The Sunday Times - Money Questions 06/12/2009

Posted by Jill Kerby on December 06 2009 @ 08:45


TAM from Co Galway:

I will retire very shortly after 42 years working and will have a lump sum of €150,000 to invest. I have a mortgage balance of €70,000. What suggestions would you have to offer for either/or short/long term?


Most financial advisors I know recommend that their clients always aim to clear their debts before by retirement for the very good reason that you will most probably be living on a reduced, and maybe even fixed, income going forward. It’s also the reason that mortgage lenders prefer not to extend a repayment term beyond age 65.  By clearing your mortgage you not only have the reassurance that whatever happens, the roof over your head is paid off, but you also free up monthly income that can otherwise be spent on essentials like groceries and running a car, health insurance, utility and insurance bills, etc.  What you do with the remaining €80,000 depends on your needs and risk profile. If this money is surplus to an occupational pension that comfortably covers your basic needs then you might feel secure in invest some of it to boost your pension.  Advisors inevitably suggest that someone in your position leave a good portion of the fund on deposit for easy access, but that you then consider spreading the rest between an income yielding bond or dividend returning blue chip share(s). Low cost ETFs are a good fund option. You might consider buying some gold (in the form of ETFs or certificates) as a way to protect the value represented by your paper euros.  Before you do anything however, do your own research and since you will have the time, I suggest you sign up for an investment course – I’ve just attended Rory Gillen’s InvestRcentre course. Also, log onto free financial sites like www.fool.co.uk and www.dailyreckoning.co.uk and subscribe to some good finance magazines/newsletters. The markets are highly volatile places and you need to know what you’re doing before you buy any shares or commodities. Good luck. 


PW writes from Dublin:  

I’m a bit concerned about how tax rates may increase after the Budget and whether the new tax will apply immediately or later. The background to this is that my husband has been offered a good job in Canada.  He is there now and the children and I will be joining him in the early New Year. We have put up a second property we own for sale and there is an interested party, but I am concerned about the capital gains tax changes that may happen in the Budget.  If we sell the house after the Budget would we have to pay higher tax right away, or is there a grace period? Also, I am wondering if you know if our VHI policies can be used in Canada until their renewal date in May?

Capital gains tax has gone up from 20% to 23% to 25% in the past year and in both cases the higher tax applied immediately, presumably as an effort to stop sellers from attempting to backdate their transactions.  Only the Minister for Finance knows if he is going to raise these capital taxes and perhaps even deposit interest which is also at 25%, but you might want to close that property deal sooner rather than later.  As for your VHI policies, it is my understanding that they cannot be maintained once you are no longer living in this state, but that you will be entitled to a refund if you cancel them before the renewal date.  Your husband should be applying for provincial health cover for you and the children immediately as residency rules vary between Canadian provinces. You will also need to register with a family doctor in order to avail of free GP visits and consultations. 

John McFarlane of the Post Polio Support Group writes:

 I have been following the letter about medical cards for pensioners coming from other countries with interest and agree with you in every detail except one.  In the instance that any person entering Ireland from another EU is in receipt of a disability allowance from their EU state, they are issued, upon application, with an Irish medical card without means testing but have to prove they are in receipt of another EU member state disability allowance or benefit.  This applies in the case of the UK where the person is in receipt of Incapacity benefit or Disability Living Allowance and not in receipt of an Irish State benefit (apart from Child Benefit or Early Childcare Supplement) and not be liable to contribute to the Irish Social Welfare System. We have several members who have returned home from the UK who are in receipt of UK benefits and who make no claim on the Irish State who have benefited from this EU trans-national ruling.  I agree that it applies only to a small number of people but have brought this respectfully to your attention for clarity and future reference.

Thank you (and two other readers) who brought this clarification to my attention. The original correspondance specifically concerned UK pensioners, not UK citizens in receipt of UK disability benefits or pensions, who believed they were entitled to the medical card without means testing because they received free medical care under the free NHS service in the UK. But that is not the case here: medical cards for pensioners are means-tested in Ireland. I include here the HSE website you kindly passed on, regarding medical cards for disability benefit recipients: http://www.hse.ie/eng/services/Find_a_Service/entitlements/Medical_Cards/Your_Guide_to_Medical_Cards.html#qualify

0 comment(s)

Leave a comment

Subscribe to Blog