The Beginner's Guide to Investing in Ireland

In a sentence, investing means buying something in the hope that its value will increase over time, at which point you can sell it for a profit. This might not even have anything to do with the stock market – art, jewellery, and pretty much anything else can be an investment.

Investing with Irish Life

At Irish Life, investment means putting regular amounts of money or a lump sum (sometimes both!) into a unit-linked investment fund, available across our pension, investment and savings plans.  

Hopefully, the investment grows in value.

If your investment does grow over a long period of time, it’s a little like magic. The investment growth is added to the fund, and then any future growth applies to the increased fund value. That’s what we call [[compound growth]].

Ireland is a nation of savers, with over €205 billion on deposit in savings accounts as of Q3 2024[1].

There’s nothing wrong with keeping money aside, but it’s an opportunity cost. Over time, inflation will erode the value of a savings account – as a nation, we’re saving ourselves poorer.

One of the best benefits of investment is being able to make your money work for you and potentially outpace inflation, ensuring that your cash goes further for longer.

Of course, the elephant in the room with investing is the risk.

When you invest in something, you’re hoping the value will increase over time. But of course, there is a chance that it might not – it may even lose value, and you could lose money.

On the other hand, if you keep your money in a bank with little to no return then it is almost guaranteed to lose value. At 2% inflation a year, €10,000 today will have the purchasing power of less than €8,200 in a decade.

That same €10,000 invested and seeing a modest 3.25% growth over the same decade? It’s worth €11,250 by the end, even after inflation – that’s a €3,000 swing!

Before you consider investing, it’s a good idea to take a look at your current financial situation to make sure that you’re ready to get started.

• Do you have any debt? This goes especially for high-interest debt like a credit card or a car loan. A return on investment is likely to be less than the interest accruing on a loan, so all things being equal you’re better off paying the debt than investing the money.
• Do you have an emergency fund? Before you invest, you should have your financial house in order. Being able to cover a few months of living expenses is really important – if you have money to invest but no emergency fund to cover unexpected costs, you should put the money in an easily-accessible account before looking to the markets.
• Will you need the money? When you invest, you should be prepared to lose money. Sensible, regular, long-term investment can reduce this risk, but not eliminate it. Even without that factor, investing is a long game and you should expect to put the money away for at least five years at a minimum.
• When will you want any returns? Having a timeline for your investment goals (retirement in so many years, a college fund for a newborn in 18 years...) will be an important indicator as to how much risk you can or should take on,

Alright, so you have the lingo down, and you’re well on your way to becoming a savvy investor. Here’s how to get started.

Before you start investing: set your goals

Goal-based investing can help you pick a fund that’s right for you. Think about why you want to invest with the hopes of making a profit. Is it maybe:

• To go on the holiday of a lifetime
• To save a deposit for a house
• To provide for your children’s future
• To start your own business
• To protect your purchasing power on your hard-earned money
• To plan for retirement

Or is it something else? When considering your goals, think at least five years in the future - don’t forget that investing is a long game. Make sure that you will not need to access the money you are investing in the short term.

Decide how often to invest

If you don’t have a large lump sum, that doesn’t mean you can’t invest. Investing in instalments can be a great way to get started and can be better than not investing at all.

You can invest a smaller amount and top up as often as you’d like once you have more money to invest. For example, you could siphon off a portion of your paycheque each month, or save your money from takeaways for a few months and top up your investment with that money.

However, if you have the lump sum to invest from the get-go while still maintaining rainy-day savings, it’s worthwhile to invest in one go. When investing, time really can equal money!

Risk is probably top of mind for you right now. As a beginner, it can feel intimidating to take a leap of faith. But risk isn’t a bad thing – it’s the name of the game.

• Lower-risk investments are less likely to lose value over time, BUT carry a different risk: not beating inflation, or not growing enough for your goals.
• Higher-risk investments might make more money in the long run, but the journey isn’t as comfortable when asset values change drastically. There is a greater risk that you may lose some or all of your money, and there’s no guarantee of a payoff in the end.

Diversify your investments

Investing in diverse assets is key, because both elements spread your risk. Combining diversification with a managed fund? Now that’s the secret sauce.

Focusing on assets like stocks in a single company, which can be very unpredictable, is the opposite of spreading risk – it’s effectively putting all of your eggs in just one basket. It can not only be daunting and time-consuming – but also a bad idea for beginners.

Do you have the time to go through a company’s books and make a call on its future potential? Doubtful.

An investment that is well-diversified and also well-managed can help decrease your risk. Plus, with a managed fund you won’t have to try to research and pick the “perfect” combination of assets to diversify your investment – the expert will do the heavy lifting for you.

Invest for the long run

No one knows for sure when the stock market will peak – or bottom out. But experienced investors do understand that this is a long game. As a rule of thumb, you should invest for a minimum of five years.

All you have to do is buy wisely – and then try to forget about it for a bit. Check in roughly once a year to make sure everything is on track. It’s like that feeling of finding money in the pocket of an old jacket you haven’t worn in years (if all goes well!).

Keep your cool

Emotion is one of the biggest risks to investors. Jittery investors make bad decisions. Buying or selling in response to media hype or sudden market rises - or falls – can lead to bad decisions. Drown out the noise and stick to your plan.

There’s no denying it: when you're a beginner, investing has its fair share of technical lingo to get the hang of. So let’s start by covering the basics.

Volatility

Volatility is the change in the price or value of an asset, especially in the short term. This is completely normal. It can be caused by changes in the asset itself or changes in the market.

• Lower volatility = less risk of large changes in value.
• Higher volatility = higher risk of drastic ups and downs.

Diversification

Diversification is one strategy to manage risk. It’s the investment form of not putting all of your eggs in one basket. If the value of one asset falls, simultaneously another might increase, lowering the risk of overall loss. 

Diversification also allows for investors to capture different growth opportunities, as well as minimising the damage down by dips in the market. In short, an investor buys different types of assets in the hopes that it will smooth the journey, giving peace of mind in the long run.

Asset

An asset is what you invest in. Assets can be all kinds of things from art or antiques to more traditional things like shares, property, and bonds. They can be tangible (physical items) or intangible (things that don’t physically exist but still have monetary value).

A company’s ownership is divided into shares – think of a share as one slice of a pie. The value of shares can rise and fall in line with the company’s performance. The terms share, stock, and equity are often used interchangeably.

A bond is a loan of money from an investor to a company or government.

Investment Funds

A fund is typically combined money coming from multiple investors, which is designated to a specific purpose.

A managed fund is overseen by an expert. They’re knowledgeable about the assets and market, so can help manage risk and reduce costs.

MAPs are a range of unit-linked funds that are invested across multiple types of assets and are available across Irish Life Assurance plans. The funds range from lower to higher risk depending on the combination of assets and their volatility.

[1] Central Bank Quarterly Financial Accounts | January 23, 2025