Q When the stock market crashed, I was really worried about my investments and my future pension. Should I sell up?
According to Frank Conway, founder of financial welfare provider MoneyWhizz and a qualified financial advisor, Investment valuations are undervalued, especially since the Russians invaded Ukraine.
He said rising inflation means valuations are under pressure. And geopolitical developments add an unknown variable to the global investment landscape. However, it is time to reflect on the historic behavior of the stock market during periods of high volatility, Mr. Conway said.
The S&P 500 Index can be traced back to 1926. With almost a century of data, comparing price valuations, it shows an average annual growth rate of 8pc-plus. However, there are periods of extreme loss and great gain. Using past performance as a guide, market volatility is likely to subside.
Since 2012, there has been some unusual annual growth and some of this is due to record low interest rates. As monetary policy tightens, market pricing is likely to be less effective but equally worth it for those willing to keep taking action. Ultimately, investments should be of a long-term nature.
For someone nearing retirement where they will be completely dependent on their pension investments, risk minimization is a must. For anyone with plenty of time on the side, using the past as a guide, current market volatility, while uncomfortable and unsettling, is also likely to pass.
Q My son is 40 years old and his family has just returned from abroad to live in Ireland. He asked about buying a family health insurance policy, but was told that an age limit would apply. Is this true because he followed my policy from the day of his birth until he left Ireland back in 2013?
ONE According to Dermot Goode of TotalHealthCover.ie, no age will apply based on the information provided. Normally, all new members who join health insurance over the age of 34 when they join are charged a fee of 2pc for each year over this threshold.
Since your son left before May 2015 and after he is insured within nine months of returning to Ireland, the law includes a waiver allowing insurers to waive the claim. age, Mr. Goode said.
Even where the age rule applies, he is entitled to full credit for all previous memberships as an adult under his own policy or covered under a family policy, which This also means that any age restrictions will be waived in his case.
H My employer contributes 12 percent, while I contribute 8 percent to a defined benefit pension plan. This is the highest available option, and I’ve considered it a good choice due to the tax benefits. However, I am paying a mortgage at a fixed rate of 2.2pc. Should I reduce my pension contributions and try to pay off my mortgage? I’m 34 years old.
ONE According to Mark Ruddy, head of client management for Lockton Employee Benefits, the contribution structure you’ve outlined would be unusual for a defined pension scheme.
It’s a clearer indication of a defined contribution plan, so it might be worthwhile to clarify this with your employer, says Ruddy. If it’s a defined contribution plan, your employer will offer generous employer contributions.
If you reduce your contributions, it is likely that your respective employer contributions will decrease as well.
Combining your combined contributions, you now have 20 per cent of your salary invested annually in your pension plan, with a net cost of 4.8 per cent, assuming you pay taxes in 40 percent level. Any investment growth your own and your employer’s pension contributions are tax-free. With such an attractive employer contribution rate, coupled with the tax relief, it will be difficult to justify reducing your pension contributions.
You have a very low fixed-rate mortgage. Depending on the terms of your flat rate, you may or may not be able to overpay your mortgage.
If you stop contributing to a pension you will have an extra 5pc of home equity that can be used to pay off your mortgage, but you will have to sacrifice 20pc worth of pension contributions.
Based on this, pension savings are arguably a more attractive option for long-term wealth creation, Mr. Ruddy said.
https://www.independent.ie/business/personal-finance/your-personal-finance-questions-should-i-sell-up-as-my-investments-dive-due-to-the-invasion-of-ukraine-41437855.html Questions about your personal finances – Should I sell off my investments as a result of the Ukraine invasion?