Author Archives: Ronan McCarthy

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    Ronan’s Monthly Blog – The Markets Bull performance and Bear trepidation

    The Markets Bull performance and Bear trepidation

    Listening and watching the various expert commentaries on the performance of the current market can leave any investor perplexed. The S & P 500 is performing at a high of 8% to 9.8% and the Dow Jones has come close to historical highs over the last year. Yet, I have attended fund managers seminars over the last two years that impressed on all attendees that there was serious disruptive elements and factors in the market place. At one particular event in 2016 entitled “Disruption” each fund manager declared that cash plus 4%/5% was their target. Yet, the average managed fund with an equity exposure of up to 65% has produced on average 6%/8% over this timeframe. 2016 saw the entrance of Mr Donald Trump – now President Trump, Brexit has become a reality and Europe has Italian, Spanish and Turkish delights on its menu. And don’t forget the trade war issues.

    To counter these worries there is some good economic factors at play. GPD in the States continues to grow. Trumps tax and infrastructure budget components appease the market and the re defining of some of the trade agreements (America, Canada, Mexico) seem to be making progress whether you agree or understand the negotiation methods in place. At home, there are some worries that we are “going back to the feature” with rents at all-time highs, employment at go steady levels, and house prices have been increasing steadily.

    In the context of these conflicting scenarios, what should the individual investor do. In our view a number of issues need to be considered:
    1. The timeframe of your investment 3/5 years or a 20-year retirement plan investment.
    2. Your own attitude to risk and volatility. Is it correctly aligned.
    3. Your present access issues.
    4. The spread of your total investment portfolio.
    5. Consider a balance and diverse approach.

    In summary, yes if you have been defensive with your investment over the last two years you would have underperformed in your potential returns. However, this may have been aligned to your risk profile and provided you with peace of mind. Historical data shows the that market returns to where it was after 18/24 months. And as one famous investor once said, “it’s not about timing but all about time”. An index to which some investors take more heed than most is production managers/manufactures indices. Interestingly, the German index aligned to this sector has declined in recent weeks, for the first time after an extended period of positive returns. EU/ U.S. trade war effects???

    Cheers Ronan

    Next time we will take a look at inheritance and protection and what life assurance contract will suit your AMRF/ARF for the next generation (section 72) and special needs trust situations.

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    Ronan’s Monthly Review

    Ronan Mccarthy life and pensions

     

     

    Your UK PENSION- should I, would I, could I. QROPS could be your answer

     

    A number of clients have recently been in contact and have asked if we could assess their options with regards to a pension they had while in employment in the UK. The quick answer is Yes, but a number of issues need to be examined prior to making any decision. Perhaps the most pressing issue in their minds is what effect “Brexit” will have on both individuals with UK benefits that are receiving retirement benefits presently and those who will be doing so in the future. The answer to most Brexit questions is “we don’t really know” but in terms of losing a benefit there should be no fears.Issues such as, how the benefits can be paid by a non-EU member to an EU member state could arise and the U.K. government have intimated that this could be the case. Individuals may be obliged to take out a UK bank account? Will residency then be an issue. Could the UK impose different anti money laundering requirements? Who knows.

    However, we do recommend that you look at your options if you do have a pension benefit from employment in the UK and you should benefit from a payment in the future. These are the options available to you.

    UK pension funds can only be transferred to a pension company in Ireland though a mechanism called QROPS. This is an agreed arrangement between HMRC and the Irish Revenue authorities. The structure means that the pension company in Ireland must be QROPS approved and adhere to these rules. These centre around when the claim can be made, exiting prior to 55, residency in Ireland over 10 years and indeed the nature of the U.K. scheme being Defined Benefit or Defined Contribution. If you are over 55 these funds become more accessible within this system and can be very attractive to any individual needing access to funds. You should of course assess your needs and requirements when making such a decision.

    Let’s look at a case study. John is 56, is back leaving in Ireland for the past 15 years and has received a annual pension statement from a previous UK employment, showing a current fund of £80,000. The fund has been invested in a defined contribution scheme or personal pension. What are his options:
    1. Transfer the fund via the QROPS system into a Personal retirement bond here in Ireland
    2. Claim his tax-free sum (25%) of the fund immediately- €20,000 and invest the remaining fund in approved retirement funds. Of course, he could leave the fund in the bond until retirement
    3. Leave the fund in the UK? Brexit? AML situation etc
    4. Remember the currency difference. Sterling has been drifting over the last number of months. John £80,000 sterling would have been transferred to euro at better rates months ago. Some clients feel transferring sooner rather than later, due to Brexit.
    5. Ownership of the bond is now with you, not a scheme or trusteeship

    Note that if your fund in the UK is in a defined benefit scheme issues such as the “critical yield “ and independent IFA advise in the UK need to be taken. Transferring from this type of scheme needs considerable more examination than that of funds in defined contribution contracts.

    In summary, you could say it’s now or never, but if you are one of the many Irish people with such a benefit in the UK, talk to us. Call me on 087-2765147

     

    Next time let’s look at the Markets Bull performance and Bear trepidation

     

    Cheers,

    Ronan

     

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    Ronan’s Monthly Review

    Serious illness – why you should have it , and what does it cover.

     

    This type of protection cover has been in the Irish market for more than 20 years now and the changes in the contracts being provided by Life assurance companies   have changed drastically over this period. Initially the cover on offer could be said to be restricted to a low number of serious illnesses with very restricted defined definitions of the illnesses covered.

    Whilst each claim will only be paid based on the definition of the listed illness in each customers policy document. The number of illnesses covered,additional fridge benefits and indeed the additions of partial payments, has now meant that the current policies provide far more cover. In real terms the cost of this cover has been  maintain at realistic levels for families and corporate clients alike. We often say to our clients ‘for the price of a daily coffee, we can provide excellent cover’. If  clients must make a claim and the illness is covered under the terms of the contract, a lump sum tax free payment is paid. In real terms this cover helps each customer manage the financial implications of contacting a serious illness. The burden of the expenses associated with treatment, travel, child care, leave of absent, can be relieved. This hopefully allows the patience and family to concentrate on what really matters – recovery. Remember, if you have an old policy with this type of cover in place, the new illnesses and benefits are not automatically included. Please do contact us if you’re willing to give up your lunch time coffee each day and have the peace of mind of having this base covered as best as possible for you and your family.

     

    Inheritance tax and contracts held in trust – ‘A Whole lot of choice’

     

    Traditionally these contracts were taken out by people for inheritance tax where the value of their estate would have tax implications for their next of kin. The contracts were put in place on a ‘Whole of life bases ‘and would be paid on second death if the policy needed to be in joint names I.e. Husband and wife. Fairly straight forward, once the contracts is written as per section 72 and approved by revenue.

     

     

    Families needing to establish ‘special needs trusts’ also find themselves in a similar situation as there may be a need to provide financial protection for a dependant with special needs. The trust is established to ring fence the payment of the life assurance policy and is set up in manner which will not affect any state provisions being paid to the dependant. A trustee is appointed to manage payments when needed. These could be in terms of providing additional housing requirements, education or medical expenses. We recently conducted a seminar for families in such a position and highlighted the fact that there is a “whole lot of choice “in this market compared to the old traditional contracts. The concept now is that you can have a contract that will adhere to the requirements as indicated above but will also have two options that may suit your personal situation in the future.

    What are these new features
    1. The option to protect the cover after 15 years and pay no more premiums
    2. The option the cash out after 15 years and get 70% of the premiums paid returned tax free.

     

     

    If you have an old whole of life contract you will not have these options. Premiums are again competitive and should be assessed. Please do email us for a quote and we would be delighted to arrange a meeting to discuss your options.

     

     

     

     

    Next time let’s look at the markets, Trade war implications and Brexit again!!!!

    Cheers,

    Ronan

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    Ronan’s Monthly Review

    Brexit and the markets

    This week has seen some major changes in the UK, with two of the prominent Brexiteers resigning from the cabinet positions. Their opinion and views regarding the UK’S exit from the EU in March 2019 does not seem to be in line with that of their leader Teressa May. How has the market reacted? It seems to have factored these adjustments in personal, with no real volitivity in share prices. In fact, some commentators believe with such hard line Brexiteers now no longer present in the cabinet to influence the final exit, a more softer approach may be pursued by Mrs. May. The markets and indeed UK industry would seem to prefer such a development. Watch this space.

     

    Planning your Pension

    Whilst we are being constantly told about our Pension funding Time bomb, some good news can be found in a Bank of Ireland/ ESRI survey published this week. The survey assessed how people feel about their finances post retirement. The study showed that one third feel that they can live comfortably in retirement and 57% have plans in place for retirement. This still leaves nearly half the population in the dark regarding their pension planning and the figures are worst for female workers. The statistics show that the earlier you plan and start your pension; the potential of a far better financial package is more likely on retirement. Most schemes are now set up on a ‘defined contribution’ bases, where your contribution is defined, and your benefit is based on the performance of your specific fund over the investment period to retirement. If you’re not in an occupational scheme you should assess the Personal Retirement savings account option or PRSA. Many people also have Retained Pension benefits from previous employment situations. Most have forgotten about them and don’t realise the options you have with this old fund. Indeed, if you place this old fund in a specific pension vehicle, you can take retirement options from age 50, and continue to work? Feel free to contact us for more details.

     

    Do you realise how AFFORDABLE Life Insurance is?

    We insure our cars, our holidays and sometimes even the family dog, but the very thing we may forget to insure is the most important of all – ourselves. What you may not know is how affordable Life Insurance can be. Life insurance can cost from €15 a month. The actual cost will depend on things like how much cover you need, your age and health and the type of plan you buy. Why not give us a call and see how much cover you could get and how little it could cost you. Over half of the population only have Mortgage protection cover which mean’s ‘he/she will get the house’ if an untimely death was to occur in a family or relationship. Not enough to cope with all the ongoing finances or indeed provide an individual with the option to take time out when bereaved.

     

     

    Next time we’’ll have details of the benefits of Serious illness cover

    Cheers,

    Ronan

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    Welcome to our new blog!

    Ronan McCarthy imageAt long last, we are delighted to welcome you to our new blog where we hope to to interact with our current clients and hopefully some new potential ones.  First of all we hope you like the look of our new website site.  We intend to use the blog as an information tool across a wide range of financial matters that should be of interest to you.  It’s our intention to try and be one of your ‘GO TO’ information resources when it comes to providing you with the facts and stats required to making the right financial choices for you and your family.

    First Stop – New Year’s resolutions

     

    At some stage over the next few weeks you may decide to reflect and look back at the year just gone and muse about the year ahead.  Sometimes, you may even look at some items that affect your bank balance and your hard-earned cash. The mobile phone package, Gas and electricity provider, Satellite TV, even the waste companies bill are all looked at to see if a better deal is available. Why not add four other items to the resolution list:

    1. Check the cost of your family life assurance
    2. What am I paying for my illness cover and what are the benefits
    3. Mortgage protection cover
    4. Pension planning and investment.

     

    Most people have an inbuilt switch that turns off when you mention these items, but believe me, if you haven’t review them in years, there’s better value and products available.  Make it your business to check out even two of the four and make your cash work harder.  Feel free to contact myself or Ciara for a free impartial review.

     

    Finally, please do check out the topics on the Website which we will be updating regularly with various interesting links.  Please feel free to email us on any specific topic and we’ll use our blog to provide the necessary information.

    Cheers,

    Ronan