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Growing wealth

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  • Registered Users Posts: 6,662 ✭✭✭CelticRambler


    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.


  • Registered Users Posts: 12,145 ✭✭✭✭DrPhilG


    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.


  • Registered Users Posts: 27,891 ✭✭✭✭AndrewJRenko


    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.


  • Registered Users Posts: 3,221 ✭✭✭Greentopia


    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.


  • Banned (with Prison Access) Posts: 200 ✭✭Uncle Charlie


    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.


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  • Registered Users Posts: 13,505 ✭✭✭✭Mad_maxx


    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


  • Registered Users Posts: 7,055 ✭✭✭JohnnyFlash


    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.


  • Closed Accounts Posts: 1,497 ✭✭✭ Santino Chubby Munchies


    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.


  • Registered Users Posts: 13,505 ✭✭✭✭Mad_maxx


    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


  • Registered Users Posts: 13,505 ✭✭✭✭Mad_maxx


    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


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  • Registered Users Posts: 7,742 ✭✭✭Rows Grower


    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".

    "Very soon we are going to Mars. You wouldn't have been going to Mars if my opponent won, that I can tell you. You wouldn't even be thinking about it."

    Donald Trump, March 13th 2018.



  • Registered Users Posts: 27,891 ✭✭✭✭AndrewJRenko



    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.


  • Registered Users Posts: 27,891 ✭✭✭✭AndrewJRenko


    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.


  • Registered Users Posts: 27,891 ✭✭✭✭AndrewJRenko


    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?


  • Registered Users Posts: 27,891 ✭✭✭✭AndrewJRenko


    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?


  • Registered Users Posts: 7,742 ✭✭✭Rows Grower


    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.

    "Very soon we are going to Mars. You wouldn't have been going to Mars if my opponent won, that I can tell you. You wouldn't even be thinking about it."

    Donald Trump, March 13th 2018.



  • Closed Accounts Posts: 1,497 ✭✭✭ Santino Chubby Munchies


    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.


  • Registered Users Posts: 13,505 ✭✭✭✭Mad_maxx


    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"?


  • Registered Users Posts: 13,505 ✭✭✭✭Mad_maxx


    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?


  • Banned (with Prison Access) Posts: 200 ✭✭Uncle Charlie


    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.


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  • Banned (with Prison Access) Posts: 200 ✭✭Uncle Charlie


    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.


  • Registered Users Posts: 13,505 ✭✭✭✭Mad_maxx


    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?


  • Banned (with Prison Access) Posts: 200 ✭✭Uncle Charlie


    Mad_maxx wrote: »
    You hardly think people receive sums of a million euro in cash?


    They do in certain communities.


  • Registered Users Posts: 20,259 ✭✭✭✭dxhound2005


    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.


  • Banned (with Prison Access) Posts: 200 ✭✭Uncle Charlie


    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.


  • Registered Users Posts: 27,891 ✭✭✭✭AndrewJRenko


    Mad_maxx wrote: »
    Is that a serious question?

    Yes


  • Registered Users Posts: 27,891 ✭✭✭✭AndrewJRenko


    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.


  • Registered Users Posts: 20,259 ✭✭✭✭dxhound2005


    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.


  • Registered Users Posts: 27,891 ✭✭✭✭AndrewJRenko


    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.


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  • Banned (with Prison Access) Posts: 200 ✭✭Uncle Charlie


    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".


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