Your Money: JFL Financial Advisors: New To The Market!!

New To The Market!!

INVEST IN A PENSION IN THE MIDDLE OF A RECESSION? ARE YOU MAD??

Most of us know that pensions are a good idea to fund our lifestyle in retirement but why is it so important?

Click to view a table of Stock Market Returns over the last 30 years.

• Well the average number of years that a male lives in retirement in Ireland is 15* years
• and the average number of years that a female lives in retirement is 18* years

This means that you need to have money to fund these years in retirement so that you can still afford to have fun, after all you will have worked most of your life so you should be able to afford to still go on holiday, play golf, enjoy a run in the car and a pub lunch or whatever your idea of retirementl bliss is. (To each of us we have our own vision, it helps to think of this and then think how much it would cost per year).

The thought of trying to save enough can be daunting especially when we want to enjoy ourselves today but with a bit of financial planning from professional Independent Financial Advisors like ourselves the task is made considerably easier.

Most people either pay a percentage of their salary to their pension savings monthly by direct debit or more popular with the self employed or seasonal workers is paying in lump sums when work is going well.

Pensions are the most tax efficient form of savings, why is this?

Well for every €77 that you pay into your pension, you automatically get an extra €23 refunded into your pension fund making €100 or €770 would amount to €1,000 or €7,700 would amount to €1,000, meaning 23% tax is always refunded to your contributions or if you are a higher rate tax payer 41% is offset against your contributions! So in real terms if you pay in €590 you get €1,000!

The government wants you to invest in pensions, hence offers the incentives to do so, your accountants and tax planners think that it is great as it is the most efficient way to offset tax bills and your independent financial advisor knows that it is best advice for you.

Why would you possibly invest now though?

Money is tight and the Stock Market has seen share prices drop dramatically over the last year.

It is true that there has been a general cycle where there is now an excess of building stock, which coupled with rising costs has had an adverse knock on effect throughout our economy, however, share prices have dropped dramatically in Ireland and the UK and many now look like bargains.

The time to buy shares is when they are low, not when they are high!

The stock market tends to be cyclical with peaks and troughs and we are undoubtedly in a trough at this time so the time to buy shares is when they are low not when they have peaked.

Have shares hit their lowest value yet?

This is impossible to say as there are just too many factors that affect individual shares in different ways, however a good analogy would be this:

IMAGINE YOU SAW A SUIT OR DRESS IN A SHOP THAT WAS OF UNDOUBTED QUALITY AND YOU REALLY WANTED IT BUT FELT THAT AT €300 IT WAS JUST TOO EXPENSIVE SO YOU LEFT IT. THEN IN THE JANUARY SALES YOU SEE THAT IT IS AVAILABLE FOR €99. YOU BUY IT BUT IN THE LAST COUPLE OF DAYS OF THE SALE IT IS FURTHER REDUCED TO €90 BEFORE THEN GOING BACK UP TO €300 IN FEBRUARY. ARE YOU ANGRY AT NOT SAVING A FURTHER €9? OR DO YOU THINK, WELL I STILL GOT A €300 SUIT/DRESS FOR €99, IT WAS STILL A BARGAIN.

Well shares at this moment in time would be very similar, they may still drop a bit more but by and large we feel that the majority have either bottomed out or are very close to it. The other option is you hold off buying shares in the hope that they drop further and you get them at the bottom, experience tells us that this is virtually impossible to predict and as such many people hold off too long and do not buy into the market until the share prices have been rising again, losing out on high potential returns.

Stocks and Shares are not the only way to invest your pension monies, we can advise on other forms of investment once we get to know you, your attitude to risk and your hopes and aims for your future but right now pensions have become so flexible that you can pick individual shares and trade them. With shares being so low they provide good opportunity for growth. There may even be a company that you personally think is well run that you would like to invest in while their shares are low. Donegal Creameries or Cement Roadstone Holdings for example but these things could be discussed more fully at our first meeting, give us a call today on 074 912 4002

John F. Loughrey & Associates
The Pensions & Investment People.

(* figures from the CSO Census 2002)

Self Directed Pension Options

The LATEST development in the world of pension is self-directed options. While these have been available for some time they have traditionally been aimed at a very small portion of the marketplace. Now providers have opened up these attractive options to a wider market, which means many more people can get in on the act. The idea behind self-directed options is that people can manage their own retirement funds personally. Pension clients can now have greater control by in effect directing the placement of their funds themselves.

The assets pension clients can now invest in are:

• Traditional Insured Funds
• Quoted Shares
• Direct Property
• Deposit Accounts
  

Traditional Insured Funds are available across many products on the marketplace but this new development means you can invest your money in a Managed Fund as well as in self-directed options, and all through one tax efficient pension product.

Quoted Shares allows you to buy and sell shares through a pension arrangement thereby giving you the following tax benefits.

• Tax relief on pension contributions
• No Capital Gains Tax on growth
• No Income Tax on dividends received
  

Access to Direct Property through a pension arrangement again allows for efficient tax planning while allowing you to buy residential or commercial property within your pension fund. Providers have recently opened up this option with the client being in complete control by personally selecting the property they wish to invest in.

Deposit Accounts allows clients the freedom to place your pension money in a nominated deposit account, which can be a great short-term option for you.

In general self-directed options allow for more flexibility and choice for you the client. Even if you’re not interested in these options right now you may be in the future. Choosing a pension scheme now that can give you these options in the future should you need them is well worth considering.

Article by: Reba McCoach

Do as the professionals do and diversify

With nervousness surrounding the stock markets and fear of a crash in the property market causing worry over where to invest your capital, there has never been a better time to copy the professionals and diversify.

Investment professionals spread their investments over different asset classes such as equities (shares), alternative assets, bonds, property and short term investments such as cash.

The best way to do this is to discuss your attitude to risk and what your aims are for your money with an Independent Financial Advisor. They will look at your future plans and develop a portfolio with a balancing point that allows you to pursue your goals at a risk level that you find comfortable.

Your money is too important to invest without a strategy, that is why it is critical to analyse your goals and current situation before making a decision on where to invest your money. The correct investment can help your confidence through economic ups and downs and even increase your potential for returns in the long term.

When it comes to choosing how your savings are invested, be careful not to short change yourself by leaving long term assets in highly conservative choices. Be sure to balance your need for growth, income and safety. If you are further from retirement a portfolio with higher allocation of equities or equity funds may be appropriate.

More aggressive asset mixes with higher equity allocations focus on capital appreciation, as you near retirement this focus may change to a gradual shift toward more conservative investments to preserve your wealth.

As with all advice, you should seek help from a professional Independent Financial Advisor, call us today to arrange an appointment on 074 91 24002

Article by: Reba McCoach

Public Employees

Want to avail of cash back from the Tax Man?
As a member of the public sector would you be interested in ways to enhance your lump sum and your regular income on retirement, whilst availing of the very generous tax relief that is available from the revenue. This benefit can be paid immediately or back dated, the choice is yours. Having total control of your finances with full flexibility. Award winning investment returns. Having the service levels that you deserve whilst receiving regular clear and transparent communication. Dealing with someone in the local community. Having scope to contribute even with full service.

We at John F. Loughrey and Associates would be delighted to talk to you about this opportunity which could make retirement all the more exciting, so why not pop in to our offices or call us today for an appointment on 074 91 24002.

Time to invest your money wisely

We are regularly asked, “How can I make my money work harder for me?” and “Where is the best place to invest my money?”

The standard answer that all financial advisors will give is the tried and tested – “Risk relates to reward, the higher the potential gain, usually the higher the potential risk to your investment”. This is true, however, there are simple remedies to make your money work harder for you. How many of us leave our money sitting in low earning deposit accounts with our banks? These accounts are extremely poor value for money and lead to your investment losing money in real terms as it will not be keeping pace with inflation and inevitable will be able to purchase less the longer it is left idling in this type of account.

Better returns do not always mean higher risk! There are a variety of high interest bank accounts that you could switch your money to in order to gain higher interest without higher risk, a typical example on a day of printing:

PREMIUM DEMAND
= 4.75%
EASY ACCESS
= 1.90%
7 DAY NOTICE
= 2.00%
30 DAY NOTICE
= 2.45%
REGULAR SAVER
= 7.30%
1 YEAR FIXED RATE
= 4.90%

The list is exhaustive depending on the terms but these are just an example. How hard does your bank work to keep you happy? Yet either through lack of time or laziness large numbers of us continue to leave our money in poor value accounts!

For those of us willing to take a higher risk with our investments, there are a wide range of options from property investment fund to funds that invest in the stock market. Views on the stock markets vary, however, many feel that with such falls, the time is right to invest and wait for the market rise again. This again would be decided by an indvidual’s attitude to risk.

The key to best advice is to visit financial advisors that are independent so that hey can source the best products for your needs.

Our firm has been in Letterkenny for more than 30 years and would be happy to help you make the most of your investments.

For a meeting with on of our advisors, please call us today on 074 91 24002.

Article by: Brendan Dunleavy

Your Money, free but priceless advice

• New To The Market!!
• Self Directed Pension Options
• Do as the professionals do and diversify
• Public Employees
• Time to invest your money wisely