Jill Kerby

DEADLINE LOOMS FOR FOUR YEARS OF VALUABLE TAX REFUNDS

Are you short a few bob this Christmas?  Are you dreading the credit card bill in January?  Having trouble paying the mortgage/car insurance/electricity bill? 

Then you may be in for an unexpected windfall – big or small – if you’re prepared to set aside a little time and make a little effort between now and 31 December…and claim a tax refund.

The Irish tax year runs from January 1st to December 31st.  Anyone who is self-employed or has non-PAYE income is familiar with their big tax deadline – October 31st – when they must file and pay their tax due for the previous year. (Non-PAYE income includes share dividends, rental income, a capital gain from selling an asset.)  

But the Revenue gives everyone one last chance for a refund, but that means getting the paperwork – on line is the fastest way – into them by 31 December, which happens to be a Saturday this year.

Last October  (and cynics would say this is uncharacteristic of the nation’s taxman) the Revenue actually wrote to more than 137,000 PAYE workers who have not applied for any tax refund in the last four years.  These people are on record for making some sort of claim some time before 2012, but the Revenue was suggesting that if they checked their pay slips and expenses receipts again, they may find that they have another refund coming for expenses they incurred since then.

And that’s the key message:  we all have a four year rear window of past expenses refunds that can be claimed from the Revenue.  They best known are for qualifying medical or dental expenses, for claiming some income tax relief on contributions to a pension plan, payments towards nursing home care for an elderly relative and for the hugely valuable Home Carer’s Credit of €1,000, which is payable to single earner couples with one or dependent people, including children under age18. (It was €810 up to 2015.)

So have you claimed for your family’s medical and dental expenses for the last four years, or for the special food or supplements they need or devices and even approved treatment done outside the state? (These must be expenses that have not already been paid by a private health insurance plan.)  Anyone who has had root canal or a crown might see a €200 refund; €5,000 worth of braces for a child could net a working parent €1,000.

But what about claiming that 13.5% VAT back on the cost of putting in new windows or extending the kitchen under the Home Renovation Scheme that was introduced a couple of years ago?  On a €20,000 renovation that’s a €2,700 VAT refund (albeit over a two year period). Did you need bridging finance to buy a home in the past four years?  The interest you were charged can also be claimed. Some homeowners can also claim mortgage interest tax relief. 

Meanwhile, if you’ve been in a private tenancy arrangement since 7 December 2010, this is your last chance you claim rent relief for the past four years. (It’s being withdrawn on a phased basis since 2011 and will be gone at the end of next year.)  From 2012-2016, a single person under age 55 could have claimed a total, maximum tax credit of €720; singles and couples/widows under age 55 could have claimed a total, maximum tax credit of €1,440; married couples/widows over aged 55, €2,880.

Another refundable expense that people forget about is tuition fees (as opposed to the €3,000 “registration charge”) for qualifying undergraduate and post-graduate courses.

For example, a student (who pays income tax), parent, grandparent, godparent or even a friend picking up all or some of the cost of full-time fees at an approved college would be entitled to a 20% income tax refund up to a maximum €7,000 per annum. Unfortunately, the government includes a ‘disregard’ amount, which was €2,250 in 2012 and went up by €250 increments each subsequent year. (It is now €3,000). Nevertheless, for someone paying the maximum €7,000 per annum, four years of full time course refunds would still be worth €3,500.

Tax refunds can be made for having a guide dog, for being a seaman, or for work clothing expenses if you’re a nurse. If your employer picks up the cost of your health insurance, you can claim the 20% relief on up to €1,000 worth of the cost of the plan. (Individuals with health insurance get the tax relief at source.)

Nearly all tax refunds are paid at the standard 20% tax rate, though some – pensions, nursing home expenses – are paid at the marginal 40% rate.

So don’t delay. Check out the myAccount site on the Revenue’s website (www.revenue.ie). Make it a very Happy New Year.

Do you have a question for Jill?  Please email her directly at jill@jillkerby.ie.

MISSING RENEWAL DEADLINE MEANS AUTOMATICALLY HIGHER NEW YEAR PREMIUMS

Nearly half the customers (45%) with a private health insurance policy will have a renewal date in January 2017 claims the Central Bank, which regulates the industry.  After your Christmas credit card statement, it will probably be the least welcome bill you will pay as the New Year dawns.

But as patients waiting for a public hospital operation or to see a specialist can attest -  that number has reached the 550,000+ mark – an insurance plan is the difference between endless frustration and diminishing health, and timely, efficient treatment in a comfortable, calm, clean facility.

The Central Bank study focusses on renewals, with 85% of consumers “renewing the same policy with the same provider”. Auto-renewal by-passes consumers making contact with their insurance provider “to ensure that they are being offered the most suitable cover available to meet their individual needs and circumstances.”

Happy days then for VHI, Laya Healthcare and Irish Life Health (which was created out of the merger of iAviva and GloHealth.)  With such a tiny market, the Central Bank’s warning to shop around is all the more important if you want to avoid overpaying next year.

But this isn’t exactly news.  Specialist health insurance advisers like Dermot Goode of TotalHealthCover.ie, a regular contributor on national and regional radio stations has been urging everyone with health insurance for years (that’s over two million of us) to never just grin and bear an annual price hike or allow your plan to automatically roll over.

 “Anyone who still has the same policy for even two years is paying too much,” is Goode’s familiar mantra. Anyone who is still paying for the old VHI Plan B (and higher) or Laya’s HealthManager variation plans from several years ago is unnecessarily paying astronomical premiums. 

These are the consumers Goode suggests who are often older and clearly wealthier (but not necessarily smarter) than a typical younger person or young parents on a restricted budge. They clearly haven’t checked out the market and especially the corporate versions of their own plans which are often re-designed for large companies. Under our Lifetime Community Rating pricing system, every plan on the market   must be available to everyone and not just to a business client and their employees.

Anyone still on the old comprehensive Laya HealthManager plan, which my husband and I had when it first came out and kept for many years until the price went through the roof, is now paying a whopping €355 a month or €4,262 a year!  I frequently meet such people during my personal finance seminars.

I’m still with Laya (which grew out of the original Bupa Ireland that broke the VHI’s monopoly in 1996.)  But my current policy, Simply Connect Plus, which also offers great private hospital cover and day to day expenses, only costs us €1,160 each though it’s price (without the usual affiliation group discount) now costs €1,246. I know my premium will be at least that next July, so I will shop around again using Dermot Goode’s website tools.

Health Manager is a great plan, but not great enough to justify paying €8,527 a year for the two of us.  The biggest difference between the two – as far as I am concerned – is that I must not pay a modest, but only once in a year excess for an in-patient event.  Our bill until next July if we stick with Simply Connect Plus will be least €2,500.  Expensive? Sure. Extravagant?  No.

Dermot Goode insists that there is still some pretty good value in the health insurance market if you are willing to take the time to the kind of cover you want and how much you can afford to pay. You can use the comparison tools on the HIA.ie or providers’ websites, but there are hundreds of plans to confuse you. Use a good broker (of which there are many specialising in healthcare.)

Finally, here’s two vital tips: Do your children need to be on your plan. No. You can buy suitable ones for them (kids go free deals are back, so check them out) that will be much cheaper than an adult one.  A big attraction of the new Irish Life Health plans is the free on-line GP consultations; families on tight budgets and working parents are already finding this benefit a godsend. 

Are the very cheap, lowest level, public hospital access only plans worth having? You won’t get a private bed, they usually don’t cover specialists or provide other out-patient benefits.  At the very least you want a plan that lets you jump long consultants queues and private hospital treatment (including daytime A&E emergencies).

Yes, the run up to Christmas and New Year’s Eve are busy times but give yourself a head start on 2017 by adding one more shopping trip – for as low a health insurance bill as possible.

Do you have a question for Jill?  Please email her directly at jill@jillkerby.ie.

Ah, Christmas…you’re back and just as pricey as ever? Read on

The Wednesday was bright and cold when my friend Susan and I arrived in Newry at 11am to do some Christmas shopping. 

Since neither of us had been there before (and I have no sense of direction) we took the wrong motorway exit and ended up snaking through Newry’s one way traffic system behind a great many other Irish-reg cars. I eventually pulled into the bus station where two other middle-aged women were standing on the footpath, one of whom was staring into her mobile phone.

I wound down my window.

“Excuse me, sorry to bother you. But can you direct me to the Buttercrane Centre?”   “Ha. That’s what we’re looking for,” the one on the phone replied in a Dublin accent. “We’re lost too.”

It was that sort of day. We did find the centres – about half a mile away, bookending the canal that runs through the town. Both malls were full of Irish shoppers, filling up trolleys with clothes, toys and lots of booze. I’ve never seen such happy, welcoming merchants.

This was my first act of treason against the Irish consumer state. (Ordinary holidays abroad are acceptable given the quid pro quo with our visitors.)  As it turned out I only spent a few hundred pounds/euro and made up for it a little by going to the Irish Craft Fair at the RDS on 1 December (as I have done for over 30 years) where I ticked off my last present.

Fin. Finito. I’m done Christmas shopping and in record time. But between the differential on the price of alcohol between North and South (due to much higher excise tax here), the sterling/euro differential and the fact that so many of the Newry shops were also offering a €1 to £1 price peg, I figure I saved about €100 or 25% of my shopping outlay that Wednesday.

My biggest purchase?  A £150 faux leopardskin coat in Miss Selfridge for my drop dead gorgeous Brazilian godchild (who can carry such a look). It was already reduced by 50% and then knocked down – as a pre-Black Friday special - by another 25%.

I’m not sure I’ll do this again next year – I enjoyed the day out with my girlfriend more than the shopping - but savings like these are especially hugely welcome to  people with young families and far more limited budgets than mine.

If you can’t go North, and you really do enjoy the giving side of Christmas, you still need a shopping strategy that avoids leaving you with a smoking credit card and repayment migraine in the New Year.

So, once again, here is my Christmas spending survival guide.  It has faithfully served me – and I hope my readers – for many years:

-       Make lists : Gift recipients; Christmas tree/ornaments; food and drink; entertainment (movies, panto, zoo); Christmas clothes; holiday travel (petrol/train fares). Bring the list with you.

-       Set a spending budget. Use either cash, a debit card or a credit card when shopping, not all three.

-       Kris Kringle:  Ideal for large extended families. Set a price limit and/or do a themed Kris Kringle:  home made food items, chocolates, services.

-       Choose a gift theme for adult recipients. You can control your spending by opting for...books, DVDs and CDs, plants, food, alcohol. (See Christmas Gift Tips)

-       Compare prices. Use the internet, especially for toys, electronics. You can save time and money, but watch out for shipping charges and deadlines. If you can, shop in Irish owned shops.

-       Pace yourself. Leaving too much to the days before Christmas will result in impulse buying. Never overdress (you’ll get hot and bothered); don’t bring children or a reluctant spouse with you unless they are reliable load bearers. Don’t shop on an empty stomach.

-       Be security conscious. Wear a zipped handbag across your torso when shopping; don’t let anyone see you key in your credit/debit card passwords. Watch your shopping bags. Pickpockets love Christmas.

-       Beat the crowds and shop early. Get out when the crowds are thickest.  

-       Set a shopping time limit, say, a maximum four hours. Stop for a break midway. Check your lists. Once you get tired you’re at risk of overspending.

-       Recycle. This doesn’t just mean giving away gifts you received that you didn’t like. It also means recycling your precious and loved things that the person on your gift list may have admired. This is ideal for people with grandchildren, godchildren, nieces and nephews for whom they can start ‘bottom drawers’, for example.

I still have Christmas cards (and e-cards) to send out; packages to post to Canada and Australia; the tree to go up; lots of baking to do and a day’s worth of wrapping. The (frozen) goose awaits its oven…

And these are the best-spent hours of all…Happy Christmas.

TEENS AND PARENTS NEED TO THINK OUTSIDE THE ACADEMIC BOX

Christmas may be coming, but in households all over Ireland parents and teenaged children are also anticipating something of far more significance:  where they will go for their post-secondary education.

CAO forms are being carefully scrutinised as the Leaving Cert exams loom and the majority who do continue their education will opt for an academic course in a college or university, rather than an apprenticeship or other qualification, and that is a terrible shame as well as a waste of time, talent, enthusiasm and money. It is one of the contributing factors to why we have a pretty consistent college drop-out rate of first year students – about 20%-25%.

According to Solas, the Further Training and Education Authority, not enough sixth year students and their parents are being directed to explore the vast programme of training programmes and apprenticeships that can lead to well paying jobs and careers. A university degree even for children who struggle academically is the ‘golden ticket’, especially for middle and higher earning families.

I met recently with both Solas and the Cavan Monaghan Education and Training Board (CMETB) about how 2017 will see an even greater broadening of post-Leaving Cert courses, other training programmes and apprenticeships, including a post third-level graduate ‘apprenticeship’ in financial services that will be rolled out at the National College of Ireland. (25 new apprenticeships were added in 2016.)

Long gone are the days when training programmes were mainly directed at the unemployed; and apprenticeships, of which there are 9,000 were nearly exclusively trades-based, Nikki Gallagher of Solas told me. 

Further education takes in everything from construction, manufacturing and technology sectors, in finance as well as construction, food and hospitality, medical services, manufacturing, and science and technology. There are job training schemes for budding hairdressers, artists, craftworkers, as well as medical device and aerospace technicians. Would your young person like to become an equestrian instructor?  There’s a 44 week, internationally recognised course starting in January at the Castle Leslie estate in Monaghan, Catherine Fox of CMETB told me.

Apprentices are employees and paid while undergoing their training. But others on courses, depending on the institution, may qualify for meal, travel and accommodation allowances. Some further education colleges may charge a small annual fee (usually less than €1,000) but Institutes of Education do not.

Even more significantly is that both institutions can offer the same further education course that can act as launch pads for university degrees that may not have been achieved via the CAO system.

Many nursing and related students at Irish and UK universities were accepted in year two of the degree programme after doing their first year in a science/nursing course at a higher education college, Fox explained. “FET students benefit from smaller classes and continuous assessment. They’re usually very disciplined and focussed. And they will also, in many cases be saving on the cost of fees for one or even two years before completing their degree at a college or university.”

The diversity of people undergoing further training to meet the needs of our new smart economy, is quite astonishing – there are 250,000 full and part time higher education and training places - 33,000 at higher education colleges and institutes. There is a course for school leavers (and even pre-school students), as well as mature adults; for the unemployed and people with full time jobs. Inclusion means Solas provides literacy and language training for minorities, refugees and newcomers who all want a good job or career. 

So why do so many young people end up in academia…and drop out?  Or fail to work in their graduate area?

Fox and Gallagher (both third level graduates) believe too much emphasis is put on academic achievement at junior level. Too  many of our young people are never given a chance to explore non-academic interests or the range of jobs and employers looking to hire and train them, in the case of apprenticeships.  Too many parents mistakenly equate high paying, secure, jobs with the professions..

And there’s the rub. Young doctors, lawyers, academics (in the case of my family) spend up to 10 years achieving higher degrees before landing their first permanent position.  Unlike the young, apprenticed qualified electrician or aerospace technician or even investment analyst who started earning at 22 or 23, and was quickly on their way to financial and personal milestones (which even include a pension), the professionals’ were delayed will into their 30s. 

Too  many young workers are all facing employment conditions their (older) parents did not: unpaid internships; temporary and part-time contracts, and very little security outside the public service. By only focussing on third level academic degrees and ignoring other paths, like further education training and apprenticeships you only add to that uncertainty.

This holiday, explore the training and apprenticeship options (especially with your non-academic children). Tell them they are free to study and train for any job or career.

Here’s where to start: www.solas.ie and www.fetchcourses.ie

Do you have a question for Jill?  Please email her directly at jill@jillkerby.ie.

PART ONE:  WE’RE NOT IN KANSAS ANYMORE, TOTO.

A fortnight ago I wrote that gold is a form of financial insurance, despite its price being variable and susceptible to market uncertainty. In euro, an ounce would cost €1,160 that day.  As I write, it is €1,173; five days earlier (just as Hillary Clinton’s emails were thought to be under FBI investigation again), it was €1,180.

This kind of volatility over just a few days was played out in the stock markets just before and after the US presidential election. Watching prices go up and down is the stuff of madness and sleepless nights. Accurate, specific price  predictions are impossible.

Trump’s election was a shock, but not surprising, given how it reflected the widespread mood of discontent among voters everywhere, including here in Ireland.

Ordinary folk in America, busy with their own lives, may not be able to put their finger on the exact causes, but they are a lot more aware than ever that things are not right, and haven’t been for some time. They increasingly see how the political class, shareholders and especially bosses in favoured industries (like financial and technology) and to a degree the public service, have managed to somehow avoid the job insecurity and losses, the wage stagnation that plagues people working in the less sheltered private sector businesses.

The hollowing out of the ‘middle class” – and Ireland is a country happily aspire to be middle class over the last four decades - and the descent into the credit and debt economy has come at a shocking price.

In the United States, where this great debt monster was conceived, nurtured and exported, measured by the same standard that applied even 20 years ago, employment, manufacture and production indicators, individual and corporate earnings, the movement of goods, price inflation are also lower or falling.  The US national debt has tipped over €20 trillion (if was just over €5 trillion when Bush took over the presidency from Clinton) and the Federal Reserve’s own “asset” balance is $4.5+ trillion, up from $500 million in 2008, made up of US Treasury bonds (debt) and mortgage and bank debts it bought to provide more liquidity to financial markets.)

And let’s not forget the estimated c$57 trillion of unfunded future liabilities the US government has promised to pay in the form of Social Security pensions Medicare and Medicaid.

Student debt and even motor vehicle debt is now measured in trillions in the US; the long wars in the Middle East are estimated to have cost about $6 trillion. (That’s 6,000 billion dollars.)

Hillary Clinton intended to raise corporate, capital gains and estate taxes and extend the national debt in order to fund her social spending programmes and the notorious “military/industrial complex” that President Eisenhower warned about when he left office in 1961. Trump has promised to spend trillions to rebuild America’s crumbling infrastructure and boost the military industrial complex but he said he’d pay for it by getting US foreign companies to repatriate their cash to America (from Ireland, among other countries) and by lowering personal and corporate taxes, thus creating more ‘trickle down’ wealth and income.

Bill Bonner, who publishes a network of financial newsletters, a few of which I’ve subscribed for more than a decade (I highly recommend MoneyWeek magazine) says that people ultimately vote with their wallets, whatever about their public claims of altruism. He frequently quotes the journalist and satirist HL Mencken (1880 -1956) who said, “Every election is a sort of advance auction sale of stolen goods.”

None of the candidates in this election (except perhaps the hapless Gary Johnson) addressed the cause of the economic debt, credit, boom and bust crisis in America (and here.) They didn’t propose a return to ‘sound money’ in order to limits unsustainable spending programmes, wars and vanity projects.

Like pretty much every other modern politician, including every single member of Dail Eireann, no one made the connection between the notion of living within one’s means – (yes, this includes prudent borrowing to build/own valuable assets) and long-term financial health and prosperity. They didn’t even agree on who to blame (previous Democrat/Republican administrations, Wall Street, the rich, the poor, the Chinese/Russians/the EU/Gulf Arabs…)

This unhealthy, catastrophic credit driven, debt burdened system and its mismanaged solutions  (more credit and debt) will only last…until it doesn’t.

So where do you and I fit in?  Bailing out our bankrupt banks has quadrupled our national debt from €50 to €200 billion since 2008. We’ll borrow €10 billion next year to roll over and service this debt. Personal debt rates are coming down, but we’re spending (and borrowing) very cautiously. Our ‘recovery’ is being funded by the extra foreign based corporate tax, tax that a negative Brexit effect and a Trump administration could eat into.

Will “things” get better or worse, now that Trump and his brand of populism has prevailed in the spluttering economic engine room of the world?  Probably.

The only question you can answer with any certainty is whether you’re prepared for both outcomes.

Next week: Part 2: A Financial Ark and How to Build One (again)

STILL HAVEN’T BUILT A FINANCIAL ARK?  HERE’S WHY YOU SHOULD

The hysteria over the Trump election and the Brexit chaos is going to settle down – at least for a while. Then expect it to ramp up again in the New Year with the inauguration of the new President on January 20 and as the end of March triggering of the Section 50 Brexit deadline.

Trump’s policies may or may not revitalise the US economy, but the biggest fear for us is a negative jobs and tax revenue fallout in the US dominated high tech, pharma, medical devices sector and the banking they do in the IFSC. A hard Brexit meanwhile could also have a detrimental effect on Irish export sectors and the cost of living here when UK imports start costing a lot more.

“Ignore the noise,” my financial adviser, Marc Westlake keeps saying, meaning, “stop reading the headlines. Stop paying attention to the short-term ups and downs of reactionary markets and currencies. Ignore the dire ‘predictions’ – the pundits are only guessing. They don’t have crystal balls.”

He’s been giving me this advice for years and has stopped hasty, expensive reactions at every market downturn (or Brexit-like event.)

It’s not so easy to ignore the noise, when you write about personal finance for a living. But the theory is sound, especially when it’s accompanied by evidence-based market and financial analysis that shows that widely diversified, low cost, regularly balanced portfolios, held over a long term consistently outperform actively managed and traded, limited assets or funds, stuffed full of excessively high administration and management fees and commissions.  

Few fund managers, no matter how lucky they are in picking winners when markets are booming, do so consistently. A highly diversified, mostly passively managed, low cost fund of assets (we’re talking of thousands of shares, bonds, properties, commodities, fixed income assets) is more likely to weather volatility and meet realistic customer expectations.

But is following sound investment advice all your need to protect your wealth and financial security?

I don’t think so.

For the last eight years, far outside your adviser’s good sense and control, panicked central bankers have been artificially depressing the cost of money to save insolvent banks, prevent mass debt default by countries and corporations and to ‘stimulate’ more borrowing and spending to kickstart economic growth.

Their low to zero rate monetary (via QE) policies have further enriched the rich, but widened the gulf between them and the ‘not-the-1%’ who’ve been saddled with the bill for bailing out of the insolvent financial sector. Global debt – hastened by leverage derivatives like sub-prime loans which Warren Buffett ominously described as “financial weapons of mass destruction” back in 2008 – has doubled since 2008.

About a quarter of all Irish economic activity is generated by foreign owned companies, most of those, American. Donald Trump wants them to reconsider where they make their goods, their R&D and their back-room administration.

If Trump’s protectionism and a hard border-laden Brexit reduces future trade, profits, jobs, then it will also reduce the €600 million plus corporate tax bonanza we’ve enjoyed – unexpectedly – in 2016. What happens if that money – a higher corporate and private sector income tax take dries up? (Exchequer borrowing for 2017 will be c€1.2 billion, but €10bn will be allocated to pay interest on the €200 billion national debt.)

Back in 2010 I started writing about a concept I called, Build an Ark. It’s time to dust it off.

You build a financial Ark in order to weather – just in case – the economic fallout, like the job tightening or higher prices that could come with higher interest rates and trade protectionism. 

Building the Ark involves not just carefully assessing your current financial position – your income, outgoings, tax, debt, savings, investments, insurance (protection measures) – but taking steps to improve it.  That means controlling your spending, reducing and avoiding debt, paying only the tax you must…essentially, living within your means. If you’re in the private sector and want to retire some day, the Ark will also prioritise your savings and investments. 

Building a really strong Ark needs lots of willing hands. Involve your immediate and wider family and loved ones. Thinks about building one big enough to make sure no one gets left behind if it starts raining heavily again; that means tough, honest and hugely challenging discussions between the generations about individual incomes, assets, debts…and dreams. (Like home ownership, third level education, entrepreneurship, retirement and long term care for elders.)

The 2008 crisis never ended. It was plastered over and put off. The debt overhang could never support a genuine, global, sustainable recovery. 

By building your Ark, you can avoid a repeat of what came after 2008. 

Every parent and grandparent who Skype’s Christmas greetings to their young ones this year in America, Australia, Canada knows exactly what I mean.

(If your community group or organisation wants to book my How to Build An Ark seminar please contact me at jill@jillkerby.ie )

ARE YOU THINKING OF CHRISTMAS SHOPPING IN THE NORTH?

Is it disloyal or unpatriotic to do your Christmas shopping in the North this year?

Judging by the debate on the various radio programmes I listened to last week, you’d think this was the most pressing issue of our times – worse even than giving into a demand for immediate public sector pay restoration, which is going to cost billions more than the country can afford right now.

The cause of this urge to shop in Newry, Belfast or Derry is the nearly 30% fall in the value of sterling against the euro. The prices of a lot of goods, especially alcohol, tobacco and non-perishable foods, was already cheaper in the UK than here. Northern Ireland shares the economy of scale that comes with a big marketplace. Wages and service costs are also lower, due in part to lower income, VAT and certain excise taxes in the UK.

Before the Brexit vote and subsequent fall in the UK currency, the 30% differential just didn’t make it worth the price of a tank of petrol and currency exchange fees to drive across the border from Dublin, Waterford, Cork, Limerick or Galway for an even modest shopping spree in the North.

Not so if you were making a big purchase like friend of mine here in Dublin who saved over €2,000 renovating their bathroom units, appliances, electrical and plumbing fittings, tiles, etc at a DIY bathroom specialist in Newry. The well known bathroom providers even offered a team of fitters who were on their approved panel.

That was nearly €7,000 worth of spending that has already gone North from just one Irish household. 

Last year we spent an estimated €4 billion in the run-up to Christmas. About 20% of us spent some of that money in the UK and Europe, including on-line. Even if only 20% of that total goes abroad this year, it could amount to €800 million that will not be spent with Irish retailers.

But this all needs to be kept in proportion. A huge volume of our spending is already spent in foreign-owned stores and services, from the likes of the British and German grocery suppliers Tesco, Marks and Spencer, Lidl and Aldi to the familiar high street and retail park shop where we buy clothes and shoes, DIY and garden equipment and even many big insurance companies. (Think Zurich, RSA, Aviva, Axa, even Irish Life, which is Canadian owned.) 

We grow and produce a certain amount of locally sourced foodstuff that is sourced locally - especially meat, dairy and bread products – but we are mainly a country of foods importers.  The ‘shop local’ campaign mostly refers to the support of Irish retail jobs, not the sources of production. Once wages and overheads are paid (which indeed circulate in the Irish economy) the bulk of profits earned on the Irish high street goes abroad.

So it is wrong, during periodic currency swings like today’s, to abandon the Tesco or Marks and Spencer or Woodies in your town for the one across the border and save 20% even after you take your transport and banking charges into account?

If you plan on spending €1,000 on presents, food and alcohol this Christmas, is it so bad to save €200 that could go on panto tickets, a movie, a train ticket to Granny in Cork or Sligo or even an extra tank of petrol (c€46 of every €75 goes straight to the State in excise/VAT) to drive there?

Brexit is already starting to push up prices in the North, though it will be next year before most people there see a substantial rise in prices as goods in the shop have already had their prices locked many months ago. The real bargains, a friend of mine who works for M&S here told me, will be had in the (still duty free) January sales in the North. Some currency analysts think Sterling could take another dip downwards before the year end, just based on historic patterns and drop from their current levels of €1.22 to buy one pound to a low of between €1.125 to €1.075 to the pound settling at c€1.10 to the pound.

Timing currency markets is always hazardous and even the professionals don’t always get it right. Meanwhile, shoppers have always crossed convenient borders – Canada and the US; Norway and Sweden, Germany and Poland -  depending on which way their currencies ebbed and flowed.

If you want a clear conscience this shopping season, stay away from the UK equivalent websites of your favourite UK retailers, in my case Amazon and M&S.

I had my eye on a thick cashmere sweater for €165 here that is selling for £120 in M&S Newry. At today’s exchange rate it shouldn’t cost more than €135 in Dublin.

Do you have a question for Jill?  Please email her directly at jill@jillkerby.ie or write c/o this newspaper.

GOLD vs PAPER MONEY: IT’S A MATTER OF TRUST

“The price of gold is the running straw poll of the world's confidence in paper money.” - James Grant, July 2008

I recently had a chance to hold a kilo bar of gold, which is only about six inches by four inches wide and about a half an inch thick.

For such a small object, it was incredibly heavy. It wasn’t buffed to a high sheen like the gold bars that are stacked in central bank vaults (which weigh 400 troy ounces or 12.4 kilos) but was slightly matt in texture and all the more lustrous.

Readers of this column know that I believe that precious metals have a small place – 5% to 10% worth - in a person’s net worth of wealth assets, typically the value of your paid off home, cash savings and pension fund. Occupational pension schemes, for example, are increasingly likely to include precious metals (silver and perhaps platinum) as part of a diversified investment fund. They see gold rare, precious and immutable, as do I, as a form of insurance I hope I’ll never have to use.

According to Aristotle, who advised Alexander the Great about these things as he set about creating a vast empire, ‘good’ money needs to be durable; it must not fade, corrode or change over time. It must be portable, and be easy to carry and move, with a high value relative to its weight. It must be divisible or ‘fungible’ and be able to divide into smaller units of value. It must have intrinsic value, that is, contain its own worth and lastly, it has to be ‘acceptable’, that is, be accepted to another party to complete a transaction.

Precious metals, especially in coin form, tick each box. The paper version of money we use originated as goldsmiths ‘receipts’ for the large amounts of physical gold and silver that Renaissance merchants owned, but didn’t want to risk travelling with. (Goldsmiths became the first bankers.) It was only in the last century that paper money bills stopped representing an equivalent amount of gold or silver. 

Today, there is no equivalent value of gold or silver in any currency issued by central bank to back up the number and face value of dollars, euro, pounds, yen, rubles and renminbi in circulation.  The intrinsic value of the money we use is literally only worth the cost of the paper, ink and base metals (in the case of coins).

In our increasingly ‘cashless’ world, tens of trillions worth of new money has been printed since the 2008 financial crash alone – mainly digitalised on the central banks’ currency computers. It is stored on on-line accounts and transacted via computers, debit, credit and pre-pay cash cards and smart phone wallets. 

Which brings me back to why I was on TV3 the other day with Mark O’Byrne of Goldcore.com, the Dublin gold bullion dealers, discussing gold.

There have been several significant Millennial financial crises ranging from the 1999-2000 NasDaq crash; 9/11; the 2008-2012 Great Recession and Greek crisis and now Brexit. The so-called War on Terror and subsequent migrant/refugee crisis has had massive financial repercussions.

The price of gold always reacts in uncertain and fraught geopolitical and economic times. Back in 1999 an ounce of gold was worth the equivalent of c €350 an ounce and at time of writing, €1,164. By the end of 2007 it was c€500.It peaked in late September 2012 at €1,365 in tandem with the Greek/Euro crisis.

The price of gold goes up and down as UK holders know: gold is up nearly 44% in the past year. Nevertheless it has a remarkable ability to maintain its intrinsic value, especially when every effort is made to artificially create price inflation by devaluing currencies or embarking on endless campaigns of QE – quantitative easing that causes savings and bond yields to collapse.

The banking sector is fragile. The debt crisis continues. Gold is dismissed by Keynesian economists as “the barbarous relic” that pays no interest. But they also hate cash which they say we are saving too much, to the detriment of “economic recovery”.

The cashless society is nearly here. Nil to negative interest rates are becoming  reality, but with no cash, there is no opportunity to take your money out of the bank and stick under a mattress. It is entirely at the mercy of the manipulators to tax with negative interest rates or confiscate in the event of a failed bank ‘bail-in’.

The depreciation of the money we use continues relentlessly. Gold has consistently held its value as this small reminiscence shows:

In the summer of 1982 the owner of the small newspaper where I worked set up a good VHI adult plan for the staff. It cost about Ir£360 old punts, which I couldn’t afford. Meanwhile an ounce of gold back then was worth about Ir£355.

Last summer, 34 years later, my Laya Healthcare Simple Connect Plus adult plan cost me €1,160. As I write this, the price of an ounce of gold in euro is c€1,164. 

Aristotle was right. And I bet Laya would take an ounce of gold as payment too.

Do you have a question for Jill?  Please email her directly at jill@jillkerby.ie or write c/o this newspaper.

FUNERAL COSTS ARE A SHOCK GRIEVING FAMILY CAN BE SPARED

Funerals are not something most of give too much thought to, at least not until you reach more advanced age (than I am now, for instance) or unless you’ve suffered a recent, close bereavement.

Recently the father of a close friend, who happens to be Brazilian, died. He was quite a young man but in keeping with their funeral traditions, he was buried within 24 hours, without a formal funeral.  Family and friends gathered a week later for a memorial service.

This is quite foreign to the way we bury our dead in Ireland.  Our ritual of holding a wake at a funeral home or in the person’s residence, then the removal church ceremony and finally the church service and a gathering for tea or lunch with close family and friends is, for us, at least, a tried and tested way to deal with loss and grief.  When mourners have to travel any distance, as so many of our immigrant family do, the funeral process can be protracted.

It can also amount to quite an expense, as a new survey from Post Insurance (www.postinsurance.ie) a subsidiary of An Post revealed.

The Post Insurance Funeral Price Index shows that while the standard funeral cost in Ireland is €4,052 plus the cost of a burial plot or cremation. The cost of a “standard coffin” can range from a high of € 2,000 in Kerry and Laois to a low of €1,177 in Waterford. A standard coffin in Dublin will cost an average of €1,750.

The burial plot, depending on what part of the country you live in, can add many thousand more euro to the bill, depending on where you live. It explains how cremation has grown in popularity.

Also, while the €4,052 accounts for the cost of Removal and Care of the Deceased, Embalming, Removal to Church / Cemetery, Hearse, Funeral Directors Fee and Coffin, it does not include what are known as ‘disbursements’ – the Church Offering, Priest, Music, Obituary Notice. The three most expensive counties for disbursement costs are Laois  (€1,440), Galway (€1,242) and Dublin (€1,177), while Kerry, (€470) and Limerick (€573) were the least expensive.

The highest quote for a ‘standard’ funeral is in Co Tipperary at €6,310 (which might surprise those of us living in greater Dublin where everything is usually more expensive) and the highest average cost was €5,000 in Co’s Sligo and Clare.  The least expensive standard funeral is available (€3,408) in Co Wexford.

A double sized grave plot can cost €32,000 in Deansgrange Dublin, while the same double plot in Shanganagh, Dublin was quoted at €5,600.

There are three ways to pay for a funeral and all its costs - €10,000 or more is not an atypical price, readers tell me (especially if a grave plot has to be bought or even opened.) You can:

-       Plan ahead and take out an insurance policy (Post Insurance offers one worth up to €30,000 in benefits), use an existing one, or consider a funeral package during your lifetime. Many funeral homes sell the latter and take instalment payments.

-       Your family can pay for it out of their own pockets and reclaim it from your estate, if you have so designated, or from their own bequest left in your will.

-       Or the money can be borrowed from a bank or credit union. Some funeral homes will accept instalment payments.

Today many more Irish people are choosing simpler, ‘humanist’ funeral services, often held in the funeral home or crematorium ‘chapel’. These can also include comparatively eco-friendly cardboard or willow coffins and cremation, cutting out a number of the biggest expenses that Post Insurance itemised.

It certainly makes good sense to either assign apportion of your long-term savings (perhaps in the Post Office) or from a small life insurance policy to pay for the kind of funeral you would like to have. It isn’t an easy subject to face, or to discuss with loved ones, but it does alleviate some of the stress that comes with bereavement, especially the financial concern of how the funeral related expenses will be paid.

Leaving a written instruction – sometimes known as a Letter of Intent – with your closest loved one (a spouse, adult child, best friend or family solicitor) will be an important guide for them (even if it isn’t a legally binding document, like a Will).

If you are going to go to be considerate enough to pre-fund and provide a funeral plan, then you should also write a legal will and make sure your executor knows where to find it too. Older people – and retiring is as good a time as any to do this – should also draw up an Enduring Power of Attorney. This document sets out your care wishes in the event you become mentally unfit to deal with your own affairs prior to your death. As your solicitor will explain, It will prevent you becoming a ward of court.

Do you have a question for Jill?  Please email her directly at jill@jillkerby.ie or write c/o this newspaper.

RETIREMENT PLANNING NEEDS A PROPER FINANCIAL PLANNER

Last week’s Budget may have raised the State pension by €5 a week starting next March, but it did nothing to encourage workers to save more into their existing private pensions or AVCs (Additional Voluntary Contribution top up plans that many public servants have) or to start one. 

The Minister for Finance could have reinstated the 4% PRSI tax relief on pension contributions that was removed in 2011 or declared that the USC refunds he was announcing would have to be directed into funding private pensions. Instead he took the politically expedient route of keeping older voters onside with the extra €5 and the 85% reinstatement of their Christmas bonus.

But that’s going to cut no ice with the fact that today’s younger workers are never going to get the same State pension benefit as their elders. Their PRSI contributions are still not invested; the amount collected right now via taxation is not enough to meet current pension benefits, let alone a bill that is going to double in size by the time they’re ready to retire (unless they start having very large families again.)

It’s a ticking can full of explosives, that is so bent out of shape from all the kicking down the proverbial road, that it would have gone off in 2010 if we hadn’t been saved by the Troika bail-out. 

I doubt if any politician, from any party, will ever be brave enough to push through the tough changes needed to stop it blowing up: later retirement; higher income contributions and lower, means-tested benefits and the phasing out of the tax-based, pay-as-you-go system for a universal, transparent, invested one that includes all public and private workers.

Even if a miracle happened and there was political commitment to reform the doomed state pension (at it’s current benefit level), the private pension system isn’t much better. The system is too complicated, costly and not transparent enough. Worker and employer contributions need to be sizeable and compulsory; costs need to be lower and subject to ongoing review.

The only good thing to say is that younger you are, the better chance you have even now of putting enough money together to avoiding having to work forever, or becoming dependent on family, friends or charity in your retirement.

I may be deeply cynical of politicians and senior civil servants ever addressing the pension system, but the Pay & File deadline coincidentally falls in October, Budget month and may help to raise awarness.

You can reduce your annual tax bill by making contributions into a personal pension or AVC by October 31 (mid-November if you file online.) You can claim a 20% or 40% income tax deduction on the pension contribution, depending on whether you pay standard or marginal rates of income tax.

However, buying a pension fund for the tax break, is a poor substitute for having a proper retirement plan that aims to produce the kind of income you want to live on in your old age.

There is a vast difference in the quality of pension/ retirement advice in this country.  It comes down to partiality and remuneration: pension product salespersons earn their living from the commission they receive from the pension manufacturer. A fee-remunerated financial planner is paid by the client for their advice, whether they buy a ‘product’ or not.

For the most part, commission-paid brokers only sell pension products supplied by popular life and pensions companies. They undergo rudimentary training. Financial planners who are members of the Society of Financial Planners of Ireland undergo a advanced financial and investment training to an international standard. (See www.sfpi.ie)

That said, not all SPFI members are fee-based and some experienced, impartial, fee-based advisers are not members of the SFPI.

But proper financial planning starts, not with a retail pension plan recommended by a manufacturer and their agent, but with your financial expectations. A  financial planner pulls together as much information as they can about your entire financial position, your risk profile and retirement expectations and then, where possible, comes up with a plan to achieve those expectations.

Funding a financially “comfortable” retirement is getting more expensive, not less in a world of zero yield bonds and deposits, the so-called safe assets for pension funds. It’s why dependence on the State pension is growing, not diminishing and why widespread pension reform is so important.

You have a deadline: October 31. Top up your existing pension and claim the tax relief. If you’re a young worker, join the company scheme if there is one, or buy your own.

But don’t just buy an old pension.

Find a proper financial planner/adviser with lots of pension experience and ask them to help you take the first right steps in shaping a long-term affordable, dependable retirement plan.