Beginner Investor Blog Series: Types of Investments Explained

Pensions (Future You Will Thank You)

A pension is a long-term investment for your retirement. The good part is that you receive tax relief on the money you invest, which makes your money work harder for you.

It’s perfect for anyone considering long-term financial security (yes, that means you, even if retirement seems far away).

Understand Tax Relief on Pensions

One of the advantages of pensions is the tax relief you get on the money you put in. In simple terms, the government gives you a “top-up” by letting you claim back tax on your contributions.

Here’s how it works:

• If you’re paying tax at 20%, every €100 you put into your pension only costs you €80.
• If you’re paying tax at 40%, every €100 you put in only costs you €60.
  

That means your money is working harder from day one. Add in the fact that your pension investments can grow tax-free over the years, and it’s easy to see why pensions are such a powerful long-term investment tool.

Additionally, at retirement, you can take up to 25% of your pension as a tax-free lump sum, giving you a helpful cash boost for big goals, like clearing a mortgage chunk, renovating the house, or treating yourself to a well-earned trip. That’s why pensions aren’t just about saving for the future, they’re also one of the most tax-efficient ways to invest your money today.

Learn more by reading our Guide to Pension and Retirement Planning.

Children’s Savings Plan (Monthly Saver for Their Future)

A Children’s Savings Plan lets you put aside a set amount every month into an investment fund for your child. Over the long term, it has the potential to grow more than a standard bank savings account because the money is invested rather than just sitting in cash. 

You can usually change the amount, pause, or top up when you like, and the plan is designed for 5–10+ years, so you can ride out market ups and downs.

It’s perfect for parents or grandparents who want a steady, hands-off way to build a fund for future expenses, such as college, a first car, or a house deposit.

Children’s Investment Trust (Lump Sum Gift in Your Child’s Name)

A Children’s Investment Trust lets you invest a lump sum and name your child as the beneficiary. The money is invested in a fund, giving it time to grow while you, as trustee, typically keep control until they’re older. It’s a simple way to gift now and let compounding work over many years.

It’s perfect for one-off gifts from parents or grandparents that you want to grow for the long term.

Learn more by reading our article on: Build Your Child’s Future with an Investment Trust Fund

Alternative Investments (The “Extras”)

This can include items such as gold, art, or even cryptocurrency. Some people like these as “add-ons” to their portfolio. They can be exciting, but they’re often high risk.

This option is suitable for experienced investors or individuals willing to take calculated risks with a small portion of their investment.

Understanding Risk & Reward

Here’s the golden rule of investing: the higher the potential reward, the higher the risk.

• Low-risk investments (like savings accounts or government bonds) usually give smaller but steadier returns.
• High-risk investments (like stocks, property, or crypto) have the potential for bigger rewards, but also bigger losses.

For example, if you’re saving for retirement 30 years from now, you can afford to take more risk. But if you need the money in two years, a safer option is better.

Investing is a trade-off: you take on risk (prices can go up and down) in exchange for the chance of reward (growth over time). In the short term, markets can feel like a rollercoaster, with lots of bumps. Over longer periods, they behave more like an escalator, still experiencing a few stops and starts, but generally moving upward.

That’s why it’s usually best to leave your money in the fund for as long as possible, so you can ride out the short-term dips and let compounding do the heavy lifting. Markets wobble from month to month, but over more extended periods, those ups and downs tend to smooth out, and the growth you earn can start earning growth of its own. 

The key is to keep your emergency cash separate, invest the money you won’t need for years, and stay consistent. Time in the market beats trying to time the market.

As a beginner, it’s smart to:

• Spread your money across different types of investments (this is called diversification).
• Match your investments to your goals (short-, medium-, and long-term).
• Keep an emergency fund separate so you’re not forced to sell investments at a bad time.
• Start small and automate a monthly amount (this smooths the ups and downs, euro-cost averaging).
• Choose low-cost, broadly diversified funds where possible; lower fees = more of your return.
• Review once a year and rebalance back to your target mix.
• Avoid timing the market, stay consistent and think long term.

Know your risk comfort; if big drops would make you panic, pick a more cautious mix.