Blog – David McCarthy, Galway Talks – 11/07/2013

galway-bayfmQuestion:  I have had money on deposit for the past few years and have seen the interest rate drop from nearly 4.5% to 2.5% for 1 year at the moment.  Can you explain why this is happening and also what alternatives I may have?

Answer:  Deposit rates have fallen dramatically in the last few years and are likely to continue to do so for the foreseeable future.  Therefore leaving money on deposit is something you should consider only for convenience and not as an investment decision.  The mistake, that people who leave all their money in deposit continually make, is that they think it’s an either/or situation.  What I mean by that, is they do not consider splitting their monies between leaving some on deposit and moving the bulk of what they have into an investment over 4 or 5 years.  There are a variety of these types of investments available some of which are Capital Guaranteed, or if you wish you can take some risk with it.

The key point I would make, in a situation like this, is to manage your money effectively.

Question:  I’ve had a Personal Pension Plan for many years and never received any advice on it.  Would it be a good idea to get this reviewed?

Answer:  You should review how your pension is invested every 4 or 5 years.  I continuously come across people who have never had a review carried out and as a result have sometimes suffered, due to falling values, when they should be invested maybe in an alternative fund or with different life company.

Like anything else in your financial life, changes are essential.

Question:  I received a redundancy lump sum recently, should I invest in the post office? 

Answer:  The most important thing at this point in time is to get your finances reviewed as this is a major change in your financial life.  Where you invest your monies is a secondary issue as there are greater matters that need to be addressed.