which 3,420eur has been invested. Current value of my investment is 3,485eur. Just about a 2% return."


Based on the figures you have given, you are yet to break even on the contributions you have made when the charges are taken into account.
Independent advice would be the best option, once you have sat down with Irish Life. With an independent financial adviser they should research the market for you and obtain 100% allocation on your PRSA. The annual management charge of 1% would be the same across the board unfortunately.

Thanks,

PaulM

Things to avoid...

'Managed funds', 'funds of funds', spread betting, microcaps, tips, newsletters, churning, trendy new things, 'trading' and people who offer to manage your money for you.

Things to do ...

Get a cheap online account, each month invest your contributions into a blue chip divident payer. Then forget them. Reinvest your dividends every year, aim for an eventual portfolio of around 20 of these shares. Dont panic and sell if the market drops - if youre in it for the long term these are the times you make money (by buying). Read everything you can and cultivate an interest.

Squall Leonhart

Deleted User wrote: »

Get a cheap online account, each month invest your contributions into a blue chip divident payer. Then forget them. Reinvest your dividends every year, aim for an eventual portfolio of around 20 of these shares. Dont panic and sell if the market drops - if youre in it for the long term these are the times you make money (by buying). Read everything you can and cultivate an interest.

Does anybody have any suggestions of good sites to register with?

Frogdog

Degiro are the cheapest out there in the Irish market at the moment, in my opinion. I've an account set up with them the last few months and I've had no problems. Very user-friendly, quick and cheap.

Squall Leonhart

Thanks Frogdog!

Are there minimum investments or small sums ok do you know?

manonboard

Squall Leonhart wrote: »

Thanks Frogdog!

Are there minimum investments or small sums ok do you know?

I'd like to second his advice.

I use degiro and find them soooo cheap.

Small sums are fine and there is no minimum investment worth considering.

Its worth reiterating, if you dont know what ou are doing. Stick with the big blue companies. If you have a look at VISA/MASTERCARD.. its like a 30degree angle only going one direction. Those numbers on thier sheets grow in line with the financial markets globally so as you can imagine, tends to go one way.

My biggest fault has been trying to beat thier excellent returns. I probably would of been much better leaving it with them.. but I'm having fun too.

If its your pension, be sure to set up the correct pension account so you get your tax benefits. I dont know anything about that.

Ryanair is doing great these days. Dont be afraid to wait for a small drop before entry time. They are frequent enough.

note: 2% return sounds terrible.. I made that this morining.. I think they are giving you a poor product (but no more poorer than what others are getting from them!)

note 2: If you are doing monthly investments of new capital, be aware of some taxes/transaction costs. eg: buyng Visa on US is cheaper than buying BKIR on London because of charges. Its just worth keeping an eye on.

Squall Leonhart

Lot to think about there, and lots of reading to be done.

I am hoping it's one of those things where you'll never learn to cycle a bike by reading about it, so I hope to learn and make mistakes as I go.

It's not my pension money here, this is just a (very) small side investment. Dipping toes in the water, see how I get on.

Squall Leonhart

Also, I've signed up to Degiro this afternoon and made a transfer, only 100 euro to start me out because I literally have no idea what I am doing.

Having no idea what i'm doing probably means it's a ridiculous thing to do with my money, but I am aware and 'willing' to accept losing it.

Squall Leonhart

Squall Leonhart wrote: »

Also, I've signed up to Degiro this afternoon and made a transfer, only 100 euro to start me out because I literally have no idea what I am doing.

Having no idea what i'm doing probably means it's a ridiculous thing to do with my money, but I am aware and 'willing' to accept losing it.

Its the best way to learn, by doing with small amounts. Remember the most important thing is to educate yourself. Read as much as you can, be cynical and questioning about advice received. Don't tamper too much with your investments, most money is lost by trying to time the market, run your winners and cut your losers and remember markets go up and down. If youre investing for the long term you will experience several crashes, so dont panic when things seem to do haywire. oh and diversify, ideally to at least 10 different holdings.

Squall Leonhart

Deleted User wrote: »

oh and diversify, ideally to at least 10 different holdings.

Probably difficult to do with 100eur

So when you're diversifying, which makes complete sense, not having all eggs in the one basket etc, how do I know where to spread the money, or is it a case of read, read, read, read, read?

Squall Leonhart

Squall Leonhart wrote: »

Probably difficult to do with 100eur

So when you're diversifying, which makes complete sense, not having all eggs in the one basket etc, how do I know where to spread the money, or is it a case of read, read, read, read, read?

Not possible now but aim towards building this. The usual advice is to pick different sectors and countries eg oil, telecommunications, food and drink, airlines, pharmaceuticals, finance etc etc
If youre going for blue chips, these will be big multinationals so you dont need to worry about geographical diversification.

Squall Leonhart

Since I haven't been able to get in yet, until funds transferred show up in my account, just wondering, is it easy to keep track of how much money I have paid in, so it's easy and quick to see how much i'm up/down, or is it something to meticulously keep track of as I go along?

manonboard

Squall Leonhart wrote: »

Since I haven't been able to get in yet, until funds transferred show up in my account, just wondering, is it easy to keep track of how much money I have paid in, so it's easy and quick to see how much i'm up/down, or is it something to meticulously keep track of as I go along?

Easy enough. Its got a big "Balance" number on the left.
Usually this is your investment values + whatever cash you have yet to invest.

Theres also a day difference to the right. .

topper_harley2

You could buy a few units of an all world ETF for E100 which would give instant diversification (e.g. IWDA has 1600 holdings alone). Loads of information about ETFs in this forum already so have a read before asking "What is an ETF"

Squall Leonhart

Thanks topper!

Yeah I've seen a few things here about them alright, exchange traded funds. The one thing that springs to mind after reading about them is taxes, can't rightly remember what was said haha, will trawl through boards and see what I find :)

RainyDay

Deleted User wrote: »

Things to avoid...

'Managed funds', 'funds of funds', spread betting, microcaps, tips, newsletters, churning, trendy new things, 'trading' and people who offer to manage your money for you.

Things to do ...

Get a cheap online account, each month invest your contributions into a blue chip divident payer. Then forget them. Reinvest your dividends every year, aim for an eventual portfolio of around 20 of these shares. Dont panic and sell if the market drops - if youre in it for the long term these are the times you make money (by buying). Read everything you can and cultivate an interest.

If you 'forget about them', you'll find yourself facing a nasty tax bill down the road. If you manage your own investments, you manage your own tax liability.

I agree with most of your list of things to avoid, except for plain old 'managed funds'. You will get far more diversification with any half-decent fund, and you focus on low-charging funds, you will do better than the vast majority of people who pick their own stocks.

topper_harley2

RainyDay wrote: »

If you 'forget about them', you'll find yourself facing a nasty tax bill down the road. If you manage your own investments, you manage your own tax liability.

I agree with most of your list of things to avoid, except for plain old 'managed funds'. You will get far more diversification with any half-decent fund, and you focus on low-charging funds, you will do better than the vast majority of people who pick their own stocks.

I think the "forget about them" is not to be taken literally, moreso a pointer to not be checking them daily.....