Your Questions: How should I invest baby's cash gift?
My newborn daughter has received a cash gift of €10,000 from her grandparents. Rather than leave it in a bank account until she reaches adulthood, I thought it would be a better idea to put the money into an investment of some sort.
What investments would be worth putting the €10,000 into? I don't want to take much of a risk.
Caroline, Gweedore, Co Donegal
Jim Hegarty replies: As you are considering a long-term investment of at least 10 years, inflation is your main hurdle. Interest rates in Europe are going to be held as low as possible for the foreseeable future and even if or when they are increased, it is highly unlikely they will return to the levels we have seen in the last number of years. There is no guarantee the banks will reflect increases in base rates to their products as they too struggle for returns for their shareholders.
With confidence returning to the markets, many are now considering alternatives to deposits. Irish fund managers are therefore designing new products with many offering capital guarantees or proportionate capital guarantees. This is an area that will become very competitive over the coming months so these products could be worth considering.
Be sure, however, that you understand and are comfortable with the risk you are taking on when you invest in such a product.
I paid into a pension in my early 20s for about eight years. I have since changed jobs and moved house but I never carried my old pension over to my current one. I understand the employer I worked with in my early 20s has since gone bust and I have not held onto any documentation which would enable me to trace my pension. Is the pension I paid into for eight years now lost?
Craig, Rush, Co Dublin
Jim Hegarty replies: The simple answer to your question is that pension funds are never lost. Maybe mislaid or forgotten about, but not lost. All pension funds are held in trust for their members and therefore safeguarded.
You mentioned that your former employer may have gone bust. However, in our experience, many employers who have provided pension schemes for their staff have either been amalgamated or bought over. Therefore making contact with any former work colleagues may point you in the right direction.
You have two options. You could engage an independent adviser and ask them to do the tracing for you. Alternatively, if you wish to do the tracing yourself, you could contact each of the life offices to see if your pension is with them.
You should, however, provide enough information to the life office so it can do a search. This should include your name, date of birth, current and former addresses, name and address of employer, and any other information which you feel would help to trace your pension.
You also mentioned that you made contributions. Your tax records therefore should show which fund manager the contributions were paid to as you would have availed of the tax relief on pension contributions.
Remember, even though you may only have paid eight years' contributions, the funds were invested on your behalf and therefore would have accumulated for your benefit over the years.
Best of luck with your search!
Jim Hegarty is Managing Director of the Dublin financial advisers Hegarty Financial Management.
Sunday Indo Business