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28-09-2019, 20:03   #31
Mad_maxx
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Originally Posted by Permabear II View Post
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.
My aunt hasn't left me anything, I was just posing a question about the best way to put money to work should someone ever come into it but thanks for the info
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28-09-2019, 20:03   #32
kneemos
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I know one particular chap who never did an honest days work in his life even though there is nothing physically wrong with him. He qualified for the pension recently which is an actual increase in state benefits every week for him.

He has his own council house, free medical care and every other hand out you can think of. The council totally renovated the house as well about three years ago.

He pays rent,plus living expenses out of his dole or pension.
It's not an extravagant life.
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28-09-2019, 20:04   #33
valoren
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Blue chip dividends. You'd get circa 3% average after tax so 30k a year. The dividend kings and aristocrats raise their dividends annually so the 30k would grow every year as well. Let's take an annual increase of 10% on that 30k every year. If you reinvested the 30k dividends and added more of your own cash to buy more stock then you accelerate the compounding process every quarter.

Quick example. Take 10k of the million. Buy something like Altria (aka the old Phillip Morris) and you get 8.3% dividend or $830 before paying 15% withholding tax. When you get the dividend, buy more Altria. Wash rinse repeat with a diversified portfolio of blue chip legends.
Unless of course you bought Altria in 2017 in which case you’ve lost half your investment.
Obviously, not all of it would be invested in Altria. It would be stupid to risk the capital on a single stock. The Altria dividend would be buying the stock on the cheap considering it has fallen ie more shares bought at depressed prices. The 10k invested today could drop 50% in a year but you'd still have the $830 locked in so long as the company remained committed to paying out. You'd be looking at buying income not selling for a capital gain. If you had an investment property that you bought for 200k that gives you a practically guaranteed annual rental income of 12k but its market value dropped to 100k then once your aim is to elicit income then the fluctuating market value becomes irrelevant.

Focus would be on generating dividend income and not capital gain. Any portfolio, no matter how conservative will at some points lose its paper value but the dividend would still be getting paid out. Long term, meaning decades, then investing a million in blue chip dividend paying (and increasing) stocks is a no brainer.

30 to 50 blue chips (google the dividend kings) with a million equals financial freedom, sleeping easy every night and dividend cash flowing in without lifting a finger. Given the power of compounding then the ultimate aim would be to receive in income the same as what you initially invested ie 10k invested in a stock decades ago that is now paying you 10k in income. A 100% yield on cost.

Last edited by valoren; 29-09-2019 at 11:05.
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28-09-2019, 20:10   #34
dxhound2005
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My aunt hasn't left me anything, I was just posing a question about the best way to put money to work should someone ever come into it but thanks for the info
Judge the advice you are given with caution. Often people who own gold or shares or whatever will push others into investing, so that the asset will increase. You could make a lot of money, but you could also lose by going into shares, property, precious metals, digital currency, fine art and so on.

The only schemes which will protect your capital are government guaranteed deposit accounts, but the return is very low, and will be eaten up by inflation. Also because financial institutions do not want deposits at present, they have imposed limits typically of €250,000 on how much a saver can have.
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28-09-2019, 20:10   #35
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That’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 ?
Yes, you could be laundering money, as well as trying to avoid paying tax. The bastards have you every way
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28-09-2019, 20:12   #36
CelticRambler
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You'd need more than a million to stop working.
Assuming I live another 50 years (which would be fairly good going, even if both my granddads lived into their nineties), that's 20k a year which is about twice what I need to live on at the moment.

So I'd spend the first half of it on a property based retirement project that may or may not pay for itself, knowing that I'd still be able to maintain my current lifestyle.
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28-09-2019, 20:15   #37
nsi423
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Unless of course you bought Altria in 2017 in which case you’ve lost half your investment.
This is true but not relevant to the OP's question.

Let's say OP bought Altria in 2017 for $70. The dividend in 2017 was $2.54, a 3.6% return before tax, ahead of valeron's 3% target.
In 2018, Altria paid out $3.00, a 4.3% return for OP's $70 investment.
This year they look set to pay out around $3.28, 4.7% return for OP.
OP's invested for cash flow, not capital gain and their income is increasing year on year.
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28-09-2019, 20:16   #38
Leg End Reject
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Assuming I live another 50 years (which would be fairly good going, even if both my granddads lived into their nineties), that's 20k a year which is about twice what I need to live on at the moment.

So I'd spend the first half of it on a property based retirement project that may or may not pay for itself, knowing that I'd still be able to maintain my current lifestyle.
What about inflation? €20k won't have the same buying power for ever. Property gains will be taxed to the hilt too.
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28-09-2019, 20:16   #39
Mint Sauce
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A great aunt. So it would probably be about 500-600 k by the time you pay the inheritance tax.

Probably pay off the mortgage, and invest the remainder.
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28-09-2019, 20:16   #40
Deub
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Originally Posted by CelticRambler View Post
Assuming I live another 50 years (which would be fairly good going, even if both my granddads lived into their nineties), that's 20k a year which is about twice what I need to live on at the moment.

So I'd spend the first half of it on a property based retirement project that may or may not pay for itself, knowing that I'd still be able to maintain my current lifestyle.
You just forgot inflation.
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28-09-2019, 20:16   #41
marieholmfan
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That’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 ?
Yes ; obliged not entitled
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28-09-2019, 20:17   #42
Permabear II
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My aunt hasn't left me anything, I was just posing a question about the best way to put money to work should someone ever come into it but thanks for the info
Grand. Unfortunately there's no way to say what a hypothetical beneficiary should do with a hypothetical €1 million before CAT without knowing more about that person's age, circumstances, investing knowledge, and so on.

I will say, however, that retaining a financial adviser and handing your money over to him or her is probably the single worst decision a person could make.
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28-09-2019, 20:22   #43
Ginger83
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This is true but not relevant to the OP's question.

Let's say OP bought Altria in 2017 for $70. The dividend in 2017 was $2.54, a 3.6% return before tax, ahead of valeron's 3% target.
In 2018, Altria paid out $3.00, a 4.3% return for OP's $70 investment.
This year they look set to pay out around $3.28, 4.7% return for OP.
OP's invested for cash flow, not capital gain and their income is increasing year on year.
So dont worry about dips as long as dividend is paid?
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28-09-2019, 20:25   #44
CelticRambler
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What about inflation? €20k won't have the same buying power for ever. Property gains will be taxed to the hilt too.
Any decent savings account or other low-risk investment vehicle would cover that. Chances are that my expenses will decrease as I get older anyhow - most of what I spend at the moment goes on diesel for long-distance travel.
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28-09-2019, 20:25   #45
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Originally Posted by CelticRambler View Post
Assuming I live another 50 years (which would be fairly good going, even if both my granddads lived into their nineties), that's 20k a year which is about twice what I need to live on at the moment.

So I'd spend the first half of it on a property based retirement project that may or may not pay for itself, knowing that I'd still be able to maintain my current lifestyle.
You live on 10 grand a year ? How
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