Reasons to be happy for your money
After the most nondescript budget I can remember, we are now left to take stock of where we are.
Some commentators love to sensationalise the risks and talk about the “wall of worry”.
I would like to look at things from the perspective of Joe and Mary Bloggs and form my views on the basis that things are never quite as bad as they seem when it comes to personal finances.
It is fair to say that there was next to nothing in the budget to assist the finances of our ordinary Bloggs’ household.
If anything, any wage increases for the Bloggs will see their tax burden rise because the tax bands and tax credits were not increased.
Then there is still the worry of Brexit and the expectation of a pull-back in the economy, both here and globally.
It is perhaps understandable that people will wallow in the gloom and fear to lose their money.
This may come about because of a decline in the value of their home or investment property.
Other assets such as their pensions could erode as stock markets fall.
Also, the fear of a recession may lead to the couple losing their jobs. But I really believe all this is overcooked.
I feel that the recession of over 10 years ago is still too much in our minds.
Humans suffer from something called “anchor bias”.
This is a tendency to rely too much on certain pieces of information when making decisions.
In this instance, it is Brexit.
I am not downplaying the potential effects of a no-deal outcome but we don’t know yet what the outcome will be.
Many forecasters worry that Brexit will harm Ireland’s economy.
It could also in the long term prove to be something of a blessing, encouraging Irish businesses to broaden their markets across the EU.
I feel that there are reasons for Joe and Mary to be upbeat.
Ireland’s economy is growing faster than any any other EU state.
And a slower pace of growth at a time of full employment in some places may not be a bad thing and prevent the economy from overheating.
Since 2008, Ireland’s economy has risen at rates well above the EU average.
We have one of the lowest corporate tax levels which attracted all of the large multinational corporations such as Google and Microsoft who use Ireland as a base for their European activities.
Apple has been continuously expanding its European headquarters in Hollyhill, employing over 7,000 people and with more expansion on the cards.
We always hope for the lotto numbers to come up or hope to find that pot of gold at the end of the rainbow.
But there are still a lot of measures in place that a many small investors do not know about or take advantage of.
There are tax back schemes in the form of Pension and the Employment Investment Incentive scheme, both of which give higher rate taxpayers 40% tax relief.
For those who have come into an inheritance or want to gift monies, there is a scheme that allows people to donate €3,000 a year tax-free to their children.
That means if you want to pass money on, you can give your children €30,000 staggered over 10 years, all free of tax.
This amount can be doubled by another spouse or partner.
The inheritance or gift tax threshold was increased albeit by a small amount of €15,000 but this means you can gift or leave your children on your death €335,000.
That means for households with three children, the Revenue won’t touch your assets to the tune of a cool €1m.
Stock markets have been rising for over 10 years.
Markets face huge turbulence and uncertainty and they have a lot to worry about — sky-high valuations for technology companies and the trade wars President Donald Trump has unleashed on the world.
But quoting again from investment guru Warren Buffett, “the stock market is a device to transfer money from the impatient to the patient”.
My message here is never get too happy or downbeat about any event or period in time.
There are postive signs.
I work in Little island in Cork and there are businesses sprouting up on a monthly basis.
OK, thousands of people stream into Little Island every day, causing traffic jams.
We are never happy.
