Finding the right path for your future

Savings and Investments should be a cornerstone of your financial planning.

Planning for your future is a key part of life – whether it is saving for your children’s education, supplementing your lifestyle, or planning your retirement.

However, with interest rates at historic lows, the returns you are getting from savings held on deposit are probably not delivering the long-term returns you need. Over the last number of years, earnings from investments such as equities and bonds have far outstripped that of cash. That’s why we see more investors once again looking at alternatives to holding money on deposit.

We know that taking the first step into investment markets can be daunting, so it makes sense to seek professional advice

It’s our job to help guide you into making the correct decision about where to invest your money.

To help you with any conversation you might have, we have outlined some core concepts that you should consider; from being aware of the effect inflation can have on your money, to the benefits of building a diversified investment portfolio, these are core themes that you should be aware of.

For your savings and investment goals, cash may not be the answer.

Saving for the future is essential if you want your goals to be achieved and it is important that you make use of all the options available to you.

While spending is great for the local economy, it’s also important to save for your own future, and putting a little aside for a rainy day is second nature for most of us. However, while we are working hard to save, it’s discouraging to see that our savings aren’t working quite so hard for us!

You’ll be only too aware that the returns earned from deposits have been low for some time now. However, when you look at the graph below, it’s surprising to see how low. ECB interest rates have been at record lows since 2009 – that’s over a decade.

Explore the alternatives

cartoon of young explorer with binoculars

Returns on cash have struggled to keep up with inflation over the last 10 years and this is why investors may need to consider the benefits of additional investments such as bonds and equities.

Holding your money in cash or on deposit may make sense for people who are risk-averse and/or have short-term goals. However, over the last number of years holding too much of your savings in cash has been costly. Generally, people are rewarded for taking some risk with their investments, and assets such as equities and bonds have the potential to earn you higher returns than cash.

Diversify, diversify, diversify

There is an old saying ‘Don’t put all your eggs in one basket’, and the same can be said to your investments. However, when we talk about it in terms of your money we call it diversification. Multi-asset funds, which are very popular with Irish investors, allow you to invest in a diversified mix of assets (for example equities, bonds, and property) which helps to spread the riskiness of your investment.

multi asset funds

Generally, there are four main types of investment, which we call ‘asset classes’, and a multi-asset investment fund will usually hold some or all of these different asset classes.

Each asset class works in a different way and carries its own particular rewards and risks. It is important to understand how they work.

• Cash: money on deposit (e.g. cash in a bank).

• Property: bricks and mortar, or property shares.

• Equities: shares in individual companies.

• Bonds: loans to companies or governments.

• Alternatives: Includes the likes of gold, oil, and other ‘non-traditional‘ investments.

An investment fund will generally hold some or all of these different asset classes. The fund manager will buy and sell the different asset classes hoping that their value will increase over time.

Structured Bonds

Invest for the long-term

Your savings goals are probably balanced between short-term needs such as saving for a holiday or a new car – and longer-term needs such as your retirement or saving for your children’s education. A key determinant of where you should save is how long you can afford to tie up the money.

Long-term investing can smooth out market fluctuations

markets during turmoil graph

Find out what type of investor you are

You may have to accept some level of risk when you make an investment but how much depends on what you want to achieve. Only you know what your goals are and how much risk you are prepared to accept to reach them.

dog licks man with cap

Deciding what you want to achieve with your investment is important because it will help you make decisions about where to put your money.

Usually, your decision will be based on three things:

What do you want to achieve with your money?

What levels of investment risk are you comfortable with?

For how long would you be happy to invest your money?

Warning: Past performance is not a reliable guide to future performance.
Warning: If you invest in this product you may lose some or all of the money you invest.
Warning: If you invest in this product you may lose some or all of the money you invest.
Warning: These funds may be affected by changes in currency exchange rates.

Take the next step

What do you want to achieve with your money?

We are committed to doing the best we can for our clients. So if you’d like to take the next step, get in touch today.