Protecting your Main Asset !

Most Valuable Asset??

What is the most important asset you hold? Most people would respond by saying it’s their home, others who don’t own a property might say it’s their car, either one of these could be correct but it’s unlikely.

For the clear majority of us our most important asset is our income or rather our ability to earn a future Income. So, with this, what are we doing to protect it???

Most people have outgoings each month, be it Life Cover, Home Insurance, Car Insurance and all the other outgoings we spend daily. If suddenly we could no longer work, how long could you keep maintaining your Lifestyle, paying bills for? If you are in good employment you may be get paid for 6 months or maybe longer but want happens after this period?????

Currently the State Illness Benefit is €188 per week which might help you if you’re out of work due to illness/sickness, but this is a lot lower than the average wage, so most people would need to top this up to maintain their lifestyle. If you’re like myself and a Company Director or someone who is Self-employed and paying PRSI class S, then you may not qualify for any State Illness Benefit at all.

What can we do??

Just like all of your other assets we mentioned earlier, you can Insure your Income by taking out a policy called Income Protection,this type of cover can provide you with a replacement income if you are unable to work due to an accident, injury or illness and can kick in after 4, 8,13 ,26 or 52 weeks depending on your circumstances in employment and your affordability to pay the premium.Generally income protection policies can replace up to 75% of your income less any state illness benefit or other social welfare entitlements. It works just like any other type of insurance policy, you pay a monthly premium for the cover, the cost of the premium depends on your occupation, health, age etc. EG, A crane driver or carpenter would be higher risk than an office worker.If you are out of work for a prolonged period then your chosen Insurance company provide you with a replacement income until are able to return to work, or until your chosen retirement age.However, unlike many other insurance products, if you make a claim, your policy will continue at no additional cost to you, this means if you need to claim again in the future, your policy will still pay out for a second time.

Added Bonus of Tax Relief?

Income Protection will allow you receive Tax Relief at your marginal rate making your premium more attractive to you.

To finish, Income protection should be part of of any long-term financial plan, after all, every long term financial plan needs an income to fund it and we at Cleere Life & Pensions strongly recommend it.!

If you wish to discuss the benefits of Income Protection and protecting your main asset please feel free to contact us on 056 7721854 or gearoid@cleerelife.ie

Killeen Financial Services Ltd T/A Cleere Life & Pensions is regulated by the Central Bank of Ireland.

 

Savings Fund or Pension Fund

Savings fund or pension fund: there’s only on Ireland today, the answer to this question is pretty obvious and it’s based very much on what age you are, writes Jill Kerby.

In Ireland today, the answer to this question is pretty obvious and it’s based very much on what age you are.The young – 15-24 year olds, may indeed still have a post office or bank savings account, but this age group are big spenders, often of their parent’s money, as well as their own part time incomes or their first wages once they leave school or college.

Rent and repaying education debt is taking a bigger chunk out of the disposable income of the 24-35 year old age cohort, but while many attempt to save for their first home (especially those who move back in with their parents) their spending pattern is very different from previous generations.

They increasingly prefer to spend on lifestyle ‘experiences’ (travel, career change) than what were considered lifestyle ‘essentials’ like car and home ownership. like an expensive motorcar, and starter home full of expensive home electronics. They live increasingly ‘virtual’ lives through new technology.

By the time the mid to late 30s come along, spending turns into serious debt. The 35-50 year olds are now supporting a mortgage, car, childcare costs on flat incomes and higher taxes. While they may aim to have rainy day and education savings fund in place, fewer than half of all Irish employees (outside of mandatory PRSI contributions) continue to an employment based retirement funds. Pension coverage (outside the public sector) continues to fall.

The big savers in Ireland continue to be older people in the over 55 age group who no longer have the high lifestyle costs they did 20 years earlier and are very conscious of their looming retirement.

Yet according to recent research by Irish Life, just under two thirds of Irish adults (64%) say they are actively saving and have some savings, However, of the other third, they claim to have no savings at all, and say they cannot afford to save.

The Irish Life research found that saving levels were higher among women (67%) than men (59%), and people over 55 years were saving the most.

Of those that are saving, 43% of people are saving over €100 a month, and people living in Dublin were found to be saving the most: 18% between €20 and €50 a month, with another 18% saving between €51 and €100 a month.

And while even this level of saving is to be commended, given the rising costs of housing, education and healthcare and many years of stagnant wages and state pension benefits, the return from conventional savings like deposit accounts and post office investments continues to fall.

Demand deposit account returns, according to the comparison website bonkers.ie now range from absolutely nothing from Bank of Ireland to 0.05% from KBC Bank. Internet only demand accounts get a fraction more interest but to achieve even 1% interest you need to commit at least €5,000 for about five years (PTSB).

The irony is that even these puny returns are subject to 39% deposit interest tax (DIRT) unless you are over age 65 and your total income is below the tax-exempt limit for a pensioner, that is, €18,000 for an individual and €36,000 for a married couple.

Finding a safe and profitable place for savings is the great financial dilemma of our times and in a country with a rapidly ageing population and a large debt overhang from the 2008 crash.

Meanwhile, the Irish Life research found that only a third of Irish employees belong to a company pension fund, and only 25% of all Irish workers have a private pension. Generous tax relief means that every €100 saved into a pension costs only €80 for standard rate (20%) taxpayers and just €60 for marginal 40% taxpayers and many companies offer matching contributions “which can mean up to €200 into [the workers’] pension fund, for a cost of €80 or €60 to the employee based on their contribution of €100,” says the insurer.

Pensions are a hard sell, but 42% of the respondents to this Irish Life survey admitted that they could afford to save between €80-€100 a month. Yet the majority (70%) of 20-something workers decline to join their company pension scheme, a 2014 Mercer report found in 2014.

Convincing young people to forego some spending today in order to secure a comfortable retirement four decades away is probably an even tougher task.

Written by Jill Kerby

Does Volatility matter if you’re a Long Term Investor?

Does all this Market Volatility really matter if you’re a long term Investor? The answer is NO.

As a long-term investor you should not be too worried about the short-term outlook and all of the market “noise”. This type of volatility is not uncommon, it just appears dramatic or different because we’ve just come through a period where markets have been up for the past number of years and funds have been performing well. Markets will average at least one decline each year, markets will fall at least one out of every 4 years yet over the long run Equities will still outperform every other asset class including Cash.

Carrying a full financial review including risk assessment will allow you to see what type of risk you are willing to take when it comes to Investments and Pensions. It would be our opinion to hold some cash on deposit for any emergencies that might happen.

The majority of the Life Companies now offer Easy Access type funds with great flexibility to clients. A well-diversified portfolio is recommended by Cleere Life & Pensions for 5 years +. Regular Reviews are also key to ensuring you are kept up to date with your Investments. Contact Cleere Life & Pensions on 056 7721854 or www.cleerelife.ie for further information or a review on your existing funds.

 All details and views contained within this article are for informational purposes only and does not constitute advice. Cleere Life & Pensions makes no representations as to the accuracy, completeness or suitability of any information and will not be liable for any errors, omissions or any losses arising from its use. Killeen Financial Services Ltd T/A Cleere Life & Pensions  is Regulated by the central Bank of Ireland.