The ‘path to wealth’ plan.
Henry’s arrival focused my mind.
I needed to stop dabbling and start
investing like a grown up.
James, 30
Management Consultant
When it comes to investing, my partner Jen calls me
‘the dabbler’.
We’re both business consultants with good salaries and
bonuses, so there’s always money left over each month.
That’s why I thought I’d give online trading a go.
The ‘path to wealth’ plan.
Henry’s arrival focused my mind.
I needed to stop dabbling and start
investing like a grown up.
James, 30
Management Consultant
When it comes to investing, my partner Jen calls me
‘the dabbler’.
We’re both business consultants with good salaries and
bonuses, so there’s always money left over each month.
That’s why I thought I’d give online trading a go.
A SLAPDASH APPROACH
My selection process was hardly robust. I just
browsed the money sections of the Sunday papers
looking for fund and share tips.
In fact, our whole approach to saving was slapdash.
Every now and again I’d throw some money into a
new fund and Jen would top up our cash account.
But now Jen had taken a career break to look after
Henry, we needed to make sure we saved wisely.
I even jumped on the
Crypto currency band wagon.
Well, everyone was at it, so it felt
like a good idea the time.
A SLAPDASH APPROACH
My selection process was hardly robust. I just
browsed the money sections of the Sunday papers
looking for fund and share tips.
In fact, our whole approach to saving was slapdash.
Every now and again I’d throw some money into a
new fund and Jen would top up our cash account.
But now Jen had taken a career break to look after
Henry, we needed to make sure we saved wisely.
I even jumped on the
Crypto currency band wagon.
Well, everyone was at it, so it felt
like a good idea the time.
An early morning wake-up-call
I was doing Henry’s 3am feed. He stared at me as he glugged his bottle, and I realized that I needed advice – for the sake of his future, and ours.
I’d always assumed wealth managers only
work with the wealthy. Nevertheless, a
colleague referred me to Goodbody.
The adviser shattered that myth. They were
more than happy to work with professionals
in the early stages of their careers.
An early morning wake-up-call
I was doing Henry’s 3am feed. He stared at me as he glugged his bottle, and I realized that I needed advice – for the sake of his future, and ours.
I’d always assumed wealth managers only
work with the wealthy. Nevertheless, a
colleague referred me to Goodbody.
The adviser shattered that myth. They were
more than happy to work with professionals
in the early stages of their careers.
The Goodbody Advice
Time is your greatest asset.
The most tax efficient way for James and Jenny to save is to invest in pensions.
They’ll benefit from tax relief on contributions, enjoy tax-free growth, and at retirement they’ll
be able to take a percentage of their individual pension pots as a tax-free lump sum.
But most importantly the best time for them to start making contributions is now.
If James and Jenny start investing today
at age 30 and both contribute
€250 a month till age 65
their pension pots will each be worth
€245,656*
*Assumes an annual return of 4.5%
If James and Jenny start investing today
at age 30 and both contribute
€250 a month till age 65
their pension pots will each be worth
€245,656*
*Assumes an annual return of 4.5%
If James and Jenny wait till age 45 and
then both contribute
€250 a month till age 65
their pension pots will each be worth
€94,717*
*Assumes an annual return of 4.5%
If James and Jenny wait till age 45 and
then both contribute
€250 a month till age 65
their pension pots will each be worth
€94,717*
*Assumes an annual return of 4.5%
Jenny had three further incentives to make investing in a pension her priority:
1
Women tend to take time off work to bring up children, reducing the years they have to contribute.
1
Women tend to take time off work to bring up children, reducing the years they have to contribute.
2
Sadly, statistics show that throughout their working careers women still earn less than men.
2
Sadly, statistics show that throughout their working careers women still earn less than men.
3
Women live longer than men, therefore their pension pots need to last longer.
3
Women live longer than men, therefore their pension pots need to last longer.
The Goodbody Advice
Time is your greatest asset.
The most tax efficient way for James and Jenny to save is to invest in pensions.
They’ll benefit from tax relief on contributions, enjoy tax-free growth, and at retirement they’ll
be able to take a percentage of their individual pension pots as a tax-free lump sum.
But most importantly the best time for them to start making contributions is now.
If James and Jenny start investing today
at age 30 and both contribute
€250 a month till age 65
their pension pots will each be worth
€245,656*
*Assumes an annual return of 4.5%
If James and Jenny start investing today
at age 30 and both contribute
€250 a month till age 65
their pension pots will each be worth
€245,656*
*Assumes an annual return of 4.5%
If James and Jenny wait till age 45 and
then both contribute
€250 a month till age 65
their pension pots will each be worth
€94,717*
*Assumes an annual return of 4.5%
If James and Jenny wait till age 45 and
then both contribute
€250 a month till age 65
their pension pots will each be worth
€94,717*
*Assumes an annual return of 4.5%
Jenny had three further incentives to make investing in a pension her priority:
1
Women tend to take time off work to bring up children, reducing the years they have to contribute.
1
Women tend to take time off work to bring up children, reducing the years they have to contribute.
2
Sadly, statistics show that throughout their working careers women still earn less than men.
2
Sadly, statistics show that throughout their working careers women still earn less than men.
3
Women live longer than men, therefore their pension pots need to last longer.
3
Women live longer than men, therefore their pension pots need to last longer.
I never considered how taking a career break to look after
Henry could impact the value of my pension. If it wasn’t for
Goodbody I wouldn’t have realised until it was too late.
Jenny
I never considered how taking a career break to look after
Henry could impact the value of my pension. If it wasn’t for
Goodbody I wouldn’t have realised until it was too late.
Jenny
Save, save, and protect.
After drawing James and Jenny’s attention to the value of pensions
we highlighted the importance of saving early for Henry and protecting themselves
against the financial consequences of ill health or worse.
1.
A plan for James and
Jenny’s retirement.
An initial pension pot target of €250,000 each for both Jenny and James was agreed. This would allow each of them to take €50,000 as a tax-free lump sum at age 65.
Both could then use their remaining pension pot of €200,000 to provide an income in retirement.
Based on current annuity rates they could expect €9,630 p.a. plus the state pension, giving each a gross annual retirement income of €22,800.
That may not sound a lot, but it’s a starting point. As James and Jenny’s earnings rise over time so will their pension contributions.
2.
A plan to save for
Henry’s future.
Most parents intend to save for their children’s future, but it’s easy for the money to get absorbed into day-to-day expenditure.
So, James and Jenny decided to pay their monthly children’s allowance of €140, plus an additional €360 directly into a diversified savings product for Henry at the beginning of each month.
If the children’s allowance is saved from day one, plus an additional €360 per month, after 10 years at a 5% return, the pot could be worth over €65,000.
3.
A plan to protect
the family.
James or Jenny had no life insurance in place. So, we recommended both take out cover for €500,00 at a cost of €70 per month each.
Also, as the family was reliant on James’s earnings we advised him to take out an income protection plan.
If he became too ill to work, this would pay out 75% of his monthly gross salary every month until he was well enough to work again.
As James’s income protection plan qualified for income tax relief at the marginal rate, the monthly premiums were reduced from €200 to €120.
Save, save, and protect.
After drawing James and Jenny’s attention to the value of pensions
we highlighted the importance of saving early for Henry and protecting themselves
against the financial consequences of ill health or worse.
A Final Thought From James
Babies and money have one thing
in common, neither come with an
owner’s manual.Thank God for grandparents and
wealth managers.
A Final Thought From James
Babies and money have one thing
in common, neither come with an
owner’s manual.Thank God for grandparents and
wealth managers.
What’s your plan?
Please contact us if you think your life could be enriched by a financial plan.
