There are a cohort of investors who like to take more control or have a greater say in how their money is invested. They are interested in exploring more than just the standard funds. Luckily enough there are some options for this type of investor.
The most common one spoken about is the Small Self-Administrated Pension fund. These are used particularly for clients looking to purchase property through their pensions. Under recent changes to the pension rules the ability to do this has been greatly restricted but it is still possible through certain pension types. They are organised through one of a handful of trustees and a broad range of assets can be purchased under this umbrella. They do require more work than the standard pensions and you do need to have a fairly significant pot to begin with to make these pensions worthwhile.
Another vehicle which is not discussed as much is the Aviva Self-Directed Investment Options (SDIO). It operates under the Aviva umbrella with Cantor Fitzgerald the appointed fund administrator. Within Aviva you have a broad range of funds similar to other pension providers but along side this you have the Aviva SDIO. gives you access to a broad range of assets ranging from the standard multi asset funds to ETF’s if that is what you want. You can tailor your pension investments to suit your goals and objectives.
Through Aviva and Cantor Fitzgerald you get access to a broad range of specialist investment providers. You can instruct how your pension funds are invested and buy and sell investment assets as you wish. The process is transparent and Each provider brings it’s own range to the market and I have detailed briefly what they each offer.
Aviva themselves have a range of Equity, Multi-Asset, Property and Commodity related funds. They are in the main, multi-asset funds but depending on your risk profile you can opt for funds that are from predominantly equity funds back to the simple cash funds. We always speak about diversification and the importance of being spread across a number of asset classes.
Greenman are an Irish company investing in retail property in Germany. They purchase and let retail space in several locations. They invest in food related retailing space and the model would have an anchor tenant like Aldi or Lidl along with a couple of smaller units. Returns are based on the rent roll rather than depending on capital appreciation. They have provided pretty consistent growth over the years.
BCP are one of the largest independently owned Irish investment companies. Set up in 1969 and with over €3bn in investment assets now. They specialise in producing capital secure structured products.
Cantor Fitzgerald Cantor Fitzgerald Ireland is part of leading global financial services firm Cantor Fitzgerald. They have been operating in Ireland since 1995 looking after Private Clients and Financial Advisors. They provide a full suite of investment services, primarily in personalised share dealing, pensions and wealth management, fund management, debt capital markets and corporate finance.
Every individual is unique and has different knowledge, attitudes to risk, timelines and different investment amounts. In order to cater for the uniqueness of people it is great having an offering like the Self-Directed Investment Options. No matter how involved or not you want to be in the investment process there are options for you.
Given the high levels of inflation we are seeing at present and the likelihood that inflation will remain at higher levels than we have been accustomed to, it is important to look at investments that will protect the spending power of your money over time. Using a very simple formula called the rule of 72 you can calculate how long it will take to halve the spending power of your money given a certain rate of inflation.
European inflation rate is running at just over 9% at present. It is unlikely to remain at that level but if it did, we would see the spending power of our money halve in just 8 years. We can look at what a 4% rate would do to our money as this is probably closer to a long term level. You divide 72 by 4 which gives 18. Our spending power will halve in 18 years with a 4% level of inflation.
Traditional safe havens in these volatile times like bank deposits and bonds will struggle to match inflation particularly at current levels. Despite several rate increases happening they are not reflected in the deposit market. In order to give yourself the best chance of keeping pace with inflation you do need to look at some risky assets and have a diversified portfolio broadly in line with your risk profile.
The ability to have a diverse portfolio is certainly helped with an offering like the Aviva Self-Directed Investment Options. It can be a simple range of multi asset funds or a mixture of ETF’s, Commodities etc for the more knowledgeable investors. Either way you need to match your investment portfolio with both your attitude to risk as well as your ability to handle any downsides. Sitting down with your financial advisor is the first step in the process.
Conor Harte CFP® of Wealthwise Financial Planning with offices in Carrick on Shannon, Co. Leitrim & Oranmore Co. Galway, www.wealthwise.ie All details and views contained within this article are for informational purposes only and does not constitute advice. Wealthwise Financial Planning 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. Wealthwise Financial Ltd T/A Wealthwise Financial Planning is Regulated by the central Bank of Ireland.#CI66141
