It is possible to benefit from Euro Cost Averaging for Lump Sum Pension Contributions by using RegularSaver.ie due to the absence of exit charges and no minimum time frame. This might be useful for self employed individuals who do not know their preferred level of pension contributions until they have done their tax returns.
Euro Cost Averaging works as follows:
Regular investments are made to an investment account (for this example- say on a monthly basis). To keep things simple we will also say that the investment account is allocated 100 percent into one fund.
Now, depending on how markets perform this fund’s price is going to fluctuate from day to day. So let’s look at a six-month example in the table below.
| Month | Price | Units Purchased |
| 1 | 20 | 5 |
| 2 | 16 | 6.25 |
| 3 | 10 | 10 |
| 4 | 5 | 20 |
| 5 | 10 | 10 |
| 6 | 25 | 4 |
In the example above, you have invested €600 and your account is now worth €791.73. Over the six-month period, you paid an average of €14.33 per unit. If you would have taken all €600 and purchased the shares at the beginning of the six months, you would have purchased 30 units and your account would now be worth just €750.00. For this example, using Euro cost averaging has increased your account by more than 5%.
This can be done through a regular investment account where you can have access to your money but at the same time average into an investment. This investment could then be contributed to a pension by way of a lump sum payment (subject to tax relief being available at the higher rate) benefiting from the averaging in described above once the client was satisfied they did not need the money and could contribute to a pension. This could be after 1,2 or 3 years depending on an individuals circumstances.
RegularSaver.ie is a website designed and managed by SmartQuotes.ie giving competitive offerings from Zurich and Aviva to enable clients to do this at a low cost while still obtaining an advisory service if required.