Blog – McCarthy & Associates – Galway Talks, 28/01/2016

Issue: First new mortgage lender since 2008, enters Irish market.
Comment: Pepper, the Australian Financial Services Company, have announced that they are entering the Irish Mortgage Market. This is the first new lender since 2008 and is to be welcomed due to the lack of competition in this market.
Pepper have had an operation in Ireland for many years, servicing loan books from other banks. It remains to be seen what type of products they will launch but this will become clearer in the coming months.

Question: I have a Personal Pension Plan and just turned 60. Do I have to wait until age 65 to drawdown my benefits?
Answer: There is an “urban myth” amongst a lot of people with Personal Pension Plans, that you have to be 65 before you can drawdown your benefits. This is incorrect as you can access these monies after age 60.
Depending on your circumstances, the general rule of thumb, with a Personal Pension, is that you can access 25% of the monies tax free and the balance must be utilized to purchase an Annuity or an Approved Retirement Fund.
With regard to the latter options, it is important that you receive professional advice.

Issue: Deposit Rates could fall to 0% this year.
Comment: A lot of depositors are now earning no return on their accounts. For certain Term Deposits the maximum rate is slightly below 1% gross. In some EU countries the interest rates are negative i.e. large depositors are actually paying institutions to take their money. I do not see that happening here. However any depositor who is waiting for rates to rise over the next few years is going to be sadly disappointed, considering the ECB’s intention to keep rates as low as possible to stimulate economic growth.
As I have always said “leaving money on deposit, is something you do for convenience not as an investment decision”.

Question: I am looking to make an investment that is Oil related. I am aware of the risks involved and would welcome any suggestions you have?
Answer: Oil is a commodity like any other and fluctuates in value. Making a direct investment in any commodity is very high risk.
However, you can get an exposure to the price of Oil, through a number of Structured Investment Bonds which will minimize your risk and also will have the potential for attractive returns. I would suggest that this would be a much safer way of having an exposure to Oil, rather than a direct investment.

Question: Has Gold made a comeback?
Answer: Certainly not, Gold is a commodity like any other and despite the fact that some people are of the opinion that it is a safe haven, this is not the case. At the peak of the recession Gold touched $2000 an ounce and is now trading at circa $1150.
Whilst Gold rises, when there is financial turbulence, in an environment where stockmarkets are performing Gold is not the place to be.