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Savings plan as long term investment with Irish Life MAPs

  • 16-03-2019 7:38am
    #1
    Registered Users Posts: 19 ✭✭✭ Ron86r


    I believe boards.ie is the place to get sound financial advice that is beyond reproach? I am looking at channeling 200 euro per month, or so, into something like Irish life's MAPs (possibly level 4 or 5). Possibly over a 30 yr time span. Has anybody got any experience of this? It looks well diversified and structure etc. Is clear. The one thing that bothers me is the shares in Exxon Mobil, I am loath to invest in such a company, although I do drive a car every day so am probably indirectly sending money their way. Thoughts, tips, advice?


Comments

  • Registered Users Posts: 212 ✭✭ Mach 3


    FINANCIAL ADVICE
    Disclaimer: This is not a financial advice forum. Any opinion offered, in any guise, is to be taken as opinion, and nothing else. That means that if somebody proposes a particular investment, this is not to be thought of as financial advice. In the event that a poster says they are qualified to give such advice, neither Boards.ie Ltd., nor any of its affiliates, accept any liability for any loss or damage arising therefrom. In other words, members can assume that nobody who posts in this forum is qualified to give financial advice. BY POSTING IN OR READING FROM THIS FORUM, YOU AGREE TO THIS DISCLAIMER. Any financial advice sought or given will result in an immediate week long ban. Second offences result in an indefinite ban.

    https://www.boards.ie/vbulletin/showthread.php?t=2055089174

    This is the third thread started by a first time poster in as as many weeks. Specifically looking for advice.


  • Registered Users Posts: 19 ✭✭✭ Ron86r


    Did you just completely ignore the words thoughts and tips in my question. Also, I didn't think I would have to explain that I was being sarcastic when I write boards.ie is the place to go for financial advice.......


  • Registered Users Posts: 1,298 ✭✭✭ RedRochey


    If you've a 30 year outlook then go all in on MAPS 6

    Even better would be a cheap passive ETF that tracks the S&P or the MSCI ACWI


  • Site Banned Posts: 10 ✭✭✭ dSchwainass


    Ron86r wrote: »
    I believe boards.ie is the place to get sound financial advice that is beyond reproach? I am looking at channeling 200 euro per month, or so, into something like Irish life's MAPs (possibly level 4 or 5). Possibly over a 30 yr time span. Has anybody got any experience of this? It looks well diversified and structure etc. Is clear. The one thing that bothers me is the shares in Exxon Mobil, I am loath to invest in such a company, although I do drive a car every day so am probably indirectly sending money their way. Thoughts, tips, advice?

    Exxon produces tons of gas which we will need more and more for renewables. I dont see anything un-green about investing in Exxon but it depends on your precise concern.


  • Registered Users Posts: 226 ✭✭ Shai


    Ron86r wrote: »
    I believe boards.ie is the place to get sound financial advice that is beyond reproach? I am looking at channeling 200 euro per month, or so, into something like Irish life's MAPs (possibly level 4 or 5). Possibly over a 30 yr time span. Has anybody got any experience of this? It looks well diversified and structure etc. Is clear. The one thing that bothers me is the shares in Exxon Mobil, I am loath to invest in such a company, although I do drive a car every day so am probably indirectly sending money their way. Thoughts, tips, advice?

    Why do you want to invest in a fund with a 0.90% Annual Management Charge that has managed to accrue a whopping 38.9% profit in the last 6 years in one of the longest bull markets ever? A bog standard S&P500 ETF would charge you less than 0.10% AMC and would have doubled in value during that same period.


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  • Registered Users Posts: 1,298 ✭✭✭ RedRochey


    You're paying higher AMC because the fund is active and would have more downside protection that just investing in a S&P500 ETF


  • Registered Users Posts: 226 ✭✭ Shai


    You're paying higher AMC because the fund is active and would have more downside protection that just investing in a S&P500 ETF

    https://www.google.com/search?q=do+active+funds+perform+better+in+a+downturn&rlz=1C5CHFA_enIE739IE740&oq=do+active+funds+perform+better+in+a+downturn&aqs=chrome..69i57j69i64.13170j0j7&sourceid=chrome&ie=UTF-8

    Actively managed funds tend to underperform compared to passive ones. You're right that they go down less during downturns, but the problem is that passive funds go up so much more during upturns that they still come out ahead after a downturn.

    Genuinely curious if you think I'm misinterpreting anything here.


  • Registered Users Posts: 1,298 ✭✭✭ RedRochey


    Sorry I meant the fund is active in terms of asset allocations, the MAPS funds have the ability to switch from equity into alternatives or property (within a certain range). Also with the equity allocation of MAPS they have low risk dynamic share to cash funds which switch to cash when volatility in the market increases.

    Now I'm not saying these aspects lead to greater performance, that's up for debate, but they do offer something more than passive funds and hence the higher AMC.


  • Closed Accounts Posts: 2,743 ✭✭✭ Heres Johnny


    Have you a pension in place OP? Do this first anyway.


  • Site Banned Posts: 10 ✭✭✭ dSchwainass


    because ETFs are so hard to use due to irish gov policy, there is no consensus on the best way to invest like youd have in the UK, Germany or the US.


    Just read as much as you can, diversify and keep costs and taxes low as possible.


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  • Registered Users Posts: 9 ✭✭✭ MuttonChop


    What you should do is pop your initial sum into a calculator, compound it at (4 - AMC)% a year for 7 years, and then lose 41% of the end profit as that's the exit tax.

    You have to pay the exit tax on any profit after 7 (or maybe 8?) years, so compounding beyond that isn't useful. After that time period you essentially reset back to your baseline and then you'll have to figure out if you want to go for another 7 (or 8) years, and then the cycle repeats.

    If you withdraw early you pay a penalty.

    If you make a loss it can't be used to offset any other gain.


  • Registered Users Posts: 1,298 ✭✭✭ RedRochey


    MuttonChop wrote: »
    What you should do is pop your initial sum into a calculator, compound it at (4 - AMC)% a year for 7 years, and then lose 41% of the end profit as that's the exit tax.

    You have to pay the exit tax on any profit after 7 (or maybe 8?) years, so compounding beyond that isn't useful. After that time period you essentially reset back to your baseline and then you'll have to figure out if you want to go for another 7 (or 8) years, and then the cycle repeats.

    If you withdraw early you pay a penalty.

    If you make a loss it can't be used to offset any other gain.

    Its 8 years


  • Registered Users Posts: 1,493 ✭✭✭ thomasm


    Dont forget you are losing 1% on the way in to stamp duty, you would be lucky to get 0.9% AMC and the underlying cost is more(closer to 2%), you also have inflation to contend with and tax at 40% on any gain. Factor all that in and the fund needs to do about 6% per annum just to stand still.



    One thing is sure Irish Life will make money !



    If you have a 30 year time frame, do pension first.


  • Registered Users Posts: 471 ✭✭ Clytus


    My pension was in a MAPs 5 until September when I asked for it to be moved to a level 4. I've 25 years before I even consider drawing down, so happy for it to sit where it is atm.

    However Im looking to start into a second fund to invest a small portion of some rental income I have. Looking at the Irish Life Managed Portfolio Fund 6....yielding nearly 10% over the last 3 years and even in positive territory YTD. Its only a small amount ..roughly €200 p/m. I can afford losses on it, but think there maybe some value to be found in the near future.

    Any thoughts?


  • Registered Users Posts: 226 ✭✭ Shai


    is your second fund part of your pension as well?


  • Registered Users Posts: 471 ✭✭ Clytus


    Shai wrote: »
    is your second fund part of your pension as well?
    No. My pension is fairly well funded atm (obviously it could always be more!) . I now have some rental income that I don't want to just waste, so was thinking about investing a portion of it into a fund that might be a bit exciting over a maybe 10 year period.

    Rental income is €2000 p/m (I recently inherited a mortgage free house in Dublin), so only thinking about 20% net into the fund..thats how I can afford some loss.

    I'm keen to hear about any alternatives though. Not totally mad stuff, but anything yielding about 10%.

    Initiative Ireland is another area I am looking into...any thoughts?


  • Registered Users Posts: 226 ✭✭ Shai


    10% over the last 3 years is absolutely atrocious. Investing in a bog standard S&P500 ETF, which has a fraction of the management costs of MAPs, would have seen a 50% return over the last 3 years. The market has been unbelievably good to investors.

    I would suggest you do a search on this forum for some of the ETFs regularly mentioned here, like VTI, SPY, VUSA, VUSD, figure out how ETFs work, and decide whether or not you would be better off investing your non-pension funds in one of them. Also, please don't let a bank make your ETF investments for you. They'll rip you off. Much better to open a brokerage account with DeGiro instead.


  • Registered Users Posts: 212 ✭✭ Mach 3


    thomasm wrote: »
    Dont forget you are losing 1% on the way in to stamp duty, you would be lucky to get 0.9% AMC and the underlying cost is more(closer to 2%), you also have inflation to contend with and tax at 40% on any gain. Factor all that in and the fund needs to do about 6% per annum just to stand still.



    One thing is sure Irish Life will make money !



    If you have a 30 year time frame, do pension first.

    Trust-poll-768x469.png

    Saw this today, thought you might like it.
    I consistently meet with individuals who swear they are conservative about their investing. They don’t want to take any risk but want S&P 500 index returns.

    In other words, they want the impossible

    A good bit of divergence between what the client wants and what the sell side offer. This has nothing to do with MAPs, only an insight of behaviour of both sides.

    https://realinvestmentadvice.com/for-the-average-investor-the-next-bear-market-will-likely-be-the-last/


  • Registered Users Posts: 1,298 ✭✭✭ RedRochey


    If its for 20+ years just put it into an ETF that tracks the S&P 500


  • Registered Users Posts: 471 ✭✭ Clytus


    Shai wrote: »
    10% over the last 3 years is absolutely atrocious. Investing in a bog standard S&P500 ETF, which has a fraction of the management costs of MAPs, would have seen a 50% return over the last 3 years. The market has been unbelievably good to investors.

    I would suggest you do a search on this forum for some of the ETFs regularly mentioned here, like VTI, SPY, VUSA, VUSD, figure out how ETFs work, and decide whether or not you would be better off investing your non-pension funds in one of them. Also, please don't let a bank make your ETF investments for you. They'll rip you off. Much better to open a brokerage account with DeGiro instead.

    Thanks for that. Ive looked at S&P ETF's, (Vanguard) but whats put me off is the tax declaration obligations. Sounds fairly complicated on the surface...or have I over-read?


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  • Registered Users Posts: 226 ✭✭ Shai


    Clytus wrote: »
    Thanks for that. Ive looked at S&P ETF's, (Vanguard) but whats put me off is the tax declaration obligations. Sounds fairly complicated on the surface...or have I over-read?

    couple of options here:

    - UCITS ETFs (essentially ETFs available at EU brokerages) have the deemed disposal rule that causes these tax obligations
    - US ETFs (available at US brokerages like firstrade.com) do not, but you will have to do a currency exchange when sending funds to a US brokerage
    - shares in BRK.B track the S&P500 very closely, but are treated as shares by the tax man. Which means you can buy them at EU brokerages and you won't have to deal with the deemed disposal rule. Downside is that BRK.B is not an ETF, but a share in a large investment firm that is not legally obliged to track the S&P500. Also, its CEO is getting on a bit, and no one quite knows what'll happen when he steps down.


  • Registered Users Posts: 19 ✭✭✭ Ron86r


    Didn't Exxon spill millions of tons of oil off the coast of Alaska. One of the worst environmental disasters ever?


  • Registered Users Posts: 19 ✭✭✭ Ron86r


    Have you a pension in place OP? Do this first anyway.


    I sure do.


  • Registered Users Posts: 21 ✭✭✭ Policy Review


    Sorry I meant the fund is active in terms of asset allocations, the MAPS funds have the ability to switch from equity into alternatives or property (within a certain range). Also with the equity allocation of MAPS they have low risk dynamic share to cash funds which switch to cash when volatility in the market increases.

    Now I'm not saying these aspects lead to greater performance, that's up for debate, but they do offer something more than passive funds and hence the higher AMC.


    The issue with the Low risk dynamic share to cash switch is that



    A) This essentially works by using an algorithm to spot down turns in the market..... there's nothing to really suggest this actually works. Jan 2018 most of the MAPS go down in value over xmas and they took a few months to go back up in value again. So why didn't it spot a potential correction?



    B) Why in a downturn switch into cash in the first place, cash is a short term option at best to stop further losses or used when a investment plan has reached maturity. Would MAPS switch more into cash in an economic down turn which essentially is going to cost the investor money as cash has little to no growth but still carries the high annual management charge and fee's.


  • Registered Users Posts: 1,298 ✭✭✭ RedRochey


    I believe the way MAPs dynamic share to cash is that it's based mainly on the MSCI ACWI 200 day moving average (among other factors but I think this is the main one).

    So if the index goes below its 200 day moving average, then MAPs will switch some % into cash, something like 30%. So it's not really trying to time or predict the markets, its more of a reaction move, something happens first and then it moves. Once the index goes back above its 200 day m.a. then it'll leave cash.

    A good example of this was December and comparing it against Zurich's Prisma funds. They both fall at the start, then mid-December MAPs would've switched into cash, Zurich falls more than MAPs does, but then in January Zurich rallys more.


  • Registered Users Posts: 21 ✭✭✭ Policy Review


    I believe the way MAPs dynamic share to cash is that it's based mainly on the MSCI ACWI 200 day moving average (among other factors but I think this is the main one).

    So if the index goes below its 200 day moving average, then MAPs will switch some % into cash, something like 30%. So it's not really trying to time or predict the markets, its more of a reaction move, something happens first and then it moves. Once the index goes back above its 200 day m.a. then it'll leave cash.

    A good example of this was December and comparing it against Zurich's Prisma funds. They both fall at the start, then mid-December MAPs would've switched into cash, Zurich falls more than MAPs does, but then in January Zurich rallys more.


    Thanks for the extra info, could never find out how it actually worked. Again time will tell if this feature gets integrated into more funds across the board.


  • Registered Users Posts: 471 ✭✭ Clytus


    Shai wrote: »
    couple of options here:

    - UCITS ETFs (essentially ETFs available at EU brokerages) have the deemed disposal rule that causes these tax obligations
    - US ETFs (available at US brokerages like firstrade.com) do not, but you will have to do a currency exchange when sending funds to a US brokerage
    - shares in BRK.B track the S&P500 very closely, but are treated as shares by the tax man. Which means you can buy them at EU brokerages and you won't have to deal with the deemed disposal rule. Downside is that BRK.B is not an ETF, but a share in a large investment firm that is not legally obliged to track the S&P500. Also, its CEO is getting on a bit, and no one quite knows what'll happen when he steps down.

    Thanks again for the info. Decided to open a Degiro account and started off buying into Blackrock's iShare S&P ETF. Seems like a cheap way to get started and get a bit of experience.


  • Registered Users Posts: 91 ✭✭ feartheclaw


    Clytus wrote: »
    Thanks again for the info. Decided to open a Degiro account and started off buying into Blackrock's iShare S&P ETF. Seems like a cheap way to get started and get a bit of experience.

    As a matter of interest which one of their ETFs did you go for - seems to be a few listed..


  • Registered Users Posts: 471 ✭✭ Clytus




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  • Registered Users Posts: 91 ✭✭ feartheclaw




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