There are some rules of thumb to adopt. I can't promise to make you rich but in time, you should be a bit better off. If you are investing for the long term – 10 years or more – these eight tips might help:
1 How much risk are you truly willing to take? Peace of mind is priceless. If you can't bear losing a quarter of your money in a year or two, don't invest in shares. They can plummet.
2 Many people do not realise they need to save a good chunk of money over a significant period of time to end up with a decent nest egg. Magic shares that go up 50 or 100 fold are extremely rare. Compound interest is your best friend and will multiply your money over time, preferably feeding it through regular savings or top-ups if your income is variable. Saving €50 to €100 per month might feel virtuous but is it enough for your investment goals?
You need a fund of approximately €350,000 to give you an income of €18,000 per annum (half the average industrial wage) at the age of 65.
Even €200 a month over 30 years wouldn't get you to a €350,000 target. If you saved €200 a month into an average managed fund from January 1984 to January 2014, you would have built up a fund of €268,000 at the start of this year – that's assuming the fund made a return of 9.4 per cent a year and had an annual management fee of 1.7 per cent.
3 If you're a taxpayer, don't forget that long-term investment is a no-brainer. Saving through a pension gives you a tax break of either 20 or 41 pe...