When it comes to saving or investing your hard earned money remember there are some do’s and don'ts

Do …

• Review your finances to establish how much you can afford to save
• Clear high interest debt i.e. Credit cards etc before you start to save
• Prioritise saving an emergency fund first this could typically be up to 3 months net salary to cope with unexpected life events that tend to occur
• Save a realistic amount that is achievable and won’t cause strain in other areas of your life. A good goal is to save or invest around fifteen percent of your income each month
• Set a goal or target and review your progress

     ... Contact us for a financial review

 Don’t …

• Impulse spend try and walk away and think do I really need this
• Bring your credit card with you every day
• Invest in a product you don’t fully understand
• Borrow unless absolutely necessary
• Wait any longer contact us today for a fee financial review

Remember you will not get rich by saving alone!  You must invest to create wealth. Saving is all about living smarter to spend less and get value for your money. Investing is the next step where you make your money work for you and accumulate.

 Ok so what type of investments can I put my money into?

There are many different asset classes money can be invested in and explain the risks involved. As with all investment you must decide what risk you are willing to take to achieve your target return.

Deposit accounts, Government Securities and Bonds

 These are investment products of Banks, Credit Unions, Building Societies, Post Office, Governments and corporate companies.

These types of investments do not really offer investors protection against inflation in the long run. That said they are still important in that they can offer higher income than shares or rental income from properties. So fixed income bonds and deposit accounts are useful for those seeking income and as a home for everyone's emergency money.

Best returns vary and the larger the figure the better the rate normally. Investors should consider how long they wish to invest for, their tax position and the state of the interest rate market before deciding whether to invest in gilts or deposits long term.

Gilts are generally safer than really speculative shares but different sorts of gilts are suitable to different types of investors.

Property

This is by far the most talked about asset class in Ireland. Property as we have seen in the last number of years can increase dramatically and fall just as quickly. Property has always been part of the Irish culture and we have the highest home ownership in the world.

Property in the past has not kept up with investment in equity although it has performed better in many years. People buy property to live in rather than pay rent and those that invest do so to get rent and hopefully capital growth (that is sell for more than they paid).

It is important to note that property values can go down as well as up and when you do invest be prepared for a period where you may not be able to sell it at a higher price.

Foreign property has been attractive to Irish investors BUT you need to do your own footwork as well when buying a property. Would you buy a car without looking around or driving and asking questions? You spend a lot of time doing this but few research bigger investments to the same degree!

Equities/Shares

In a nutshell equity is a share in ownership in a company. You own part of that company. Companies issue shares to raise funds for expansion. Individuals then buy and sell the shares in the open market directly or through pension funds, insurance companies or unit trusts. Companies are very different from each other so to compare like with like shares are grouped together into sectors of similar businesses for example the food sector, the banking sector, pharmaceutical sector, construction sector etc.

Share prices rise and fall daily, even hourly and can be extremely volatile over the short term. Some such as technology and Internet shares are more likely to be volatile.

Historically good quality shares have tended to outperform other investment classes however this return does come at a price in that they tend to go up and down in value more often than the other asset classes. The history of the last few decades has shown that quality shares have outperformed property. There is also the risk of getting back less than you invested in the company.

I mentioned that most investment experts recommend diversifying your portfolio and that this offsets some of the risks. By diversifying I mean varying the assets your money is invested in. As the old saying goes don’t put all your eggs in one basket this is crucial when investing.

Just remember don't leave it to chance before you invest you need to understand risk versus reward so take advice before you invest..... contact us today for a free appraisal and risk evaluation.