You might think that investing is complicated, but it doesn’t need to be. At Zurich we are here to help guide you on your journey so you can make the right decisions for you.
Have you decided to start saving and investing but don’t know where to start? The following step-by-step guide for beginner investors might help you navigate the decisions you need to make to start investing in Ireland.
This guide can help you figure out how much you can invest, the investment options available and how to choose the right investment funds for you. It will also help you work out what level of risk you are comfortable taking.
Our investment guide goes through the following steps:
- Understand what investing means
- What investment options are available to you
- Define your investment goals
- Calculate how much you can save and invest
- Understand your attitude to risk
- Risk ratings and investment funds
- Choosing an investment fund
- Begin investing in Ireland
1. Understand what investing means
At Zurich, investing means putting a lump sum and/or regular savings in an investment fund with the potential to grow the fund further. The compounding effect of your contributions and the subsequent returns on your chosen funds should increase the amount you have in the investment fund over a long period of time. The following video will help you understand how savings and investments work.
You can invest a lump sum in addition to saving and investing regularly each month. In the following paragraphs, we will explain how to work out how much you can afford to set aside each month, and how you can invest a lump sum.
2. What investment options are available to you?
If you are a beginner investor, you might not want to actively manage your investments yourself. That’s where the experience of a financial advisor comes in. A financial advisor can help you understand what funds suit you best based on your attitude to risk and other factors such as your return-on-investment expectations.
The only decision you will need to make is whether you want to save on a regular basis or invest in a lump sum, or both. (More about this below.)
3. Define your investment goals
You may have decided to invest your money because you have a specific savings goal in mind. You might be saving for a rainy day or want peace of mind that you have funds available in the event that the unexpected happens.
Whatever your motivations for saving, there are lots of options available to you. If you are saving for a future event – such as paying for your children’s education –putting a number on the sum you need to save for can be helpful. As an example, the Zurich cost of education survey shows that the average lifetime cost of primary school education was €14,968 in 2023. The lifetime cost of third-level education in Ireland can rise to over €60,000. So, if your goal is to save for your children’s education, this might give you an idea of how much you may need to save.
You can use our savings goals calculator to see how much you need to save regularly or how many years it will take to reach your target based on your contributions. This strategy applies to several future events such as buying a house or saving for your retirement.
4. Calculate how much you can save and invest
This step will help you understand how much you can afford to save. Firstly, add up all of your monthly income. Then add up all of your monthly expenses. Finally, calculate the difference between your total income and your outgoings. This will show you how much you have left to save and invest.
Our budget calculator and annual budget spreadsheet can help with this.
5. Understand your attitude to risk
When you decide to invest your money, you are acknowledging that the value of your investment may go down as well as up. To mitigate this risk, you can invest in funds with a low-risk rating.
Alternatively, if you feel comfortable accepting a higher level of risk, you can choose a fund that can potentially give you a higher return on investment. This is why it is important to understand your attitude to risk.
You can use the Zurich risk profiler to help you understand your risk rating.
6. Risk ratings and investment funds
If you used the Zurich Risk Profiler, you will have been assigned a risk rating between one and seven. The risk rating you have been given represents your attitude to risk. The lower the rating, the lower the risk you may be willing to take. The higher the rating, the higher the risk level you are likely to be willing to take.
Our most popular Zurich funds are our Prisma funds. Each fund description has a portfolio risk rating indicating the risk rating associated with each of the Prisma funds. You should be looking for a fund with a risk rating similar to your own risk rating.
Remember that other factors may need to be considered, so again it is important to have a financial advisor guide you through this phase.
7. Choosing an investment fund
There are different funds for each risk profile. However, you should also consider:
- Asset classes
- Type of fund management
- Length of investment and expected returns
Asset classes include cash, bonds, property, equities, and alternatives. There are fund options available for each class. They all have different rewards and risks.
The fund management can be active or passive. Active funds are actively managed by a fund manager who buys and sells investments on behalf of the fund in order to maximise gains and minimise losses. Passive funds track a particular market which the investment sits in.
The length of time you are planning to invest and the return on investment you expect to make also plays a role in choosing a fund. It is advisable to keep your savings invested in a fund for seven plus years.
Once again, a financial advisor can help you go through this step.
Learn more about choosing an investment fund and find out what is an asset class.
Our fund performance calculator will give you an idea of how our funds perform after a specified number of years.
8. Are you a lump sum investor or a regular investor?
If you went through all the previous steps, well done. As a beginner investor, you have absorbed a lot of valuable information.
The last thing to understand is whether you want to save regularly or invest a lump sum, or both. This isn’t too difficult to figure out.
A regular investor invests a monthly sum of money into an investment fund. A lump sum investor makes a once-off payment into an investment fund.
Our investment growth calculator will show you the potential returns on either regular or lump sum investments.
9. Begin investing in Ireland
We are coming to the end of our guide to investing in Ireland.
In this guide, we have talked about different investment options and the steps a beginner investor should take before investing in a fund.
We have provided you with all the tools to assist you in calculating how much you can afford to invest, understand your attitude to risk and compare investment fund performances.
The last thing to do is to find a financial advisor located near you in Ireland or get in touch with Zurich’s financial advisors to start your investment journey.
This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No representation or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, Zurich, its members, employees and agents accept no liability, and disclaim all responsibility, for the consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it.
Warning: Past performance is not a reliable guide to future performance.
Warning: Benefits may be affected by changes in currency exchange rates.
Warning: The value of your investment may go down as well as up.
Warning: If you invest in this product you may lose some or all of the money you invest.
Warning: Annual management fees apply. The fund growth shown is before the full annual management charge is applied on your policy.