The following are 5 common questions we receive on a frequent basis. We will always answer questions directly, but we created anonymous variations of these 5 common questions as it may benefit many more of our readers. Feel free to send any questions to firstname.lastname@example.org and we will get back to you as soon as possible.
I am 45 and received an inheritance of €30k. What should I do? Pay off some of my mortgage or invest? Any other alternatives?
There is no easy answer to this question. How an individual treats their inheritance is dependent on their own personal circumstances and ultimately what they are trying to achieve. If reducing mortgage repayments to a more affordable level is a goal then paying a lump sum to reduce the capital loan would help achieve this. On the other hand, if you want to ensure your money is working most effectively then you might consider continuing to pay your mortgage at an interest rate of say less than 3% and instead put the €30,000 capital sum into an investment account that will achieve say an 8% growth. Naturally, interest rates and growth rates are variable and will differ in each individual case. In this case, your capital sum is 5% per annum better off in an investment. One thing always to remember, it is sometimes better to have a capital sum available to you in case of an emergency.
I am in my late 50s and haven’t really paid attention to my pension. Is it too late for me to invest in it? What should I do?
It’s never too late to commence paying into a pension. If anything at 50 it’s possible to visualise what retirement will look like for you which isn’t as clear when you’re in your mid 20’s or 30’s, hence it makes it easier to focus your efforts on building a retirement fund. The tax reliefs that you can obtain will also be higher in your 50’s so if you want to get the most out of your money then paying into a pension for an income in retirement is the best way to make your money work. If you are self-employed and are looking to exit your business then using a pension can be an ideal way to tax efficiently exit your business.
I am an ulster bank customer with a mortgage and over 40k in savings on deposit. What should I do?
If you have an existing mortgage within Ulster Bank you really don’t need to take any immediate action. When Ulster Bank ultimately withdraws from Ireland, the terms of your mortgage will still have to be honored so unless you want to shop around and see if other institutions have more favorable terms, you don’t need to do anything.
If you are in a position where you have any level of cash on deposit then you really should investigate appropriate investment options that will ensure your money in the first instance keeps its value in line with inflation and secondly, is providing you with an appropriate level of return that is in line with your risk attitude.
I am in my early 30s, self-employed and single. What protection policies are essential for me if any?
An individual’s biggest asset is their ability to earn an income. Typically most people insure their assets, for example, our house, our cars, etc, however, there are not enough people who focus on protecting their income. An income protection policy is so important if you are self-employed and rely on your ability to work. An income protection policy will provide you with the safety net of replacing any lost income should you become incapable of working and can provide cover up until retirement age.
I’m 25 and plan on travelling for up to a year once the pandemic finally ends. Is there much point in paying into a pension until then? My employer won’t contribute until I become permanent.
You could contribute to a PRSA. This can be eventually moved to a new employer once you return from travelling. You could stop contributions while you are travelling if you can’t afford to keep the payments going.
Perhaps it would be better to save as much as possible for travelling as that may be a once in a lifetime opportunity and you should enjoy it as much as you can. When you return to Ireland, you can then re-look at pension options. You will still have plenty of time to do that at 26/27.
For more information, give us a call on 025-30588 or book a complimentary, no-obligation chat here. We are always happy to help. Our office is still open for appointments only and we are also available for consultations over the phone or via zoom.