Friday, 9 September 2011

Pension on Hold and Learning about Money!

Yesterday I requested my pension be put on hold indefinitely. Our account manager was none to happy about this and reminds me that I'll lose out on my company contribution and my tax relief. This a load of sales crap in my opinion. Now I don't claim to know a lot about how they work, but the company contribution at the moment is tiny, about €16 per month, I'm ok with losing that, no biggie. The tax relief thing is a bit of a sales pitch as well. Sure I don't pay tax on it now, but when I claim my pension back when I'm older, I'll have to pay that tax back (probably at a larger rate than now, looking at how the tax rates keep climbing). So basically, it's only really a deferral of tax payments.

Once the hold is placed on my pension, I asked for a copy of my current pension details. I've only been paying into my pension for about 16 months now, my total contributions are about €2800 and the current value is €2600. So, while I've been paying into my pension, my pension fund manager has been losing it. Seems like a wise choice to leave the pension completely. Why pay to lose money? They get paid regardless, for playing around with my money.

My goal is to use the extra income from my pension and make it grow for me. I've a long way to go with learning about stocks, shares and investing, but I hope to blog a bit about it and what I've done so far.

At the moment, I've been reading a few interesting books. These include:
Rich Dad Poor Dad by Robert Kiyosaki
Rich Dad Poor Dad 2: Cashflow Quadrant by Robert Kiyosaki
Think like a Champion by Donald J. Trump
The Art of War: Sun Tzu
The Winning Investment Habits of Warren Buffett and George Soros: What You Can Learn from the World's Richest Investors

I've also been playing Cashflow 101 (a board game about money and personal finance) with a few friends. You play as a rat in the rat race and the premise of the game is to break out of the rat race. You get a budget sheet where you keep track of your income, expenses and investments. The only way to break out of the rat race is to get your passive income to exceed your expenses each month. You're passive income consists of dividends from shares, cash made from rental properties and other investments. It's a great game and I'v learnt a few things from the two games I've played already. Majority of the terms, properties and opportunities are all American based, but the lessons learned are the same. Basically, don't lose money.

On another note about money, I've been experimenting with Trading and I downloaded a demo account for Forex Trading, through ShareWatch's website. I had a brief goof around with it last night. You get 50,000 in your balance to start off with and you can buy and sell shares based on the real market at the moment. There's a huge number of options to choose from when viewing the graphs (looking at line graphs, max/min lines, candlesticks) and you can set up your own strategies for buying and selling and give you alerts when to sell and when to buy using the likes of MACD and DMACD and a number of other strategies. It was interesting. I was only able to buy and sell currency symbols and to be honest, it just feels like gambling. Like a good mate of mine says, it's 50/50, it's either going to go up or it's going to go down. There's as much prediction in this as there is in palm reading and horoscopes.

I'm trying to learn as much as I can and I'd love to hear what other people think about these books and the board game and their experiences with investing, so please feel free to comment below. Just keep it relevant and to the point.