Building wealth is something that happens over time. If you sold your business, you have built up the value of that business over decades. For those that don’t have a business to sell, your wealth comes from how you grow your surplus income.
We encourage clients to automate their savings so it is like a bill each month and you make your investment each month. When it comes to the execution of monthly investment, you have two choices, use a life company or DIY it, using a low cost online platform. Which is best? Besides the investment part, they offer very different services.
Using an online platform is definitely cheaper, as it should be. You are doing everything yourself. The platform is just providing the access point for you to make the trades.
Using a life company will be more expensive. First off, you have to pay the 1% government tax on contributions (it has been recommended that this is done away with). You also have annual management charges on regular saver plans, which are higher than on regular pension plans, due to the fact that they tend to be kept for shorter time frames. While the compounding effect of charges make a difference over time, in the first few years, the actual monetary cost is very low. And it isn’t free money, you get more than just investment for it, which we will go through below.
When you DIY it, you DIY everything and that includes taxation. You may outsource the taxation element to an accountant (which they will of course charge your for). If you are doing it all yourself, you have to keep note of the units you buy each month and if you are selling, you have to take note of which units were sold. You are also responsible for deemed disposal (also recommended that it is done away with). When you have your calculations done, you have to submit a return to the Revenue and pay the tax due. There is plenty of admin and time involved in this. Using an online platform, you do not have to sell units in your holdings to pay your tax. You can pay it from personal tax reserves.
With a life company, they will do all the taxation for you, paying the Revenue out of your fund. You do not have to submit a return to the Revenue.
There is a lack of automation when you DIY it. You can set up a standing order so the money goes from your bank account each month but then you have to log on to make the trades yourself.
With a life company, once the direct debit is set up, the money will be debited from your account and invested each month. It is set and forget.
When you have to press the buy button yourself, you may start to second guess the market. Will prices go up or down in the next few days? Will I get a better price if I wait? What if I hold off investing this month and double up next month? I may get a better price…or you may lose out.
With a life company, the investment is automated and will happen at the same time each month. Some months will be better than others, that is the nature of regular investing. The chances are you don’t even think about the unit prices, the money leaves your account and is invested.
Some people are perfectly happy with DIY investing. They are comfortable in dealing with the taxation element of it and don’t mind doing the additional admin that goes with it. Others aren’t comfortable with that at all and need someone to do it for them. And then there are others who prefer to spend their time doing other things and are happy to outsource everything to a life company.
Steven Barrett
12 May 2025