Growing wealth

CelticRambler · 28-09-2019 8:37pm

Still waters wrote: »

You live on 10 grand a year ? How

By not living in Ireland, for a start! :pac:

Leg End Reject wrote: »

I'm not sure it would cover it. Are you relying on the current pension not being decreased? 10k is a very small amount to live on for a year, I'm not sure how you do it.

What pension?

House is bought and paid for, half my food comes from the garden, every other expense is kept to a minimum by not allowing myself to be ripped off by greedy capitalist corporations. Can't do much about the cost of fuel, though, which is why my holidays account for about half my expenditure.

NSAman · 28-09-2019 8:40pm

The simple fact in ireland is that growing wealth is difficult. 33% transfer tax and other taxes on money earned mean that the average Joe, will not be able to grow.

I have heard it said that anyone who does grow wealth in Ireland is either doing business internationally or is not being 100% honest.

I know that is a generalization but it absolutely seems impossible to develop in Ireland compared to other countries.

Geuze · 28-09-2019 8:40pm

Strumms wrote: »

How will the state ‘know’ of your windfall ? Genuine question.

Probate process.

All wills are public documents.

Strumms · 28-09-2019 8:42pm

Leg End Reject wrote: »

You'd be taxed on all profits minus expenses, capital gains at 33%. Taxed on rental income too ...

Hmmmm, they have you every way so it seems.

dxhound2005 · 28-09-2019 8:42pm

CelticRambler wrote: »

By not living in Ireland, for a start! :pac:

What pension?

House is bought and paid for, half my food comes from the garden, every other expense is kept to a minimum by not allowing myself to be ripped off by greedy capitalist corporations. Can't do much about the cost of fuel, though, which is why my holidays account for about half my expenditure.

I hope whoever gets your money when you're dead will be equally fastidious.

Leg End Reject · 28-09-2019 8:44pm

CelticRambler wrote: »

By not living in Ireland, for a start! :pac:

What pension?

House is bought and paid for, half my food comes from the garden, every other expense is kept to a minimum by not allowing myself to be ripped off by greedy capitalist corporations. Can't do much about the cost of fuel, though, which is why my holidays account for about half my expenditure.

Sorry, I assumed you lived in Ireland and meant the state pension.

What if you're unable to maintain your garden as you get older?

You're in a good position though, I'm jealous.

nkl12xtw5goz70 · 28-09-2019 8:52pm

NSAman wrote: »

The simple fact in ireland is that growing wealth is difficult. 33% transfer tax and other taxes on money earned mean that the average Joe, will not be able to grow.

I have heard it said that anyone who does grow wealth in Ireland is either doing business internationally or is not being 100% honest.

I know that is a generalization but it absolutely seems impossible to develop in Ireland compared to other countries.

This is all very true.

These policies are supported by the "tax the rich" socialists, but they really target the average Joe.

My own secret weapon is a non-domiciled spouse.

Mad_maxx · 28-09-2019 8:54pm

Santino Chubby Munchies wrote: »

NSAman wrote: »

The simple fact in ireland is that growing wealth is difficult. 33% transfer tax and other taxes on money earned mean that the average Joe, will not be able to grow.

I have heard it said that anyone who does grow wealth in Ireland is either doing business internationally or is not being 100% honest.

I know that is a generalization but it absolutely seems impossible to develop in Ireland compared to other countries.

This is all very true.

My own secret weapon is a non-domiciled spouse.

My partner is from Limerick, not sure that will do ðŸ€”

studdlymurphy · 28-09-2019 8:56pm

Strumms wrote:

Thatâ€™s mad, so if I go to my bank on Monday, a cheque for 50,000 to be lodged they are entitled to ask where I came by the dosh and if not altogether satisfied then go and ring the revenue ?

Say you won it on the horses like Bertie

nkl12xtw5goz70 · 28-09-2019 8:58pm

Mad_maxx wrote: »

My partner is from Limerick, not sure that will do &#55356;&#56340;

Probably not, alas :pac:

CelticRambler · 28-09-2019 9:07pm

Leg End Reject wrote: »

What if you're unable to maintain your garden as you get older?

All part of the pre-retirement planning - finding ways to make it productive but almost maintenance free (raised beds, companion planting, passive irrigation, etc). And if I'm saving money by not driving any more, I can pay someone to come in once a month and do the heavy duty maintenance. Or take in a lodger. Or even blackmail one of the children to come back and help out every so often!

Full disclosure: I'm not against making money work for itself, and if I had that million, I'd be pretty disappointed if the invested first half didn't generate a significant return, and the remaining 10k pa stayed at 10k+RPI.

DrPhilG · 28-09-2019 9:55pm

Leg End Reject wrote: »

You'd need more than a million to stop working.

Depends on your age, location and circumstances.

If you were 21 and looking to live in Dublin, then I agree, you'd need to make some seriously crafty investments to retire on a million. Or use that million to recruit and train a fleet of bank robbers and turn it into 10m.

On the other hand, I'm 40. I live in the North West. I could pay off my mortgage and build a substantial property portfolio with €1m, enough to generate at least €50k a year net.

Could I retire on that? Yeah I could, I wouldn't be touring around in a sports car or cruising the Bahamas 3 times a year but I could sack work.

AndrewJRenko · 28-09-2019 11:57pm

Mad_maxx wrote: »

Instinct tells me buying two luxury apartments in the centre of Dublin would be the best option, cater to the executive type high earning tenant, three grand per month type client

Putting all your investment eggs into one basket (Dublin executive property) breaks the golden rule of investment - diversify, diversify, diversify. If you time your investment badly and the market drops, you could find yourself in very hot water.

Greentopia · 29-09-2019 12:35am

Mad_maxx wrote: »

Let's say a great aunt died and left you a million euro, could you retire and having put the money to work, live off it?

If so, what would you do with the money - where would you invest it?

Idea stems from stories you read about people who either build up enough of a nest egg to retire early, replace great aunt with won it on the 3.10 @ Cheltenham if you prefer.

Don't want to retire.

With a million I'd sell my house, buy about 10 acres and buy or build a slightly bigger house elsewhere. Set up a CSA smallholding- community supported agriculture http://communitysupportedagriculture.ie and I'd hire a head grower to help with the labour.

I'd buy a house for my partner in Germany-houses are cheap in the east. Stay there with him a few weeks in the year and rent it out at a nominal amount just to keep it heated.

No investments. I can live on less than €10,000 a year at the moment easily-own my own home so a million would be more than enough for anything I wanted.

Uncle Charlie · 29-09-2019 12:50am

Santino Chubby Munchies wrote: »

If your great-aunt left you the money, the first €32,500 would be tax-free, and then you would pay Capital Acquisitions Tax of 33% on the remainder. So your million euro would be down to €680,725 straightaway.

One of the implications of the current Irish taxation system.

Its best to deal in cash then you wouldn't have that problem.

Mad_maxx · 29-09-2019 9:23am

AndrewJRenko wrote: »

Mad_maxx wrote: »

Instinct tells me buying two luxury apartments in the centre of Dublin would be the best option, cater to the executive type high earning tenant, three grand per month type client

Putting all your investment eggs into one basket (Dublin executive property) breaks the golden rule of investment - diversify, diversify, diversify. If you time your investment badly and the market drops, you could find yourself in very hot water.

That's text book orthodox investment advice, doesn't always apply, this country penalises equity investment in the way it does not with property, a market drop is not a problem unless you are carrying a lot of debt.

Most major cities nowadays have areas which have growing exclusivity

JohnnyFlash · 29-09-2019 9:30am

Mad_maxx wrote: »

Instinct tells me buying two luxury apartments in the centre of Dublin would be the best option, cater to the executive type high earning tenant, three grand per month type client

That’s what I did. Bought 3 apartments in Ringsend in 2012 when prices had almost hit their lowest. Kitted them out with really decent furnishings, kitchen, beds etc, and rent them at a premium to Italians working in tech in places like Google and Airbnb.

nkl12xtw5goz70 · 29-09-2019 10:09am

AndrewJRenko wrote: »

Putting all your investment eggs into one basket (Dublin executive property) breaks the golden rule of investment - diversify, diversify, diversify.

To quote Buffett again, "Diversification is protection against ignorance. It makes little sense if you know what you are doing."

If one actually knows and understands the market for Dublin executive property, investing in it could make more sense than investing in multiple things one doesn't understand just for the sake of being diversified. Plus, we now see a higher degree of correlation across investment classes. If property crashes, stocks and other investments are likely to tank as well.

Like it or not, most people who have got really wealthy have done so by putting all of their eggs in one basket.

Mad_maxx · 29-09-2019 12:10pm

JohnnyFlash wrote: »

Mad_maxx wrote: »

Instinct tells me buying two luxury apartments in the centre of Dublin would be the best option, cater to the executive type high earning tenant, three grand per month type client

That’s what I did. Bought 3 apartments in Ringsend in 2012 when prices had almost hit their lowest. Kitted them out with really decent furnishings, kitchen, beds etc, and rent them at a premium to Italians working in tech in places like Google and Airbnb.

You couldn't have bought at a better time, I'd go for somewhere around the IFSC

Mad_maxx · 29-09-2019 12:12pm

Santino Chubby Munchies wrote: »

AndrewJRenko wrote: »

Putting all your investment eggs into one basket (Dublin executive property) breaks the golden rule of investment - diversify, diversify, diversify.

To quote Buffett again, "Diversification is protection against ignorance. It makes little sense if you know what you are doing."

If one actually knows and understands the market for Dublin executive property, investing in it could make more sense than investing in multiple things one doesn't understand just for the sake of being diversified. Plus, we now see a higher degree of correlation across investment classes. If property crashes, stocks and other investments are likely to tank as well.

Like it or not, most people who have got really wealthy have done so by putting all of their eggs in one basket.

If you aim for equity diversification in Ireland, that means having to sell your fund after seven years with a 40% exit tax, U. S etfs are no longer available to be bought and even when they were a few years ago, you had no choice but to take the dividend cash pay out, reinvesting the dividend wasn't an option

Rows Grower · 29-09-2019 12:36pm

dxhound2005 wrote: »

He must be a close friend. I wouldn't tell that sort of information to strangers.

He doesn't have the same standards as you and is far from a close friend of mine, he openly tells everyone when he has a good few drinks in him on his payday how stupid they are to be working all their life.

He gloats on it, I've seen him order a drink for people with the line "Give him a drink on me there, shur that poor man has to work".

AndrewJRenko · 29-09-2019 1:12pm

Santino Chubby Munchies wrote: »

Like it or not, most people who have got really wealthy have done so by putting all of their eggs in one basket.

That may well be correct - and if it is, it is a very good indication that they took some serious financial risks on their journey - risks that should not be taken lightly.

AndrewJRenko · 29-09-2019 1:15pm

Uncle Charlie wrote: »

Its best to deal in cash then you wouldn't have that problem.

Tell that to lads getting visits from the CAB to seize their assets each week. If your lifestyle does not match your declared income, Revenue will find you, sooner or later.

AndrewJRenko · 29-09-2019 1:26pm

Mad_maxx wrote: »

If you aim for equity diversification in Ireland, that means having to sell your fund after seven years with a 40% exit tax, U. S etfs are no longer available to be bought and even when they were a few years ago, you had no choice but to take the dividend cash pay out, reinvesting the dividend wasn't an option

There are ways of diversifying without doing ETFs or even funds. But anyway, why would you HAVE to cash out of your fund after seven years?

AndrewJRenko · 29-09-2019 1:27pm

Mad_maxx wrote: »

That's text book orthodox investment advice, doesn't always apply, this country penalises equity investment in the way it does not with property, a market drop is not a problem unless you are carrying a lot of debt.

Most major cities nowadays have areas which have growing exclusivity

What is the penalty on equity investment that you mention?

Rows Grower · 29-09-2019 2:07pm

AndrewJRenko wrote: »

That may well be correct - and if it is, it is a very good indication that they took some serious financial risks on their journey - risks that should not be taken lightly.

You have to take risks if you want to be successful.

Nothing ventured, nothing gained.

nkl12xtw5goz70 · 29-09-2019 2:14pm

AndrewJRenko wrote: »

That may well be correct - and if it is, it is a very good indication that they took some serious financial risks on their journey - risks that should not be taken lightly.

Modern portfolio theory—the academic orthodoxy taught as a cornerstone of financial theory, which most fund managers are likely to follow—divides portfolios across uncorrelated asset classes to find the so-called efficient frontier that minimizes risk while maximizing returns. This neat mathematical modeling sounds great in theory, but there are huge problems with how these models measure real-world investment risk. Investors who sleep well at night, believing they hold low-risk portfolios according to their investment advisor's statistical models, can actually be exposed to a lot of risk that they don't perceive.

MPT did nothing to protect investors in 2008—where people holding diversified portfolios got hit just as badly in many cases as people following an "all eggs in one basket" strategy—and it's unlikely to do much in any future market crash either. But investment advisors won't tell you this. All they know is MPT, and so they'll keep on blindly practicing it and giving investors a false sense of security.

Mad_maxx · 29-09-2019 2:21pm

AndrewJRenko wrote: »

Mad_maxx wrote: »

If you aim for equity diversification in Ireland, that means having to sell your fund after seven years with a 40% exit tax, U. S etfs are no longer available to be bought and even when they were a few years ago, you had no choice but to take the dividend cash pay out, reinvesting the dividend wasn't an option

There are ways of diversifying without doing ETFs or even funds. But anyway, why would you HAVE to cash out of your fund after seven years?

I meant you have a roll up exit tax on EU domiciled funds, what do you have in mind as regards " diversification"?

Mad_maxx · 29-09-2019 2:22pm

AndrewJRenko wrote: »

Mad_maxx wrote: »

That's text book orthodox investment advice, doesn't always apply, this country penalises equity investment in the way it does not with property, a market drop is not a problem unless you are carrying a lot of debt.

Most major cities nowadays have areas which have growing exclusivity

What is the penalty on equity investment that you mention?

Is that a serious question?

Uncle Charlie · 29-09-2019 2:24pm

AndrewJRenko wrote: »

Tell that to lads getting visits from the CAB to seize their assets each week. If your lifestyle does not match your declared income, Revenue will find you, sooner or later.

Why would CAB come after me ? I'm not a criminal.

Plus even if I did have a lot of money I would not splash it around.

I would be happy driving a 10 year old car etc.

The only reason I would like to have a lot of money is for the security it would bring and not so I can waste it on stuff I don't need.

Uncle Charlie · 29-09-2019 2:30pm

AndrewJRenko wrote: »

Tell that to lads getting visits from the CAB to seize their assets each week. If your lifestyle does not match your declared income, Revenue will find you, sooner or later.

On a side note CAB goes against the constitution and is technically Illegal.

Under CAB somebody is guilty until they can prove they are innocent.

Even Vincent Browne pointed out how CAB goes against the law.

Mad_maxx · 29-09-2019 2:33pm

Uncle Charlie wrote: »

AndrewJRenko wrote: »

Tell that to lads getting visits from the CAB to seize their assets each week. If your lifestyle does not match your declared income, Revenue will find you, sooner or later.

Why would CAB come after me ? I'm not a criminal.

Plus even if I did have a lot of money I would not splash it around.

I would be happy driving a 10 year old car etc.

The only reason I would like to have a lot of money is for the security it would bring and not so I can waste it on stuff I don't need.

You hardly think people receive sums of a million euro in cash?

Uncle Charlie · 29-09-2019 2:36pm

Mad_maxx wrote: »

You hardly think people receive sums of a million euro in cash?

They do in certain communities.

dxhound2005 · 29-09-2019 2:36pm

Apart from watching out for those with a vested interest pushing certain assets, someone with a spare million should ignore any "legal" advice here. And advice to use cash only, and to indulge in tax avoidance. Life will be simpler in the long term.

Uncle Charlie · 29-09-2019 2:40pm

dxhound2005 wrote: »

Apart from watching out for those with a vested interest pushing certain assets, someone with a spare million should ignore any "legal" advice here. And advice to use cash only, and to indulge in tax avoidance. Life will be simpler in the long term.

Its not tax avoidance its more like "tax efficiency" because tax would have already been paid on the money if someone has earned it.

AndrewJRenko · 29-09-2019 3:28pm

Mad_maxx wrote: »

Is that a serious question?

Yes

AndrewJRenko · 29-09-2019 3:30pm

Uncle Charlie wrote: »

Why would CAB come after me ? I'm not a criminal.

Plus even if I did have a lot of money I would not splash it around.

I would be happy driving a 10 year old car etc.

The only reason I would like to have a lot of money is for the security it would bring and not so I can waste it on stuff I don't need.

What security does it bring if you can never spend it? You might as well stack the notes beside your toilet if you're never going to be able to spend them.

And yes, if you're dealing in cash to evade tax, you are actually a criminal.

dxhound2005 · 29-09-2019 3:30pm

Uncle Charlie wrote: »

Its not tax avoidance its more like "tax efficiency" because tax would have already been paid on the money if someone has earned it.

And after earning it, when they die more tax has to be paid before a grandnephew/grandniece can inherit it.

AndrewJRenko · 29-09-2019 3:33pm

Uncle Charlie wrote: »

On a side note CAB goes against the constitution and is technically Illegal.

Under CAB somebody is guilty until they can prove they are innocent.

Even Vincent Browne pointed out how CAB goes against the law.

The same principle has always applied to Revenue cases. Revenue can come up to on the street and take the Rolex off your arm, putting the obligation on you to prove your innocence - that you bought it from taxed income.

Uncle Charlie · 29-09-2019 3:33pm

AndrewJRenko wrote: »

What security does it bring if you can never spend it? You might as well stack the notes beside your toilet if you're never going to be able to spend them.

The security in not having to worry about how I pay the bills.

And yes, if you're dealing in cash to evade tax, you are actually a criminal.

Only in the same way that someone who breaks the speed limit is a "criminal".

Uncle Charlie · 29-09-2019 3:38pm

AndrewJRenko wrote: »

The same principle has always applied to Revenue cases. Revenue can come up to on the street and take the Rolex off your arm, putting the obligation on you to prove your innocence - that you bought it from taxed income.

The concept of CAB has never been properly challenged in the courts.

The idea someone is guilty until they can prove they are innocent completely goes against the law.

Nomis21 · 29-09-2019 3:38pm

If I inherited a huge amount of money I would find a beautiful woman half my age and live in a camper van with her on a nudist resort in Spain for as long as I can.

But actually I am doing that right now so perhaps I need to think of an even better idea:)

dxhound2005 · 29-09-2019 3:40pm

Uncle Charlie wrote: »

The concept of CAB has never been properly challenged in the courts.

The idea someone is guilty until they can prove they are innocent completely goes against the law.

What does properly challenged mean?

BDI · 29-09-2019 3:48pm

This thread is like sitting at a bar in a dodgey pub with fellas who invest in sovereign rings.

AndrewJRenko · 29-09-2019 4:05pm

Rows Grower wrote: »

You have to take risks if you want to be successful.

Nothing ventured, nothing gained.

There's some truth in this, but the person retiring on a nest egg may not have the appetite for that level of risk.

All I'm suggesting is that
1) Investors educate themselves as to what options are open to them, including paying for professional advice if necessary, and
2) Investors understand the inherent risks of their chosen solution.

cnocbui · 29-09-2019 4:09pm

Mad_maxx wrote: »

Let's say a great aunt died and left you a million euro, could you retire and having put the money to work, live off it?

If so, what would you do with the money - where would you invest it?

Idea stems from stories you read about people who either build up enough of a nest egg to retire early, replace great aunt with won it on the 3.10 @ Cheltenham if you prefer.

Leave the country and invest it in the country you went to or some other.

AndrewJRenko · 29-09-2019 4:10pm

Uncle Charlie wrote: »

The security in not having to worry about how I pay the bills.

So you're spending it on paying the bills, despite having no other income? That's going to show up on someone's exception list in Revenue someday.

Uncle Charlie wrote: »

Only in the same way that someone who breaks the speed limit is a "criminal".

Not really - if you pay your speeding fine and take the penalty points, then you don't actually get a conviction in Court. If you deal in cash to avoid tax, there is a good chance of an actual criminal conviction, and having any assets seized and a Revenue judgment with interest and penalties.

AndrewJRenko · 29-09-2019 4:40pm

Santino Chubby Munchies wrote: »

MPT did nothing to protect investors in 2008—where people holding diversified portfolios got hit just as badly in many cases as people following an "all eggs in one basket" strategy—and it's unlikely to do much in any future market crash either. But investment advisors won't tell you this. All they know is MPT, and so they'll keep on blindly practicing it and giving investors a false sense of security.

Hang on a sec. The 'cute hoor' investors here, who put large parts of their portfolio into Irish financial shares, or better still, put in all into Anglo had their capital almost completely wiped out - like high ninety percent wiped out. I recall hearing Gay Byrne whinging about what' advisor ' got him to put big money into Anglo, as he rebuilt his portfolio after being ripped off by a previously fraudulent advisor (and uncle of current Minister Murphy, funnily enough).

By comparison, those who had their money in diversified funds across multiple regions and industry sectors, had some quiet years, and maybe some modest capital losses - but nothing like their poor cousins above.

That's the very real danger of not diversifying.

AndrewJRenko · 29-09-2019 4:53pm

Santino Chubby Munchies wrote: »

To quote Buffett again, "Diversification is protection against ignorance. It makes little sense if you know what you are doing."

If one actually knows and understands the market for Dublin executive property, investing in it could make more sense than investing in multiple things one doesn't understand just for the sake of being diversified. Plus, we now see a higher degree of correlation across investment classes. If property crashes, stocks and other investments are likely to tank as well.

Like it or not, most people who have got really wealthy have done so by putting all of their eggs in one basket.

Part of the problem here is that many people think they understand the Dublin executive property market because they once rented a bachelor pad in their 20s,but they really don't. Have a look at the posts that come into the accommodation forum from landlords, often experienced and well established landlords, who clearly have little clue about their legal and financial obligations. Have a look at the posts from people who bought property in badly built blocks now facing substantial costs to rectify and dealing with nonpaying neighbours.

Lots of people don't know what they don't know, and overestimate their knowledge of a sector.

nkl12xtw5goz70 · 29-09-2019 4:59pm

AndrewJRenko wrote: »

Hang on a sec. The 'cute hoor' investors here, who put large parts of their portfolio into Irish financial shares, or better still, put in all into Anglo had their capital almost completely wiped out - like high ninety percent wiped out. I recall hearing Gay Byrne whinging about what' advisor ' got him to put big money into Anglo, as he rebuilt his portfolio after being ripped off by a previously fraudulent advisor (and uncle of current Minister Murphy, funnily enough).

True. However, I'm advocating an "all eggs in one basket" strategy only if you have a high degree of understanding of that basket. It's safe to say that Gay Byrne was not informed enough to know what he was doing when he invested in Anglo. Likewise, the "cute hoor" investor is generally following what he hears from others.

If you don't have a high degree of understanding of a sector or company, then sure, stick your money in an index tracker or something. It's better than nothing. That said, funds and index trackers are likely to go nowhere for some time, given that the stock market, at least in the US, is enormously overheated right now. Shiller P/E ratios are at levels previously seen only in 1929 and during the dot-com bubble.

Growing wealth

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