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Everyone Needs a Financial Plan

December 5, 2014/in Financial Planning, Pension, Personal Finance /by Aidan Wall

How often have we heard the expression “I would not have achieved my goal without having a carefully thought out plan and sticking to it”. We hear it from high achieving people in the world of sport and business alike.

You will hear it from top class golfers like Rory McIlroy who will set his objectives, arrange his playing, coaching and work schedule for the year ahead and then go and execute that Plan. If he starts his year with no plan then he would say the focus simply isn’t there to be successful. This same principle is equally important in all other situations – the football/hurling team coach, the business manager or home-maker all need a plan. Doesn’t it make eminent sense, therefore, to seek assistance in achieving the objectives of your financial plan through each stage you face in your life?

Pensions – No longer a luxury but an absolute necessity

December 5, 2014/in Financial Planning, Pension, Personal Finance /by Aidan Wall

The recent budget announced that the Pensions levy is being substantially reduced and indeed will be abolished completely by the end of 2015. What was seen as a major obstacle to the encouragement to save through a Pension Plan for your retirement has now effectively been removed. Here therefore are some key considerations for you to bear in mind. 1. Start as soon as you can Make no mistake, the starting point is the most important point when it comes to pensions. Of course it is hard for someone in their 20s to think about saving for their retirement – let’s face it they are immortal and will never get old! – and it is made even harder in a fraught economic climate. But the sooner a pension is started, the less a person will have to save. Someone who is 25 and takes out a pension is saving themselves a world of financial pain in the years ahead. If they wait until they are 40 they will need to put aside over 4 times to get themselves the same return. 2. Never panic though More than 50 per cent of the population does not have a private pension. While it is better to start a pension early, that doesn’t mean it is ever too late to start, it simply means that the later the start the more you may need to put in. Counterbalancing the late start is probably a greater degree of affordability as you get older. 3. Managing risk When you are younger you can afford to take a degree of investment risk that can include investment in high risk stocks. As you get older the fewer risks you should take. A gradual de-risking should be a feature of your strategy with each passing decade. Good advice will help steer you through the process and to identify suitable opportunities without putting all your eggs in one basket. 4. Mix things up Don’t just decide on a sum you’re comfortable putting into it and leave it at that. Change the payment amount as your life circumstances change. If you get a pay rise you can increase it, if you have children you can reduce it (but only slightly). If you are due a bonus you can put in a once off lump sum. 5. A necessity, not a luxury Putting pension money aside for your future retirement should be considered an unavoidable outgoing and not a luxury. It is right up there with a mortgage, food, clothes and electricity as one of the things people need to realise that they cannot do without. 6. Keep tabs and get good advice You should check your pension plan regularly. Having access to a good financial planning adviser who will steer you through the process and carry out regular reviews with you is vitally important. Source: Lifetime Financial Planning 2014

The recent budget announced that the Pensions levy is being substantially reduced and indeed will be abolished completely by the end of 2015. What was seen as a major obstacle to the encouragement to save through a Pension Plan for your retirement has now effectively been removed. Here therefore are some key considerations for you to bear in mind.

1. Start as soon as you can

Make no mistake, the starting point is the most important point when it comes to pensions.
Of course it is hard for someone in their 20s to think about saving for their retirement – let’s face it they are immortal and will never get old! – and it is made even harder in a fraught economic climate.
But the sooner a pension is started, the less a person will have to save. Someone who is 25 and takes out a pension is saving themselves a world of financial pain in the years ahead. If they wait until they are 40 they will need to put aside over 4 times to get themselves the same return.

2. Never panic though

More than 50 per cent of the population does not have a private pension.
While it is better to start a pension early, that doesn’t mean it is ever too late to start, it simply means that the later the start the more you may need to put in.
Counterbalancing the late start is probably a greater degree of affordability as you get older.

3. Managing risk

When you are younger you can afford to take a degree of investment risk that can include investment in high risk stocks.
As you get older the fewer risks you should take.
A gradual de-risking should be a feature of your strategy with each passing decade.
Good advice will help steer you through the process and to identify suitable opportunities without putting all your eggs in one basket.

4. Mix things up

Don’t just decide on a sum you’re comfortable putting into it and leave it at that. Change the payment amount as your life circumstances change.
If you get a pay rise you can increase it, if you have children you can reduce it (but only slightly). If you are due a bonus you can put in a once off lump sum.

5. A necessity, not a luxury

Putting pension money aside for your future retirement should be considered an unavoidable outgoing and not a luxury.
It is right up there with a mortgage, food, clothes and electricity as one of the things people need to realise that they cannot do without.

6. Keep tabs and get good advice

You should check your pension plan regularly.
Having access to a good financial planning adviser who will steer you through the process and carry out regular reviews with you is vitally important.

Source: Lifetime Financial Planning 2014

Budget 2015 – How does it affect you?

November 16, 2014/0 Comments/in Child Benefit, Income Tax Rate, Personal Finance, Tax, The Budget, USC - Universal Social Charge /by Aidan Wall

Budget 2015 is the first since Ireland left the Troika programme and the first since the economy has started its recovery. How then do the key taxation measures affect you as an individual? Firstly we look below at the key features of the budget as they may affect you and then we outline a few Personal Tax Scenarios to see the net savings from the various measures.

Top Income Tax Rate – reduced from 41% to 40%.
Standard Rate Tax Bands – increases by €1000 for singles and €2000 for a married couple.
USC – multiple changes to both the thresholds and rates.
Farmers/Agriculture/Land – various changes/increases to exemptions and reliefs.
DIRT exemption – for first time buyers using savings for 20% deposit.
Artists exemption – threshold increased by €10,000 to €50,000.
Cigarettes – increase in cost of 40c for a packet of 20.
Pensions Levy – levy of 0.6% to be abolished by end of 2014 and completely by end 2015.
Child Benefit – increase of €5 p/m.

Taking the key personal taxation measures into account the few scenarios painted below will, hopefully, give you a good guide of how the budget will affect your pocket.

Scenario 1 – Married couple, 1 employed earning €50,000, 3 children, own property
2015 Changes	Euro
Change in Tax Band	210
Change in USC	174
Change in Marginal Income Tax Rate	72
Change in Child Benefit	180
Net Saving	636

Scenario 2 – Unmarried couple, renting, one earning €80,000, one earning €35,000
2015 Changes	Euro
Change in Tax Band	420
Change in Tax Credits	(80)
Change in USC	249
Change in Marginal Income Tax Rate	474
Net Saving	1,063

Scenario 3 – Married Couple, both self employed, one earning €150,000, one earning €30,000, own property
2015 Changes	Euro
Change in Tax Band	420
Change in USC	(451)
Change in Marginal Income Tax Rate	1124
Net Saving	1,093

Scenario 4 – Single person, employed earning €45,000, property owner
2015 Changes	Euro
Change in Tax Band	210
Change in USC	174
Change in Marginal Income Tax Rate	112
Net Saving	496

So, it can be seen that the Budget does put a bit more money in some pockets, although some commentators have pointed that these gains are somewhat offset by the new water charges.

Source: Lifetime Financial Planning 2014

Everyone Needs a Financial Plan

Pensions – No longer a luxury but an absolute necessity

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