By Luca Caruana
Welcome to The Money Coach, a Times of Malta column where readers can ask questions about life’s money issues. Send your questions about personal finances, inheritance, gifting or other personal finance topics to moneycoach@timesofmalta.com Dear Luca, I have been investing consistently since the beginning of 2025. I am 23 and I want to set myself up with the possibility of retiring early at the age of 55, living solely on my investments. My portfolio is composed thusly: Primarily ETFs consisting of S&P 500, STOX600, Vanguard FTSE All World ETF, and Gold. I also have speculative investments in the fields of nuclear power, quantum computing and to a lesser degree Cryptocurrency related stocks (MicroStrategy, Etoro, Webull, BlackRock, Coinbase, (without directly buying any cryptocurrency) I have done well for myself so far with a sizeable unrealised gain and frequent dividend payments. However, I have some queries which persist. Lately, I have been bombarded with emails and calls to sign up for a Private Pension Plan. In a way, I have my investment portfolio intended to cover my retirement expenses. Is there any benefit in investing in a pension plan instead/also? What is the catch? My second question revolves around taxes. Namely I understand that taxes are paid on any realised gains. Seeing that my investments are yielding unrealised gains, and any dividends gained are reinvested; what are my obligations regarding local taxes? My third question has to do with the fact that when I near my retirement age, I need to start liquidating my assets. How would you approach this matter? Would you liquidate a lump sum every year or withdraw money from the brokerage account gradually? My last question has to do with the brokerage application I use. I have in the past dabbled with some day trading on eToro. I have moved past trading to some disciplined Dollar Cost Averaging on Trading212. I find the interface of this application intuitive as it facilitates rebalancing and the stock purchases are commission free. Trading212 has long been touted as an ideal application for beginners. But I feel a consistent sense of insecurity on the long-term (up to retirement) sustainability of the application and how would my investments be affected if the platform goes bust. Regards, Disciplined Young Investor Luca responds: Dear Disciplined Young Investor, First of all—well done. Many people don’t even have such a goal, let alone by age 23. The fact that you’ve already thought about retiring at 55 and are investing consistently is a strong foundation. With a time horizon of 32 years, you’re giving yourself a real chance. Historically, by consistently applying DCA (dollar-cost averaging) into the market – especially something like the S&P 500 – you’re likely to see average returns of around 8–10% per year. You’ve set yourself up well. Your portfolio appears to be thoughtfully constructed. From what you’ve described, you’ve included a mix of broad-based ETFs such as the S&P 500, STOXX600, and Vanguard FTSE All World, along with some exposure to gold. This type of approach is often associated with diversification and relatively lower fees. Including a smaller allocation to sectors like nuclear energy, quantum computing, and crypto-related equities suggests that you’ve taken an interest in emerging industries as well. While every investor’s approach will differ, having a clear strategy and awareness of your overall risk profile is always a good starting point. On your question about private pension plans—here’s the straight answer: There are two main advantages: 1. 25% tax credit (capped at €750/year as of the latest update – check for changes yearly). 2. Illiquidity: This may not seem like a benefit now, but the fact that you can’t access it until retirement actually protects you from dipping into it impulsively in the future – especially when life throws unexpected costs your way. But there are drawbacks too: Higher overall costs – Compared to other investment options like ETFs, private pension plans can come with higher ongoing charges. These typically include management fees and fund-related costs, especially when the underlying investments are mutual funds, which tend to have higher expense ratios. For context, ETFs often have annual fees around 0.2%, whereas mutual funds can range from 1.5%–2% or more. It’s always a good idea to compare fee structures across different options to understand what you’re paying for and how it might impact long-term returns. Lack of flexibility—most pension plans don’t allow for investment in ETFs. You’re often locked into 3 portfolio types: Cautious, Balanced, or Aggressive, and many of them are biased towards European equities, leaving out the U.S. which has outperformed for the past 15 years Access limitations—when you retire, you typically get 30% as a lump sum, and the rest through an annuity. Whether or not to open a private pension plan depends on your personal circumstances and long-term goals. While some individuals choose to include it as part of their broader financial planning (mainly to benefit from the tax credit and the structured approach it offers) others may prefer to continue investing independently. If it’s something you’re considering, I’d suggest reviewing the terms carefully, paying close attention to all fees involved, and seeking guidance from a licensed financial advisor before making any decisions. On the tax side, it is best to always consult with a licenced tax advisor in such case. As a Financial Coach I’m afraid I cannot help you much there. On withdrawals at retirement: You don’t need to worry too much about this now, but as you near your goal of retiring at 55 (or even before), the strategy will have to shift. When that time comes It is again best to consult with a licenced tax advisor specialised on investing to see what would make most sense to your portfolio at that point in time. And lastly: Trading212. I agree that it’s intuitive, low-fee, and great for DCA. But I do understand your concern about long-term sustainability. The key question to ask is whether the platform is regulated by a major authority—like the FCA (UK), or MFSA if local. If it is, your investments are technically held with a custodian, not the platform itself, meaning that if Trading212 ever goes bust, your holdings should remain safe. That said, it’s smart to stay updated on the platform’s status, and eventually—when your portfolio gets larger—you may want to consider splitting your funds across two platforms (or more), just as an added layer of protection. I hope this helps. Luca is the founder of the Money Coaching Hub. Email him your financial questions or your response to today’s question for a chance to be featured in a future column. Disclaimer: This column is intended to provide general information on various topics related to personal finance. The information provided is for educational purposes only and should not be construed as personalised financial advice for your specific situation. Financial decisions are highly individual and can vary greatly based on your unique circumstances, goals, and risk tolerance. The author of this column is not authorised to provide financial advice. Before making any financial decisions, it is recommended to seek professional financial advice from an authorised financial advisor.