Blog – McCarthy & Associates – Galway Talks, 10/03/2016

Question:  I have a Life Assurance Policy which I took out as part of the old SSIA and I am still making contributions to it.  Should I continue or look at alternatives?

Reply:  Policies that were sold to investors by Life Assurance Companies, as part of the old SSIA Scheme, were open ended and many people have continued to contribute to them.  The problem is that performance in these types of policies has been very poor and the annual charges make matters worse.

I would suggest that you encash your policy and utilize the lump sum that you will receive, by reinvesting it in a Structured Investment Bond (a variety of which are currently available would be more attractive than the policy you hold).

You could then continue to save the monthly premium in a normal deposit account

Issue:  The clock is ticking on interest only mortgages.

Comment:  During the boom times, a considerable number of buy-to-let mortgages were sanctioned on an interest only basis for the entire lifetime of the loan.  In theory this arrangement was fine as long as property values continued to increase.

The problem now is that time has moved on and these investors will have to repay the capital sum at some stage, possibly by disposing of it.  If the property is in an area where it has recouped or is likely to recoup the original purchase price, then the matter may not be as crucial.

For investors who own properties in areas that are unlikely to ever recover in value, they are prolonging the problem and at some stage they will have to face up to the reality that this is a matter they will have to address with the bank.

Issue:  Investors have a hard time trying to balance risk and need for potential returns.

Comment:  This is a problem that a lot of people are facing when they move money off deposit.  The days of 100% Capital Protection on any investment, has virtually disappeared.  The new reality is that you will have to take a risk with some of your monies in order to achieve any sort of reasonable returns in the future.