Where to invest my pension? As an Irish tax resident, you can invest in every asset class including: Cash Deposits, Bonds, Commodities, Property & Equities through unit-linked or exchange-traded funds. Fund-based investment also allows you to access broad-ranging geographical locations and when it comes to company shares (equities) you can also avail of a wide variety of industry sectors, including pharmaceutical, energy, food, and tech stocks.
So, with so many ways to invest your pension contributions, the real key to successful pension investing is to manage the risk and minimize the costs, with the help of a low-cost financial broker like OneQuote.ie.
Where to Invest My Pension Plan?
Risk & Return
With so many options on offer, the first thing to realize is that risk and return have a direct relationship meaning the lower the risk the lower the return, and vice versa. So given your own time left to retirement, ask yourself what’s your risk attitude, low, medium or high? You can, of course, alter this as you go or as you approach retirement.
Diversity & Liquidity
The sensible approach regardless of your risk attitude is not to put all your eggs in one basket and to spread your risk across the asset classes. Investing in funds allows you access to all asset classes on a low-cost basis and the liquidity to quickly adjust to changing market conditions as may be required.
Obviously, there are always going to be costs involved, no matter what kind of pension plan applies to you, be you self-employed, an employee or a company director.
But again, fund-based options are the best way to minimise these costs and keep them simple and transparent. When choosing to invest in funds, the investment charge is known as an Annual Management Charge of AMC. The key to remember is that this should never exceed 1% PA and can be as low as 0.75%, even with ongoing financial broker support. You should not need to pay any additional broker fees nor any contribution charges, so always seek 100% net investment allocation.
Reinvesting at Retirement
If about to reach retirement and want to reinvestment your pot, you can do so through an Approved Retirement Fund or ARF. The same rules should apply here to Risk, Diversity, Liquidity, and Costs, although depending on your fund size you should also be able to negotiate the AMC.
Where to Invest my Pension Plan?
To learn more about assessing your own investment risk profile and how best to invest in funds, contact: Ken O’Gorman – QFA – Pension Specialist on: 01 8450049