Deciding on the best investment route
Zurich's Ian Slattery discusses wealth management and explains how pension investments work, what an investor should think about before choosing a fund or portfolio and why advice is key to smart financial decision-making.
![](/-/media/project/zurichie/zurichmainsite/blog/20171004-best-investment-route/20171004-best-investment-route-header.jpg)
The age old saying: 'failing to plan is planning to fail' could easily apply to any discussion around wealth management, as indeed could the phrase 'knowledge is power'. When it comes to financial planning, having a good basic knowledge and getting expert advice from an independent financial broker or advisor will stand you in good stead.
Ian Slattery, Investment Consultant at Zurich certainly appreciates the importance of financial planning for the future. "When starting out on an investment journey you have to ask yourself some tough questions in terms of what you are spending and earning, how much you can afford to invest and how much of a return you are hoping to gain from your investment," he says. "Wealth management is about being prepared for the future and facing up to questions at a time when you can influence the answers, rather than taking a reactionary approach if something happens."
There is lots of advice and recommendations out there for first time investors, but starting out on an investment journey doesn't have to be a minefield. "Getting advice from an independent financial advisor is key," Slattery says. Understanding how investment markets work is also important. "That doesn't mean having formal economics education behind you, but even a general appreciation of how it all works is a definite advantage," he adds.
Central to any decisions around choosing a fund or a portfolio of investments, is an investor's appetite to risk. "There are different definitions and opinions on what risk is", Slattery says. "Some see it as how volatile the investment journey might be, some see it as the risk of losing some money and others see it as losing all of their money. It's important to understand what level of risk you are comfortable with and that will inform your investment decisions and journey."
If you're not sure what sort of investor you are, Zurich's handy risk profiler tool can help you understand more about investment risk and what levels of risk you feel comfortable with. Based on your answers it will also suggest some funds that are suited to you. Of course, risk, return and investment growth are intrinsically linked.
When we talk about investments and pensions we talk about them growing over time. But how does that work? This video answers these and other questions.
For many people their first entry into the investment arena is when they start a pension. Given there is a knowledge gap when it comes to pensions and a lack of engagement, is there a clear explanation as to what actually happens to a pension investment?
Essentially, the value of your pension at retirement depends on how much you can afford to put away each month, the length of time you are making contributions, the type of pension plan you select and the investment return. One thing we know is that the sooner you start a pension, the bigger it should grow. Zurich's Pension Calculators are a good starting point and can help you decide how much you can afford to save.
Slattery agrees there is a lot of complexity around pensions which is why he believes people don't engage. But he says it's really not that complicated.
"Once you've decided to save in a pension - either a company pension or a personal pension - your policy is set up. Now that you have a pension policy you can invest in a range of funds, for example, you could go into an equity fund which would be perceived to be higher risk, or cash which would be at the lower end of the risk scale. Basically, the pension is what you put your money into and the fund or funds, decides how your money performs."
In addition, a person may decide to opt for the default investment option, in which case they don't have to make any decisions around which fund or funds to invest in.
Slattery also explains that if you have your pension with Zurich you can go online anytime and see how your funds are performing and what the current value of your pension is.
Another positive for pension investments is around the tax benefits. "You get tax relief when you contribute to your pension, you get it during your pension as your investment grows tax free, and you get a tax free lump sum at the end when you retire."
Zurich carried out research last year entitled the Zurich B&A Pension Survey 2016. Of those surveyed the majority said that their knowledge on pension investments was relatively low*. According to Slattery it's about reframing the conversation and simplifying the language used to explain how pensions and investments work. "For example", he says, "tax relief is one of the big positives that comes with investing in a pension. A lot of people hear the word 'tax' and they don't realise it's a benefit. It's about changing that mindset through better lines of communication, which could see people engage in a more meaningful way."
Having won numerous investment awards over the years, including the Brokers Ireland Best Investment Performance Award for the last three years in a row, Zurich works hard on its performance and active investment philosophy. With over 50 funds to choose from Slattery says there is something for everyone whether a first time or seasoned investor.
"All our funds are rated on the 1-7 on the European Securities and Markets Authority (ESMA) risk scale. For example, at risk level 1 we have things like cash and at the higher end of the scale we have single asset funds which would be predominately equities."
What to invest your money in is a big decision. "We have a large range of investment options and funds to choose from, and we are here to help you understand what your choices are and how they work," Slattery concludes.
* Source: Zurich B&A Pension Survey 2016
To listen back to the interview with Ian Slattery play back on the Zurich Life Podcast.
About: Ian Slattery
Ian Slattery, is an Investment Consultant at Zurich. You can find a local financial advisor near you with the Zurich Life Advisor Finder. Alternatively, our Financial Planning Team can provide you with more information about Zurich Life's pension plans and options. If you don't want to be struggling to stay financially afloat in retirement, starting a pension could be the smart move.
Warning: Past performance is not a reliable guide to future performance.
Warning: Benefits may be affected by changes in currency exchange rates.
Warning: The value of your investment may go down as well as up.
Warning: If you invest in these funds you may lose some or all of the money you invest.