Blog – McCarthy & Associates – Galway Talks, 06/11/2014

questionmarkQuestion:  I need to take out a Life Policy and I am wondering is there much of a difference between the premiums quoted from different companies?

Answer:  The premiums from life companies can vary considerably.  This is obviously dependant on the type of cover you are looking for, age, health etc.  Too many people seem to accept cover that they are offered by their bank without looking at other providers.  As with motor, home and medical insurance, savings can be made through a little bit of research.

Question:  Should I use my own money to purchase a car?

Answer:  If you have the funds available to you I would recommend that you use them for car purchase rather than raising finance from your bank, who will charge you exorbitant rates.  However, for some people the leasing route is becoming very popular and some very good deals are to be had from some distributors.

Leasing will become more popular as the years progress and we will move away from the idea of having to own our cars.  When you consider that this is an item that will depreciate considerably from the moment you purchase it, we should be looking to get away from the physical ownership of a car and considerate it more of an item that we only need the use of.  This concept has become extremely popular in countries like UK and Canada and I hope that it will continue to become more popular here also.

Issue:  AIB reduces variable mortgage rate by 0.25%, but personal loans and overdraft rates remain excessive.

Comment:  Whilst the reduction in AIB’s variable mortgage rate by 0.25% (with other lenders will follow suit in the coming days), you must remember that this rate has increased innumerable times over the last 6 years.

Variable mortgage rates have a long road to travel before they reduce to acceptable levels.  Meanwhile, we see overdraft and personal loan rates at “outrageous” levels which are totally unacceptable.  I hope that some institution will see that there is potential market share to be gained, by offering rates on these types of loans, which are far more competitive than what is currently available.

Question:  Do you consider that this is a good time an investment property?

Answer:  Over the last 6 years there has been a considerable change in the costs associated with renting property, due to increased income tax, property tax etc.  If you are considering purchasing an investment property, make sure you do your homework closely on the ongoing costs. Being blinded exclusively by price, might lead you to making the wrong decision.

In other words do your homework and be sensible about your decision before you take such a major investment step and always remember-property does come with risk attached to it.

Question:  Is it a good time to purchase bank shares?

Answer:  It depends on your view of the different Irish banks and their prospects.  I would not recommend purchasing AIB under any circumstances, due to the fact that the Government owns 99% of the shares.  If you feel that the Irish economy is going to continue to improve (as I do) then you could look at Bank of Ireland, which is the one institution whose profits are expected to move in line with the improving economic climate.