Firstly, you will need to assess your current financial position - ask yourself:

• How much can I realistically afford to save and for how long?
• Do I have any loans that can be cleared before I consider committing money to a savings or investment scheme?
• What are my ultimate aims for this money?
  
  
• What kind of security do I want for my money - do I want to take a risk for the chance of a higher potential return? 

Understanding Risk

There are three main types of risk associated with savings and investment products. You should make sure that you understand the different types of risk and which applies to the product you are buying. Generally speaking, the higher the potential return, the greater the risk. Your attitude to risk is very personal and should form the basis of the advice or product you are offered.

• Inflation risk: the risk that your money will lose value or purchasing power over time. Even a modest inflation rate of 3% will mean that €1 will be worth 3% less after one year.
  
   
• Return risk: the risk that your savings or investment will not perform as well as hoped or expected. If you buy a financial product, which does not guarantee a certain return, then you are exposed to return risk.
  
  
• Capital risk: the risk that you could lose all or part of your original investment. If a savings or investment product carries this type of risk then, before investing, you should consider the financial consequences of losing all or part of your money.

Risk And The Older Investor: Older investors should be particularly wary of promises of high returns and income. Many investments are only suitable if they are taken over longer periods of time. This is to off-set volatility - in particular, ups and downs in the stock-market. Be sure to get written confirmation of the type of risk involved in any product you are sold and the minimum recommended investment term.

NOTE ON RISK: make sure you talk to your financial advisor in Orca about the type of risk you are prepared to accept and what that will mean to the returns you can expect.

The type of product(s) you will save and/or invest in may be determined amongst other factors, by your own personal needs.

Below is a guide to short-, medium-, and long-term saving and investing needs to help you in your financial 'self-assessment'.

Short-term needs

• Typical short-term needs could include: a holiday; Christmas; back-to-school expenses; and car insurance.
• Typical term money will be invested for: anything from a few months to a few years.
• Access required: immediate or within a few days.
• Security required: high, therefore potential returns may be relatively low.

Medium-term needs

• Typical medium-term needs could include planned expenses like: your dream holiday; new car; mortgage deposit or home extension; children's education; or money for a rainy day.
• Typical term money will be invested for: from five to ten years.
• Access required: no immediate access required but 'rainy day' fund should be accessible within a few weeks.
• Security required: you may want higher potential returns and so be willing to take some risk - depending on what you are saving for.

Long-term needs

• Typical long-term needs could include planned expenses like: retirement; or investments for your own or your children's future.
• Typical term money will be invested for: ten years or more.
• Access required: limited access until maturity.
• Security required: you may be willing to take more risk on a longer term investment and the old rules still apply: higher potential returns equal higher potential risk and vice versa.

Tying up your money

We can broadly categorise the main saving and investing products according to their normal recommended investment term:

You may need to have a mix of products between short, medium and long term as you may well have a similar mix of financial needs, e.g., you may want to save for next year's holiday, your children's education in 6 years time, and to build up a pension for yourself in, say, 20 years time.

*Please note that pension plans are designed to tie up your money until retirement (or earlier death).

Products we can offer

Property

Investing directly in property generally requires either large amounts of capital or borrowing. If you borrow heavily to invest in property you will be more vulnerable to the potential risks, particularly if your investment property is secured on your own home.

Potential returns

• Rental income if investing directly.
• Capital growth if the value rises.

Potential risks

• No rental income if property is vacant.
• Increase in mortgage repayments if interest rates rise, where the property is purchased using borrowings.
• Falling property values and / or negative equity.
• Immediate access to your money may be difficult - poor liquidity.

For more information please contact our sales team at 014097090 or info@orca.ie

Pooled Investment

Investing directly as an individual often requires expertise, particularly in relation to shares and property. Many investors do not have the required knowledge or the time to manage their investments and opt instead for a pooled investment. Types of pooled investments are unit funds, with profit funds and tracker bonds.

Pooled Investments - the alternative to investing directly.

The benefits investing this way can include:

• pooling of your money with other investors to achieve, for example, lower transaction costs and other economies of scale;
• a professional fund manager to look after the fund;
• exposure to the property market without the need for large amounts of money or direct borrowing;
• the spread of risk across different types of funds and asset types - depending on the investment product; and
• reduced paperwork and tax compliance administration for individual investors.

On the downside of course there are costs and risks associated with investing in pooled funds and these need to be taken into account.

For more information please contact our sales team at 014097090 or info@orca.ie