€50 per week for the next 20 years - what to put it in?

The One Doctor

Hi all,

Have just started in a job and I'll be in this department until I retire in 20 years.

Will work my way up of course, but that's the plan.

Im paying into the public pension, but from my research that's not going to amount to much.

So it's time to hit the markets for long term holding, ideally stocks with dividends, but good ETFs etc are an option.

Right now I have no mortgage (rent is quite low) and no debts. I do have two young kids though!

Does anyone have any particular sites they use for buying stocks? Any ideas on good strategies for long term holding?

Ill be paying in €200 per month, and that'll increase over time as I earn more.

Any advice welcome.

daheff

So a couple of things to think about (and not to be a downer)

1 -pay off any debt first -especially credit card debt

2- if you can contribute to a pension, all the better. not sure if you can also set up a PRSA if you have a public pension

3- Dividends are charged at marginal rate of tax (up to 52%). Capital gains are (currently 33%)

4- ETFs have an 8 year deemed disposal rule. Even if you dont sell you need to pay tax as if you did. you cannot carry forward any losses.

5- Rent/mortgage. how are you going to pay rent/mortgage when you retire? Will you have enough, or should you think about trying to buy a home rather than rent?

6- 200e per month over 20 years, with a 6% pa return will end up with about 90K at the end. thats not an awful lot in terms of retirement fund. If you can increase it by 5% a year then its about 140k.

7- Kids get more expensive as they get older, but some bills disappear (childcare etc).

AndrewJRenko

Are you planning on buying a house?

Best investment option for retirement is probably pension AVCs to avail of tax relief, assuming that you're paying tax at the higher rate.

But if you're going to be buying a house anytime, you don't want to tie up your money there.

The One Doctor

https://www.boards.ie/discussion/comment/120119483#Comment_120119483

Nope, we won't be buying a house.

I'm paying tax at 20% right now.

Debts are paid off.

AndrewJRenko

In that situation, I'd be looking for a low charging investment fund, so your investment is spread (diversified) around the world and across many sectors to reduce risk. I'm not sure who provides such funds these days. You could try a broker like these;

https://onequote.ie/low-investment-charges/

Jim_Hodge

I'd do AVCs to a Pension to be perfectly honest.

daheff

https://www.boards.ie/discussion/comment/120120931#Comment_120120931

actually being on 20% is an interesting point. Dividends & interest count towards your annual income. If you earned enough on that to push you into the higher bracket, and pension contributions would then be at 40% rather than 20% -so a straight off 20% gain on them. As far as I know (and somebody please correct me if i'm wrong), its all the pension contributions that benefit, not just the portion of salary over the threshold.

BUT if you are on lower income you may also be entitled to other state benefits. again you'd need to understand the thresholds for those so as not to lose them.

Supercell

I have an AVC with Davy that I put a monthly amount in and invest it into Investment Trusts , over the longer term it should do resonably well i think.

JPup

My first advice is to save to buy a house unless you expect to inherit one. You don't want to be renting in your retirement years.

Assuming you are sorted on the housing side, put the money into a pension as has already been suggested. Go 100% passive equities (i.e. tracking the stock market), aim to minimise fees, and then check your statement once per annum to make sure your contributions are going in ok.

Best to also have at least 3 months salary in cash in a savings account too for a rainy day.