5 Top Questions about Saving

    Saving is a crucial part of financial planning and it is an area that we receive a variety of questions about. Here Anne O’Doherty looks at the top 5 questions about savings that we frequently receive from clients and the answers we guide them through

    What is the difference between investing and saving?

    Saving and investing are two different ways to handle your money. Saving is generally when you put a set amount of money aside on a regular basis for a particular period of time. Savings tend to be low risk, easily accessible and shorter term. Investing on the other hand is the term generally used when you have a lump sum that you can put away for a medium to long term. It is more geared towards wealth accumulation and achieving longer term financial goals.

    How do I decide how much to save?

    One of the most common questions we are asked is how much an individual should save each month. The answer often depends on an person’s financial situation and their goals. A general rule of thumb is to follow the 50/30/20 rule. This means allocating 50% of your income to necessities, 30% to discretionary spending, and 20% to savings and debt repayment. This 20% can be further divided into short-term savings, like an emergency fund, and long-term goals, such as retirement. This will of course vary depending on a person’s financial priorities.

    Should I pay off debt before starting to save?

    This is a common question especially with clients who may have high-interest debt. While we would always suggest prioritising paying off high-interest debt, we do also believe that it is important to have some money put aside that is easily accessible, in case of emergencies.  We all know how unpredictable life can be and a financial plan should include provision for an emergency fund to avoid accumulating debt should unforeseen circumstances arise. It is possible to balance debt repayment and savings by allocating a portion of your budget to both simultaneously.

    What is an emergency fund?

    An emergency fund is a financial safety net and is essential for handling unexpected expenses. Having savings of 3 to 6 month’s worth of living expenses put aside is a good goal. This can be done over a period of time by starting small, making this goal more achievable. Simply setting up an automatic payment to your chosen savings account can ensure that this happens.

    What should I take into consideration when choosing a savings account?

    There are lots of variables to consider when choosing the right account for you. The answer depends on your own specific circumstances and you need to take into account things like what your goal is, how much you will be putting aside, how long you will be doing this, how quickly you may want to be able to access the funds and of course your attitude to risk. You also don’t have to pick just one product. You may have more than one goal and find that mixing products is the best option for you.

    Whether you’re just starting out with your savings journey or would like to ensure you’re on the right path, we’re here to help you. Discussing your savings and understanding the various options available to you is a critical part of any financial plan. We’ll work with you to understand how much to save, where to save, building an emergency fund, managing savings on a tight budget, and balancing debt repayment with saving can empower individuals to take control of their financial future.

    Building your savings can be simple and an effective way to achieve your longer term financial goals. We’re here to help with all your questions about saving. So if you’d like to take a closer look at saving and what kind of plan is right for your circumstances, just get in touch with us at Quintas Wealth Management, because we know what counts.

    Planning your financial future – what to know about asset transfer

    The old cliché comes to mind when discussing succession planning. You know the one, death and taxes…. You’ve worked hard all your life to own your home, pay off debts, secured large deposits/investments, purchase a second property… the list goes on. Now you’re faced with the scenario where your beneficiaries have to sell a portion of these assets in order to satisfy the tax man. They will only benefit from as little as 66% of the value of said property. But by understanding the scenarios and asset transfer they can avoid this.

    What are the scenarios?

    Broadly speaking there are three scenarios that can be come about:

    1. Transfer ownership while you’re living. Thus discharging all responsibility to your beneficiaries before you die
    2. Make provisions for your wishes upon death
    3. Untimely death without provisions being made

    Did you know you have the option to mitigate the potential tax bill for your beneficiaries with two of these scenarios? Even where you believe you won’t incur a tax bill for the transfer, it is worth considering the future. Remember current Revenue CAT thresholds and tax rates are only that, current! It would be remiss to take them as guaranteed.

    A closer look at Scenario 2

    Scenario 2 is the most frequently seen case that our clients present. Yes they have a Will. And some level of discussion has been had with adult children, extended family and beneficiaries. Yes too there will be a big tax liability. There’s not much can be done about that. At least that is the perception without exploring all the options. 

    What our clients don’t always know is that provisions can be made to protect your loved ones from this tax bill. One such provision is what’s known here in Ireland as a Section 72 policy. It is a life assurance policy. But unlike a typical life policy, it does not create an additional tax bill in the hands of your estate.

    Example: Section 72 Policy

    The below example gives a very crude example of the difference.

              Let’s assume you have one beneficiary (a child) who has already availed of their full Category one CAT threshold of €335,000 when you transferred your second property to them 5 years ago     

    Scenario 1 incurs a Revenue bill of €264,000 for the beneficiary. That is 88% of your cash and investments go straight to Revenue. Scenario 2 incurs a bill of €660 with the family home. 100% of cash and investments to into the hand of your elected beneficiary.

    Another, less known about option, is a Section 73 savings policy. The regular investment policy is set up at the outset with this option included. Premiums are paid for a minimum of 8 years, the person(s) giving the gift/inheritance takes out the policy; they are also the owner(s) of the policy. Once you have met the criteria for the Section 73 relief, after 8 years the policy can be encashed and proceeds used to pay the gift tax liability.

    Next Steps

    Financial Advisors the length and breath of the country talk about risk daily. Market risk, volatility factors, capital at risk, the list goes on. What greater risk is there to those you care about most than your untimely death without a Will or with a significant change that was put on the long finger.

    If you’d like to take a closer look at planning your financial future, asset transfer options and what kind of plan is right for your circumstances, just get in touch with us at Quintas Wealth Management, because we know what counts.

    My First Year: 5 Things I’ve Learnt

    Welcome folks, it’s Tracey here. Although most of you probably know me, I will start with a bit about myself. At this point I have over 6 years’ experience in different forms of financial services, namely within Fund services and the alternative investments space. I completed the Professional Diploma in Financial Advice designation (QFA) in July 2021, you could call it a lockdown project. January 2023 marks the start of my second full year in a brokerage. With that top of mind, I decided what better time to record my practical learnings in my first year with an independent financial advisory. Here’s 5 things I’ve learnt that might benefit you.

    A Little Today for a Better Tomorrow

    Save for your pension. As an early thirty something with (hopefully) decades of work still ahead it can be hard to prioritise saving for retirement. I’ve seen it on so many occasions this year. But when it comes to the other side, it is a huge sense of relief to have a decent pension pot in place. Yes you can argue you don’t know what life will look like in 2060, but nobody will convince me that early thirty somethings in 1990 knew how the world would look in 2022.

    ‘Hopefully’

    Back to that inconspicuous hopefully I included in the first point. Protecting your salary should be one of the first things a graduate invests in. One of Ireland’s largest providers, Zurich have a line ‘we don’t protect against, we protect for’, and it’s true. You are protecting your financial future by investing in this. On the face of it, paying these premiums doesn’t appear as exciting as a crypto vault on an app on your smart phone, but when it comes to being physically out of work for a sustained period I know which one I would prefer to have.

    Review, Review, Review

    A term used with investing, ‘invest and forget’, meaning don’t unduly concern yourself with the market fluctuations until such time as you need the funds. However, in Quintas Wealth Management the review process is as important as the initial set up. Personal circumstances change, and what is even more common is changes to regulatory guidelines, from time-to-time life companies have offers, better terms, more suitable products. Ensure you review your plan, products and premiums at least annually.

    Time in the Markets

    It was a hectic year in markets, validating the phrase – ‘time in the markets rather than timing the markets’. My recommendation is invest long term, invest at a volatility (risk) level you are comfortable with and at an affordable level for your circumstances. The best time to invest is always when you can afford it. There is a perception that investing is for people with hundreds of thousands in deposit accounts, regular investments can start from €100 a month.

    A New Normal

    By and large the days of one job/employer/career for life are a generation or two behind us. More typical nowadays is a mix-um gather-um of employment and employer types (employed, public, private sector, self employed, contract work, multi nationals, Irish SMEs etc.). All the more reason to consolidate your benefits. Do a stock take on what you know you have and think you may have. The very first part of the first step in Quintas Wealth Management’s financial advice process is finding out this information for you.

    All in all, an enjoyable first 16 months with Anne and the team. An awful lot learned in my first year about the financial advice business and I’ve no doubt an awful lot still to learn! But as the saying goes “every day is a schoolday”!

    Should you wish to review your existing protection, savings and pension policies give us a call today.

    5 Top Questions About – Market Volatility

    It’s all over the headlines. The markets are going through a period of unprecedented volatility. It is, of course, a time that may cause worry to many investors. Here, Anne O’Doherty, our Head of Life & Pensions answer the most commonly asked questions we have received and shares our view on how investors should react.

    What is market volatility?

    Market volatility is an investment term which is used to describe periods of unpredictable and sharp price movements in the stock market. It covers when prices fall but can also refer to sudden price rises. Understanding market volatility and being aware of it is an important part of investing.

    What makes markets volatile?

    There are many factors that can affect the markets. Volatility is usually caused by political and economic factors, industry or sector changes or even individual company news.

    The current market volatility that we are experiencing is being driven by the war in Ukraine, pending interest rate increases, fears around new Coronavirus variants and sudden rise in inflation among other factors.

    What does a “bear market” mean?

    A bear market is a prolonged period of decline in the stock market, usually a decline of at least 20%. It’s an indicator of low investor confidence and a sluggish economy. A bear market is usually followed by a bull market. This is when securities are once again on the rise and tends to last longer than the preceding low. 

    What impact will this have on my investment?

    While it can be difficult to witness any declines in your portfolio, it is important to apply logic and not act out of emotion. The most important thing for an investor to do is hold their course.

    History has shown that those who have stayed invested during previous periods of market volatility have achieved their original investment objectives.

    I’m not sure what to do, where can I get help?

    Investing is a long-term commitment. A well-balanced, diversified portfolio would be built taking into account the ups and downs of the market. Although volatility is a typical part of investing, it’s not unusual to be concerned by periods of it. If you have any questions or concerns in relation to your own investment, please don’t hesitate to get in touch with us at Quintas Wealth Management.

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