Green Brick Wall

Investments & Savings

Page Author: Evan Hughes CFP

 

Saving for the future

Investing for the future need not be over complicated in Ireland. With the right advice you can find a solution that is proportionate to your risk tolerance and future goals. 

Let's look at some basics to better understand the process:

 

Traditionally, deposits such as bank or credit union accounts have not kept pace with inflation. Inflation is the general rise in the prices over time. This means the value of your bank savings can actually be going down in real terms. 

Have you made provision for an emergency fund in case of the unexpected? It is a good idea to keep access to some cash savings. 

Have you paid off debts like credit cards or car loans? There isn't much point paying a lender for the use of their money if you have that capital in your own account! It usually makes sense to clear debts before investing. 

Are you planning to purchase or upgrade any items in the medium term? Maybe a new car, or possibly home improvements, or even a post-covid holiday? It is prudent to budget for these items as you will need access to your savings in order to complete these goals. 

Once these 3 basics are covered, and you still have a remaining balance or monthly affordability, then you could look to invest to make your money work for you. 

Do you have a minimum of 5-7 years where you are very unlikely to need the proposed investment? Investments will have good an bad years and as such the rate of return is not-linear. In the past, there have been more good years than bad years. It is good practice to have that 5-7 year window in case you start off with a downturn ion order to give your investment time to recover and then grow. 

Have you completed a risk to return workshop with an investment advisor? Customer feedback consistently indicates that investors - especially first time investors - are much more comfortable having completed an explainer workshop (usually on Zoom). This should include a risk analysis and volatility explainer. It sounds more dramatic than it is, but it's a valuable exercise to give you a clear understanding of what is involved. 

The final step is to compare the various providers:

Terms and conditions will vary from one provider to another - this will include charges also. The objective is to get the lowest charges possible while still choosing a fund manager with a good track record. 

Past performance is not a reliable guide to future performance. It is still a consideration to check the returns history of each provider and make a judgement call on who you think likely to be competitive when investing your money. 

Sustainability is now a larger consideration for investors than it was in the past. At Ethico we believe that ESG or ethical funds are the superior choice for risk management and sustainable futures. 

Ethico advisors are happy to guide you through the above process and assess if investing is the right option for you.