Personal finance Q&A

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Today with David McCullagh 18 min 2 speakers 3 chapters transcribed 1 month ago

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What is the purpose of the show and how can listeners submit finance questions?

Claire (Host) 0:00

Get in touch on WhatsApp. 0870-323232. Welcome back. I'm joined in studio now by financial planner Owen McGee. Uh do you have a question about planning your retirement, clearing debt, or even budgeting or savings? Well, now it's your chance to get some advice. If you get your question in quick, Owen might be able to get to you. You can WhatsApp uh the show on O eight seven O thirty two thirty two thirty two. You can text five one five five one or email today DMC at or te dot ie. Good Good morning Owen. Good morning, Claire. Thanks for having me in. Great. We'll get straight to the callers. We have Anna on the line with a question. What did you want to ask Owen, Anna?

Unknown 0:42

Hello, hiya Claire, how are you owned?

Claire (Host) 0:44

Good morning.

Unknown 0:45

Um My quick question is we would be a low income family um near retirement age and I have a small amount of savings and I'm just wondering whether it be the best. investment or place to put it. So I can't keep going near it.

Owen McGee 1:00

Okay, Anna. So the first thing I'll say: low income family, close to retirement, a little bit of savings. One of the things that's a disadvantage when it comes to pensions, and that's an unusual um st phrase for me to come out with to say disadvantage and pens pension in the same sentence. But the one of the disadvantages for people who are maybe twenty years of age, they put their money into their pension, they get all the tax relief, they get the tax-free growth, they get a tax-free lump sum at the end. But the end is ages away, right? If you're close to retirement, the end, the end is coming sooner. So any money you, if you're not maximizing your pension contributions right now, you should be. Okay.

Owen McGee 1:36

And you should be trying to get some advice. And work is typically if there's a pension scheme, if there isn't, you should be an auto-enrollment anyway. So you probably have access, even if you don't realize it, you probably have access and work to a pension advisor of some sort, or you can go out and get one yourself. Um but But I would be s the first thing I'd be boxably trying to tick for you would be Can I get some of the savings and convert it into pension by putting a lump sum in? You can put a lump sum in still now today for last year, and you can still do this year. So I would be ticking that box first. After that, though, you're kind of looking make sure you're not carrying any well, not pay maybe we flip flip this.

Owen McGee 2:11

The first thing you should be looking at is make sure you're not carrying any debt, particularly what I call crappy debts. You don't have overdrafts or personal loans or car loans that might be better used. to clear off this save use the savings to clear them off. But then pension, then maybe a bit of short or medium term savings. And really what you have to think about Anna is when are you gonna need this money and what are the priorities? And if you're on a treadmill with debt, you need to get off that treadmill, but then you're starting to prioritize what am I going to use this money for?

How should a low‑income family near retirement allocate a small savings pot?

Claire (Host) 2:37

So clear your debts.

Owen McGee 2:38

Debts are debts like the the the debts are always I don't know, we don't need to know Anna to be honest with you. But to be honest, debts are just a financial treadmill. And people think, Oh, I can have this debt over here and I and it's pushing me backwards and I can do this over here and I'll get ahead. You won't. Like the bank always wins in that circumstance.

Claire (Host) 2:53

Is there a mortgage, Anna, or anything to pay off there? No, there isn't anything I think.

Owen McGee 3:01

Yeah, okay. And the other thing, just be careful. Sometimes people have this money and it helps them sleep at night because they have the cash because if anything goes wrong they can reach for it. You do need to consider a buffer as well. So a buffer Yeah people I'm worried about. Yeah, people who don't have a buffer reach for the credit card when life happens. And people who do have a buffer, it's been proven, sleep better at night. So don't and um sometimes people think buffer. I definitely can call it an emergency fund or a rainy day fund because to me That conjures up negative thoughts.