There has been a lot of talk about Ireland’s recovery and the fact it is set to be one of the fastest growing economy’s in the European Union.
Here is Ireland in Numbers:
- Employment increased for the 9th consecutive quarter in Q4 2014. Unemployment is predicted to hit 9% during 2015. It had reached 15% during 2011!
- Ireland has one of the youngest populations in Europe. Median age of 35.5 compared to 42.8 in Euro Area – among the lowest old age dependency ratios in Europe at just 18.6%, compared to 27.5% in EU.
- Value remains in Property – For example the Irish office market, with prices below peak levels, and competitive internationally. Dublin prime rents are competitive internationally at €484m2 pa. Moving outside of Dublin offers improved value: Cork €242 m2 pa, Limerick €177 m2 pa, Galway €177 m2 pa and Waterford €107-130 m2 pa.
- Right now almost 25 per cent of Irish wealth is held in cash deposits. That is three times more than in frugal Canada and twice as much as our neighbours in the UK.
There are still 3 Headwinds I want to reference in this Blog.
Deposits
For those fortunate to have savings we are witnessing also a scenario where interest rates have never been lower, and anyone with a few bob to put aside is paying the price. Rates on deposit accounts can be as low as 0.01 per cent, and few savings accounts of any kind offer rates of more than 3.5 per cent (dirt). To put those numbers in context, if you had €10,000 on deposit and earned a rate of 0.01 per cent, the level of interest after a year would be €1. And you would have to pay DIRT on that which would leave you with 59 cent.
Long Term savings
For those of you with children. It costs about €10,000 a year to send a child to college and most people go for four years. So if you would like your offspring to be educated to third level, the bill will come to €40,000 and that is in today’s money. In 10 years time, thanks to inflation and any additional charges future governments might impose, the cost will go up. It could be €60,000 in 2025.
The most sensible way to save for that is to put child benefit into a long-term savings account from the start. Do that and you will have about €28,000 over 18 years. But many people can’t afford that, or at least not when their child is young.
So the second-best option is to put aside a lump sum and then save. If you had a lump sum of €10,000 today and found a deposit account paying 3 per cent a year, you would need to save €289 a month over the next 10 years to meet a target of €54,000. Alternatively if you find an investment product making an annual return of 5 per cent, you would need to put aside €240 a month on top of the €10,000 lump sum.
The State offers Instalment Savings based on 12 monthly savings, which are left on deposit for a further five years. It offers 7 per cent return on your savings after that period, which works out at 1.24 per cent. The minimum savings are €25 per month and the maximum €1,000 per month.
Health System
Everyone resident in Ireland is entitled to free public health coverage. The level of free coverage depends on your economic health – the poorer it is, the higher your level of coverage. Free it may be, but you’re also free to wait. Waiting lists for those without private insurance can stretch into years – even for critical operations like heart operations. There are tens of thousands of people waiting for their ‘free’ medical services. Governments are always promising to clear these infamous waiting lists, but the health service but they seem to be like death and taxes – always with us. Even a quintupling of the health budget by many billions of euro did not clear up the problem. Before, during and after the Celtic Tiger, fairly long waits remain the norm. To cut down the waits, you need to pay for private health insurance. From the 1st May this year the Government is making it more expensive for people to buy Health Insurance (who don’t presently have it) if you are over 35. There are over 400 Health Insurance plans in Ireland so which one to choose ?
If you would like more information or a FREE Financial Review (from a company shortlisted as one of the best in Munster) contact us – contact@alphawealth.ie
What have you got to lose ?
Kind Regards,
Nick Charalambous
Managing Director Alpha Wealth/Alpha Health
M: 086 082 7925 T: Cork +021-2061783
E: ncharalambous@alphawealth.ie E: nick@alphahealth.ie