Informed Decisions Independent Financial Planning & Money Podcast

This week we are going to explore two concepts, 'Diversification' and 'Asset Allocation' which can have significant impact on investment success over the long term, and which are shrouded in mystery and often misunderstood. We are going to tell it like it is, share some insights which may surprise you, and give you some food for thought if this applies to you. What Is Asset Allocation? This is the term most commonly used to refer to the proportional distribution of an investment portfolio between different assets. The asset allocation of a portfolio will determine how much of that investment will be allocated to two or more different asset classes; the most common being Equities, Bonds, Property, Commodities and Cash. The rationale for allocating across asset classes is founded in the alleged correlation in returns between various assets at different points in the cycles of each. The principle here is that if the portion of your portfolio in 'asset A' is in a temporary decline that your portion in 'asset B' will be on the ascent. I say alleged because there is a lot of conflicting evidence as to whether there is a negative correlation or not. Ultimately this concept aims to deliver consistently positive returns while reducing volatility of the overall portfolio. Read Full Blog Here..... Paddy.

If I come across another 'Best Investments For 2019' or 'Best place to invest €100,000' article I will lose the plot. Reason being that, just like the title of this blog, these articles really are just another form of click-bait. As we all will know, even if we didn't, click-bait is merely a hook with which to drag you into a website, and ultimately to sell you whatever they have in their warehouse, maybe the 'worlds most powerful torch', or the amazing 'world's quickest can-opener'......things designed to solve problems that you don't really have! Likewise, you may not have the problem of needing to know where to invest €500,000 right now, yet you still find yourself reading this! I am not sure what that says about you, or indeed about me who is writing the blessed thing! Yet there is a proliferation of 'best way to invest such & such' and 'best investments in such & such' on the web here in Ireland. The web is great, I really do love it, but my god it's also so full of dross. I have read 5 such articles this morning in the hope of finding something which represents some sort of sense......but alas I have drawn a blank! One article suggests investing it all in a certain investment product, which on closer inspection has a really rubbish performance record and carries 2.7% fees per year, and another suggests investing the entirety in gold in the interests of 'accessing the world's greatest commodity'! If we really were reliant on the information at hand then mistakes could be our hobby of choice for years to come! I understand that media need to create content, it is what generates traffic and subsequently advertising revenue, but as we all will accept, let's not take what we read or hear on the internet as gospel (including what you read or hear right now). Having said that some sources might be more well-intentioned than others! Read Full Blog Here. Paddy Delaney

Investors are said to achieve far less in returns than the markets in which they invest. How is that possible you may ask? Typically it is down to investor behaviour. Investors get blamed for doing silly things when it comes to investing, however my take is that it is the financial professionals who must shoulder the responsibility for it. This is not to suggest that the advisors/planners that might assist investors have total control over what an investor does, but I do believe that if an investor is engaging with an advisor/planner that that professional has a duty of care to let that investor know how investments have worked since 'time began'. Without this knowledge then it is only utterly natural that an investor will succumb to fear and do something irreversibly costly which will have a lasting negative impact on their future. Full Blog Here. Paddy Delaney

Welcome back! 'Relief' is an interesting word. If we were to tell someone that we are going to 'relieve myself' it can strike up all sorts of suggestions! Apparently it comes from the Latin 'relevare' which meant 'to alleviate'. In this instance Retirement Relief is all about 'relevare', and to 'relevare' oneself from a burdensome Capital Gains Tax bill! Retirement Relief is a nugget that is quite often missed as a really lucrative opportunity to reduce one's tax bill, particularly if one is a director, or owns a business or company. Can I claim retirement relief? I am on a mission to help answer that very question. Treat this article as an introduction to Retirement Relief, to wit, like everything you read on the internet, if you are going to pursue this type of route then please do (obviously) seek individual guidance on it! I have often wondered why not many people know about it or at least why most of us don't hear much about it.....If we were being cynical we would suggest that the reason is because nobody really makes or saves much money from doing it other than the individual client.....but that would only be the response if one was being cynical! But really, I can't think of any other reason! So in this episode I am aiming to share insights on what it is, how it works and ultimately to answer that question; 'Can I claim retirement relief?' Paddy Delaney QFA RPA APA

Hope all is well?! Last week we shared some ideas on the best way to accumulate €1m, and whether a deposit regular savings account or a pension route might be the most effective way of doing it. We analysed these two routes and factored in deposit rates, pension fund returns, fees and charges and various tax rates that apply to both and how they will impact on the end result. As always, it pays to begin with the end in mind! This week I hope to share ideas on how to select a suitable investment fund, how to avoid common mistakes, and how to deal with the consequences of funds not performing as you may have hoped. If you have read or listened to last weeks' episode you will recall that based on realistic assumptions that the pension route would stand to be in the region of €400,000 more effective than a deposit account! A large portion of this net euro benefit was as a result of the tax reliefs (currently) available to 'Sam' on the contributions made to a pension. The remainder of the net euro benefit came from the average annual return that the pension delivered to 'Sam'. I received a lot of emails from individuals on that last episode, some expressing surprise and some seeking further information. One of the questions that was put to me was, 'Well what if the fund I am in does not deliver the 6% return, or indeed if it is negative returns for a long period of time'. In my experience at least this is a very real concern that many have, and feel quite uncertain about it, so lets explore. Thanks for listening, Paddy Delaney QFA RPA APA

Should I invest in a pension or save money in a bank account!? Last week I shared some ideas about the value (or potential lack thereof) in having a pension of 'average' size. The reaction to that piece was really quite interesting; it seemed to have surprised some people! There is no question that €100,000 is a lot of money, no matter what way you slice it however having that in a pension fund at the point of retirement leaves one with, to be fair, quite limited options to access a meaningful withdrawal income. In last weeks' piece I referred to a previous blog we shared about the value of amassing a pension pot of €1m, and the considerable options that offers one at retirement. That got me thinking and so this week I take a hearty stab at comparing the merits of saving into a regular deposit savings account, or into a pension if one was aiming for a lump sum of €1m! We will explore which of these in this 2-horse race, in Net terms stands to offer you the best possible chance of success. This is not something that I have never seen done before, maybe there's a reason for that.....let's see! Paddy Delaney

The title of this piece may seem overly alarmist, however it is my firm belief that most pensions that people here in Ireland have are really ineffective and the investors would quite possibly be better off doing something else with their funds. Are pensions useful? Absolutely they can be hugely useful (read here for 1 example!) however if they are entered into in a half-baked way they can be pretty useless, and unfortunately I have seen it far too many times. We all see lots of articles and blogs and media mentions of not enough people having pensions etc etc, however it is also true that getting a pension just for the sake of it is not necessarily the right solution. In this article I hope to share insights which will potentially help you avoid getting into something that is of no value nor use to you, and give you a good chance of getting into something that stands a strong probability of being of real value to you. What Is The Average Pension or Retirement Income In Ireland? It really depends on what survey or research you are relying on but I have seen various figures quoted. Some say that the average pension pot for those retiring is €60,000 and other 'research' that puts that figure at €90,000. Either way I am not sure how those figures are arrived at, but my experience would suggest that for those that have pensions it may indeed be an average of that sort of level. Some have pension pots of €20,000 and others have pension pots of €1m or more, so it varies greatly! Depending on the size of the pot, the level of volatility you are exposed to and the number of years over which you intend to draw that income, you'll have a varied retirement income available to you. Read Full Blog Here. Paddy Delaney.

'What should I do with an inheritance' and 'How should I invest an inheritance' are questions we might never hope to need to consider but many are forced to consider these every year here in Ireland. This week in Ireland's award-winning and unbiased personal finance blog I hope share some insights which might be of value to anyone that does every find themselves faced with this question. The reason I guess that this is a relevant topic here is because I have seen several cases where people inherit money, then act irrationally or in ways that is to their own detriment, and they end up blowing the lot on senseless stuff that they wound up regretting a short time later. That is hardly a respectful way to behave with the likely hard-earned legacy that a loved-one has left you!? Likewise I have seen some people handle it really well and have made decisions that have supported their goals, and the result being the inheritance was a positive impact on their life. Surely, a better outcome! I'm out to help even a handful of people to avoid that same regret. Read full blog here. Paddy Delaney QFA RPA APA Coach

Welcome back to the new home of Personal Finance in Ireland, where we share insights which we hope help you to avoid mistakes and achieve the results you seek. All we ask in return for sharing these ideas is to tell a friend, and use the ideas with the intention in which they are shared, thanks! -13.9% The title of this week's blog is a little vague or possibly might appear abstract, granted, but I do believe that it's contents will help people to see the light! To help explain, I was speaking to an advisor recently who I was helping to connect with and recognise the real value she can bring to her clients. She is an experienced advisor who is trying to transition from an old-school sales-person to operate in a more transparent and client-focused way. As you know I am all about the transparency and the client-focused side of things so I was more than happy to play a small part in helping her make this transition. Anyway, we were chatting about investments and recent volatility, I passing the recent volatility off as 'par for the course' while she was very much seeing it as a distraction and bordering on something to be fearful of as an investor. At that point I mentioned something like 'but sure it's only down in the region of 15%, that happens every year on average, and it's the very thing that rewards those who stay invested'. She looked at me as if I had two rock-filled heads. She stated that there is no way that global equities have declines of that amount every year, even on average.........and that is where she was very much ill-informed, and where I guess the vast majority of us are also ill-informed. Let's fix that! J.P Morgan Guide To The Markets I have mentioned this beauty of a quarterly document before here, and I wish to re-iterate that (as far as I am concerned) it is one of the most easily digestible and insightful economic/investment/macro reflections available anywhere, at absolutely no cost. Click here to get the December edition. So in my conversation with the advisor I was working with I referred to this nugget. Page 14, to me, is essential reading for anyone that is ever contemplating investing in any form of decent equity portfolio. Irrespective of the fact that this chart, as you'll see below, is a reflection on the top 500 Companies in the USA only (S&P 500 Index), summarises what long term investing is about, and indeed portrays the great contradictions of equity investing, you face temporary declines but always win over the long term!

Welcome to Informed Decisions, Ireland's #1 Personal Finance Blog & Podcast! Hope you managed to catch last weeks' Podcast with Andy Agathangelou, all about developing more transparency in Financial Services, it was a decent chat! This week I am on a mission to shred some myths about that big question: Should I take my benefits out of my Defined Benefit pension scheme, or leave my benefits in my Defined Benefit pension scheme. Granted it is not a question that everyone of us will need to answer over a life-time but it is one that I see more and more in recent times. In addition to that it is a decision which can potentially have such a significant impact on one's future lifestyle and financial well-being that it deserves a closer inspection! Given that in the region of 60% of people who have a Defined Benefit scheme have left that employment and so will typically have the option to leave if they want. We're gonna try help them understand whether that's a wise move or not! Before we begin I have to declare a bit of a bias I have on this topic......I firmly believe that generally speaking a Defined Benefit scheme is a hugely valuable benefit to hold onto for dear life, that you'd have rocks in your head to leave it, that it represents better value than you could possibly hope to achieve if you transferred your benefits out of it, that it will sustain you in retirement, and go a long way potentially to sustaining your partner if they survive you, that thousands of others would give their left and/or right arm to have the preserved benefit that you have, and that it is usually a case that your advisor may be steering you to leave because it will benefit them more than if you stay......but hey I could be totally and utterly misplaced in my bias. I'm just outlining that I do have a bias, and a belief that in most circumstances you'd want to have rocks in your head to take a transfer! Let's see if I'm way off or way on.... What Is A Defined Benefit Pension? In simple terms a Defined Benefit pension scheme is one in which you are 'guaranteed' a certain level of income in retirement, based on your salary at time of leaving employment, and the number of years you were a member of that scheme. Traditionally they have been the Rolls-Royce of pensions, offering great security, value and certainty of income to retiring employees. In recent years their reputation has been tainted with swathes of employers 'closing' their DB schemes, due for no other reason than they are hugely expensive for employers to provide. Defined Contribution schemes, where the employer will make a certain payment each month on your behalf are far more manageable for employers, and usually less effective for retiring employees. When Can I Take A Transfer Value From My Defined Benefit Scheme? Read On Here..... Paddy