Potential ways to manage your own retirement savings account
The tables below provide some suggestions on how to manage your own retirement savings account(s) depending on whether you are an employee or self-employed.
At Fair Share Partners we try to identify the simplest and most effective way for you to achieve your wealth goals and we believe that the Buy & Hold approach is the most convenient option for the majority of members’ retirement savings accounts and will result in you achieving wealth outcomes similar to our calculator’s Buy & Hold sample estimates in Table 5 of our Prosper Tomorrow page.
Most retirement savings accounts provide access to at least one investment fund that invests in the global stock market (often called global equities). In Ireland there is often an option to invest in a fund that is 50% invested in the European or Eurozone stock market and 50% invested in the global stock market (sometimes called Indexed 50/50 Equity Fund).
So our ‘Buy & Hold (100% Equities)’ suggestion in the tables below basically just means investing all of your retirement savings account money into whatever global equities fund is available in your own account and then holding it through thick and thin until about 5 years before you intend to retire. At that point we suggest that you gradually start switching some of your global equities into cash until you reach 10% in cash by your retirement date, as proposed by Warren Buffett himself for his wife in his letter to Berkshire Hathaway shareholders in 2013 (the relevant extract from this letter is available in our library here).
There is no need for it to be any more complicated than that!
Table 1: Employee with access to Workplace Retirement Savings Plan
| Type of Contributions | Type of Retirement Savings Account | Years Until Retire | Investment Suggestion |
|---|---|---|---|
| Employee, employer & AVCs* | Workplace Retirement Savings Plan | > 5 | Buy & Hold (100% Equities) |
| Employee, employer & AVCs* | Workplace Retirement Savings Plan | < 5 | Buy & Hold (90%/10% Equities/Cash) |
Table 2: Self-Employed or Employee with no access to Workplace Retirement Savings Plan
| Type of Contributions | Type of Retirement Savings Account | Years Until Retire | Investment Suggestion |
|---|---|---|---|
| Employee & employer contributions (if any) | PRSA | > 5 | Buy & Hold (100% Equities) |
| Employee & employer contributions (if any) | PRSA | < 5 | Buy & Hold (90%/10% Equities/Cash) |