Blog – McCarthy & Associates – Galway Talks, 20/08/2015

Question: I get the impression that it is virtually impossible to achieve any sort of return on savings without taking some risk, what is your opinion?
Answer: The days of full capital protection have virtually disappeared. The products that are currently available which provide complete security are unlikely to provide any sort of reasonable returns.
The reality now is that investors need to take some element of risk and this can vary according to your preferences across a wide range of options.

Question: I recently re-entered the workforce and had been unemployed for the last 2½ years. My wife was still working but our situation disimproved while I was out of work. I want to try and plan my finances for the future, what would you recommend that I do?
Answer: This is obviously a milestone in financial terms for you and thankfully is a positive one. You may have during the period you were unemployed, stopped paying medical insurance, life cover, pension etc. These are all areas which you need to revisit and see what areas you ceased making contributions to and look at restarting same. In addition you may be in a position now to consider saving on a monthly basis or alternatively looking at rescheduling or clearing some of your borrowings.

Question: I am considering helping my son with regard to a deposit for a house. Are there any tax implications for both of us if I do this?
Answer: It is important to remember that there is currently a lifetime threshold of gifts/inheritance from parent to child up to €125,000. Any gift that you made to them now will be taken off this sum depending on the value of the estate that they inherited.
There is no tax to be payable now but the lifetime threshold is an important aspect to be aware of.

Question: I am getting a loan from my bank for a property and I feel they are putting me under pressure with regard to taking out life cover with them. Can they do this?
Answer: You are not required to take out the life cover through your bank. In fact it has been our experience that you will probably get a cheaper policy through a broker or directly with some of the life policies. Whichever policy you choose can be then given to the bank and utilized for your mortgage.
One tip I would give you is that you don’t take out an expensive policy that is beyond what you require unless you are fully aware of its features and it suits your circumstances.

Question: My mother is in her 70’s and has some money on deposit which she needs to be able to have access to. The problem is it is earning less than 1%. Is there any alternative suitable for her?
Answer: Unfortunately this is your only option as your mother requires access and security for her money. These are the more important features rather than looking to maximize the return on the money.

Question: I want to help my daughter out to buy a new house however she doesn’t have a sufficient deposit. Is it a good idea for me to borrow for her?
Answer: I would highly recommend that you do not consider this course of action. You are at a different stage of your life and whilst intentions are very commendable, if things go wrong well then you could be left with a loan that you may not be able to service.