SMALL BUSINESS SNAP HAPPY 15.0156.20.06.14 14/ 11 Money Elite camera was Eamonn Quinn’s picture-perfect present p13 thesundaytimes.ie Starting at zero you’ve nothing to lose

JUSTINFARRELLY With interest rates at record lows, it’s time for homeowners, investors and savers to get IF SECURITY IS NUMBER ONE, smart, writes Mark Channing YOU HAVE TO HOUSEHOLDS are being urged interest charged on a tracker ACCEPT THE to review their savings, invest- mortgage. ments and mortgages as David Quinn, managing CURRENT RATES interest rates fall to historic director of Investwise, a fee- lows. This should be good news based adviser, said: “If you for borrowers but experts warn choose the best deposit that only homeowners lucky account, your after-tax return enough to have tracker mort- should be higher than the gages will benefit from the rate interest on your tracker, so you cut. are better off setting the money The aside than overpaying the (ECB) entered uncharted terri- mortgage.” tory by slashing interest rates Permanent TSB, for O’Hanlon. She advised invest- from 0.25% to a record low of example, pays 2.25% for ment of small amounts regu- 0.15%. It is the latest in a series depositsofat least€5,000fixed larly, rather than a lump sum of rate cuts aimed at stimu- for terms of 16-24 months, or all at once, to minimise the lating the European economy 1.3% after deposit interest impact of volatility. and warding off the threat of retention tax (Dirt). This com- Experts urge caution over deflation. pares with rates of structured products such as There are about 400,000 0.65%-0.9% charged on the tracker bonds, which provide trackers in Ireland and repay- best tracker mortgages. capital protection but tie you ments on these loans will fall as Overpayments would be a into a minimum investment a result of the cut. Variable rate bad move for those planning to period and can have charges mortgage holders are not so borrow more to move house. which may not be obvious. A lucky as banks don’t have to Permanent TSB, Bank of Ire- low-risk multi-asset fund that pass on ECB cuts to these cus- land and allow holds a portion of equities, tomers.Theratecutisbadnews movers to take trackers to their bonds and cash could be a for savers who will see interest next house but additional bor- better bet, although your cap- paid on deposits fall. rowingmustbeat ahigher var- ital would not be protected With interest rates set to stay iable rate of interest. It is in Kelly said there could be tax close to zero for a protracted movers’ interest to keep as advantages from investing in period, we get advice for bor- muchoftheoveralldebtaspos- funds. Gains are subject to rowers, savers and investors. sible on tracker terms. an exit tax of 41%, the same Colm Kelly of Cregan Kelly as Dirt. However, unlike BORROWERS O’Brien, a financial adviser in Dirt,which is deducted annu- Someone with a €300,000 Swords, Co Dublin, said: “It’s ally, the exit tax is payable only tracker mortgage will save better for movers to have the on encashment or after eight about €20 a month from the money in savings and borrow years, by which time the gov- new cut in rates, the latest in a as little as possible at the vari- ernment may have cut the tax. series of payment reductions. able rate.” “You will get hit with the tax Liam Ferguson of Ferguson Overpayments can make but only at the rate that applies & Associates, a mortgage sense in some circumstances. on encashment or after eight broker,said:“In2008someone “If you’re in negative equity years, so there is an eight-year with a €300,000 mortgage there is some merit in over- O’Connor has turned to the stock market and believes that consistent regular investing over time will do better than leaving your money sitting in a deposit account window for the tax to be over 25 years would have been paying,” said Kelly. “Psycho- reduced,” he said. paying €1,798 per month. Fol- logically it can make a big Mark O’Byrne of metal bro- lowingthislatestcuttherepay- difference to people to pay rate is fixed. Rachel Doyle of could be worth considering.” can.” Permanent TSB and KBC so you earn slightly more budget when Dirt was kers GoldCore said gold is a ment is €1,144 per month — down their debts as quickly as the Professional Insurance has a two- Bank pay 2% for easy-access interest than what banks are increased to 41%. “It was like worthwhile investment when more than €650 less.” possible.” Brokers Association said pre- year fix at 4.75% and a three- deposits. Fixed rate accounts, currently paying. someone flicked a switch. interest rates are low, although Lenders are telling tracker Frances O’Hanlon of FOH dicting the direction of interest year fix at 4.95% compared where you lock your money The downside is you have to Once Dirt increased along with it has lost about a third of its customers to take advantage of Financial, an adviser in rates “is fraught with uncer- with a standard variable rate of away, pay slightly more. PTSB lock your money away for the falling interest rates, a lot of value sincepeakingat$1,921an the rate cuts to overpay their Clonmel,CoTipperary,agreed. tainty”, although she believes 4.4%. charges pays 2.25% interest on its 18, 16 longer periods, increasing the clientsrealisedthey had to start ounce in September 2011. mortgages. This should allow “If you overpay now, you have it is reasonable to expect rates 4.69% fixed for two years and and 24-month accounts. risk that the value of your cash looking elsewhere,” he said. “Gold has always been criti- them to become mortgage- made considerable inroads on to increase over the next few 4.89% fixed for three years for Regularsaverscanearnupto will be eaten away by inflation. Would-be investors need to cised due to its lack of yield, free ahead of schedule. The your mortgage by the time years. existing customers, compared 4%with Nationwide UK (Ire- TheNationalSolidarityBond assess their attitude to risk unlike stocks, bonds and banks’ advice is self-serving interest rates go up again,” she Fergusonsaidfixingcouldbe with a variable rate of 4.5%. land) on monthly savings of up pays 6% tax-free after four before deciding what kind of deposits,” said Byrne. “How- because they would benefit by said. “Just be mindful that, worthwhileifyoudonotplanto to €1,000. “You can get slightly years, or an annual rate of investment suits them. ever, given the ECB’s historic getting trackers off their books when you pay it into your move and are unlikely to SAVERS higher rates for regular savers’ 1.47%. The 10-year bond pays “If you’re happy to take on rate cut and the continuation of as quickly as possible because mortgage, you’re not going to overpay your mortgage. Savers have seen returns accounts but rates tend to drop 30% or 2.66% annually. an element of risk, you have to ultra loose monetary policies, these mortgages are loss mar- get it back out again.” “In some instances, you can dwindle, with 2.25% the most as money accumulates in these look towards stock markets many investors and depositors kets or only marginally profit- The question for home- fix for a couple of years at the they can hope to earn. They accounts,” said McInerney. INVESTORS and the equity-based funds, will now rightly see non- able for lenders. owners on variable rates is same interest rate as the stan- have also been punished by State Savings are another McInerney reported a change but you must take a minimum yielding gold as an increasingly Overpaying does not make whether to switch to a fixed dard variable,” he said. higher taxes, with Dirt at 41% option. Returns are tax-free in savers’ mindset after the last of a five-year view,” said attractive diversification.” sense for homeowners with rate. These are generally more “Given that it’s unlikely that and those earning more spare cash, however, if it would expensive but would pay off if variable rates are going to come than €3,174 a year in interest earn more on deposit than the interest rates rise while the down any time soon, fixing paying 4% pay related social insurance. Experts say rates are likely to New and existing deposit rates % 5 fall even more. Shane McIn- Stock market gives me more bang for my buck erney of Deloitte Pensions & Investments said: “Interest LOW returns and high taxes have led gives him up-to-date analysis of stocks a long- term view. There are going to be 4 rates have been falling consist- Cormac O’Connor to seek an alternative and markets. months which aren’t as good as others ently now at a rate of about 25 to bank deposits. In O’Connor’s view, consistent regular and that’s where discipline is needed. You basis points a month and I He decided to take control of his money investing over time will do better than have to stick with the strategy even 3 imagine you are going to see by investing in the stock market. leaving your money sitting in a deposit through a bit of turbulence,” he said. New business them drop further.” “I had money on deposit which was account. “Based on historic returns the “It’s important to get a low Savers unwilling or unable earning fairly decent interest, but every odds are stacked in your favour to beat commission, execution-only broker. If Existing 2 to assume investment risk couple of months the rate was being cut. the returns paid in deposits,” he said. you’re investing every month, you don’t business must make the best of what is Then Dirt increased and I realised that I Once he has identified what shares to want to be spending a lot on available. “If security is the had to be more proactive if I was to get buy, O’Connor uses a range of strategies commissions and fees,” added O’Connor. 1 number one thing, you have to any sort of decent return,” said O’Connor. to reduce the risks. He is not planning to save his money Data relates to new and existing business rates accept the current rates for He attended a one-day investment These include investing small amounts with the bank again in the near future, offered to households and NFCs conducted through deposits,” said Quinn. seminar run by independent financial regularly over a period of time, holding he said. resident offices of banks operating within the State Source: 0 “If it’s short-term money advisory firm GillenMarkets. the shares over the medium to long term, “I don’t see the banks increasing their 04 05 06 07 08 09 10 11 12 13 14 for a deposit on a house, for He also subscribed to GillenMarkets’s and ensuring that his portfolio is well rates again for a long time.” example, get the best rate you weekly investment newsletter which diversified. “I drip feed money in and take MARK CHANNING Revenue ready to signal end of the line for the gravy train

erusing Revenue’s satisfied that BIKis being paid on (PRTB), which regulates more property for their own use or that haunts how some invest their regular lists of tax all company vans parked than 260,000 rental contracts, of a family member. Rents can be retirement nest eggs. defaulters is one of overnight in the driveways of disclosed that rents rose by increased annually by giving a The value of pension savings life’s guilty pleasures, private homes? 8.4%in Dublin in the past year month’s notice. hit a record €91.5bn at the end of and busybodies got a Businesses could also feel the and by only 0.8% outside the These rules might not trouble last year, according to the Irish Pspecial treat last week heat when they pay subscriptions capital. The disparity is reflected footloose tenants if they are given Association of Pension Funds when Leinster House popped up COMMENT to professional bodies on behalf in average rents —€1,227 a month enough time to make alternative (IAPF), having fallen as low as among the named and shamed. of accountants, solicitors and for a house in Dublin compared arrangements. However, they are €63.5bn in 2008. Most of the The body that runs the Oireachtas other professionals on their with €637 outside the capital. totally inadequate for families recovery came from investment made a tax settlement of nearly payrolls. Unless the accountants Away from the headlines, hoping to put down roots. How growth rather than new money €333,500 after civil servants NIALL BRADY or solicitors are in public practice, information on the PRTB’s can they hope to settle in an area flowing into pension funds. were caught abusing taxi and where membership of a website helps put the raw data in if their landlord can ask them so The rebound seems to have meal allowances. professional body is mandatory, context, revealing the paradox at leave so easily? gone unnoticed by some of the Whatever the curiosity value, can their employers legitimately the heart of the rental market. A The casual nature of buy-to-let 500,000 workers in defined this episode provides more claim that the subscriptions were sizeable chunk of the population is underscored by the paucity of contribution (DC) schemes, who evidence of Revenue’s hard-line incurred “wholly, exclusively and —29% of all households —lives in unfurnished accommodation largely call the shots over how approach with expenses and necessarily” for the purpose of rented accommodation. With available to rent. This is not a their pensions are invested. When allowances. Civil servants have a them as benefits in kind (BIK), clarification has consequences for their businesses? house prices, especially in symptom of tenants’ preference faced with investment decisions, legitimate expectation that their Revenue ruled. many with flexible working Bleary-eyed civil servants can Dublin, on the increase, the for cheap disposable furniture, it seems many of us take the safe transport and sustenance will be Expenses are a grey area, and arrangements:home offices are take comfort that the net is also proportion of renters is unlikely neutral paint schemes and cash- option, with more than 17%of paid for when working late to taxpayers may discover what is a generally not their normal places tightening for those to blame for to decrease. offs from their landlords’ homes. DCsavings held in cash, facilitate the Dail’s nocturnal legitimate deduction only after of work, according to Revenue, so the late nights —politicians — Yet their rights as tenants are It reflects the expectation that according to the IAPF. Cash was a debates. Revenue discovered falling foul of Revenue. For they cannot claim travel expenses who are finding that the days rooted in another era, when they will not be staying long good place to be when all asset some had pushed their luck, example, it spelled out its position when visiting head office. of unvouched and untaxed renting was a temporary enough to bother furnishing the classes — equities, property, taking taxis home at taxpayers’ on travel and subsistence Companies operating van fleets expenses are largely over. arrangement for a transient accommodation themselves. commodities —crashed expense after a normal working expenses only after commencing could be next on Revenue’s hit population of young people. simultaneously during the day or for running personal audits of hundreds of engineers list. Employees who drive these Rent a dilemma Landlords can give notice to Cracks in nest eggs financial crisis. Those who errands. Having failed to and ITprofessionals who have vehicles are not liable for BIK Buy-to-let was back in the news quit if they want to sell or Pension funds have recovered lingered on deposit too long, clamp down on these abuses, set up companies to trade as provided the van is only for last week when the Private upgrade a rental property, or if from the stock market crash, but however, have missed out on the Leinster House should have taxed independent contractors. The commercial use. Is Revenue Residential Tenancies Board they decide to move into the the shadow of 2008 and 2009 still subsequent recovery.