By Dave Kavanagh

A tax that is often not considered and doesn’t usually make the Budget headlines each year is Capital Acquisition Tax. In 2019 in Ireland, there was €455 million collected in Capital Acquisition Tax. This covers both inheritance tax and gift tax. It also includes estates that may have been taxed in previous generations. For example, if someone left an estate worth €2,000,000 to an only daughter, she would (in the current tax year) have a tax bill of almost €550,000. After she pays the bill and puts what’s left in the bank, any interest is taxed (DIRT). Guess what happens when she passes and leaves her estate behind? It’s taxed again! Spouses can leave any amount to each other tax free. After that, the three thresholds are, a) Children - €335,000, b) Other close relatives - €32,500 and c) All others (including cohabiting partners) - €16,250. Everything received above these is taxed at 33%. So, is there any way to prevent it? There are two main actions that can either reduce or eradicate such a tax bill. The first is to take the time to plan when making a will. Let’s say a value of €750,000 was being left to 2 adult children. (Not a big estate if you combine a house, savings and a life policy). This would create a tax bill of over €25,000. Instead, if €670,000 of it was left to the 2 children and the balance between a few grandchildren, there is no tax bill. The second thing that can be done is for the person leaving the estate to take out a Section 72 plan. This is a type of life policy that is allowed to pay any tax liability without adding to the value of the estate. It becomes particularly important for anybody that does not have children to plan things out, as even other relatives can only receive €32,500 before any balance is taxed. These thresholds are particularly important for anybody in the process of planning or making their will.

Dave Kavanagh QFA has been advising people financially for over 25 years. For quotes or information (with no cost or obligation) he can be contacted by emailing info@financialcompanion.ie or use the contact form on www.financialcompanion.ie or phone 087-6414570, or @Davekav_advice on Twitter and Instagram. Combined with his previous role of gym/nutrition adviser, he regularly gives talks and workshops at seminars and events for groups, companies and government departments on financial wellbeing, positivity and motivation. As heard on RTE 2FM and TV3.

By Dave Kavanagh

It’s human nature to want good things to happen to us and conversely, for bad things not to happen to us. A constant example I see of this, is the vast amounts of money that is spent on the lotto every week, despite the odds of winning the jackpot of 10.7million to 1, compared to the numerous people I talk to that have no preparations in place, for the potential financial loss in the event of a serious illness or even a fatality. Considering that in Ireland, you have a 1 in 4 chance of developing one of the conditions covered before age 65, and, according to one of the main life companies’ claim statistics for 2021, 32% of their death claims were under age 60. The difference between how people affected by such occurrences will be impacted financially, is usually dependent on how people have planned and prepared. Of course we don’t want bad suff to happen, but it happens frequently whether we want it to or not. (Exponentially more frequently than the aforementioned lotto jackpot wins!)

Whenever I talk to people who have just reviewed their own individual circumstances and put appropriate plans in place, they talk about the “peace of mind” that this gives them and the fact that it is one less thing to worry about now that they are up to date with the knowledge that sufficient cover is now in place to prevent any major financial loss, should one of those “bad things” happen. It requires a conscious act of making the time to look at your own situation and finding out the levels and types of cover that are suitable and affordable for you. A simple phone call or email may be all you need to get started and having one less thing for you to worry about.

Dave Kavanagh QFA has been advising people financially for over 25 years. For quotes or information (with no cost or obligation) he can be contacted by emailing info@financialcompanion.ie or use the contact form on www.financialcompanion.ie or phone 087-6414570, or @Davekav_advice on Twitter and Instagram. Combined with his previous role of gym/nutrition adviser, he regularly gives talks and workshops at seminars and events for groups, companies and government departments on financial wellbeing, positivity and motivation. As heard on RTE 2FM and TV3.

By Dave Kavanagh

When advising clients and analysing their finances, I ask them how long (if at all) their employer will pay them if they are out of work long term due to illness or injury. In some cases, it is standard and can be something like 3 months at full pay, then 3 months at half pay and then a pensionable rate of pay. For many, they are not sure and when they look through their employment contract, it states “at employer’s discretion”. Many people realised how vulnerable they were when the pandemic arrived, dropping some incomes from €600 or €800 per week down to €350 of PUP. Many don’t give much consideration to how they would cope if they suffered a loss of income for an extended period because they think “it’ll never happen to me”. Sadly, many find out the hard way following an injury or illness that keeps them out of work for months or even years. This is where having Income Protection in place, can be the difference between maintaining a level of income that keeps your lifestyle virtually unchanged, or dropping to a level that could force you to use up any savings and also get into financial difficulty.

So how does it work? Depending on your circumstances, you choose an appropriate level of cover. This is based on not exceeding 75% of your salary, less any state income entitlement. You also choose a “deferred period” which refers to how long you are off work before payments commence. The premiums are based on factors like your age and occupation, as some occupations would leave you more at risk of not being able to work. There is also tax relief on premiums paid for income protection, which could mean up to 40% of your premium is refunded by way of adjusting your tax credits. If dropping from your current income to the state benefit of €208 per week is something that would impact badly on you, perhaps it is time to consider.

Dave Kavanagh QFA has been advising people financially for over 25 years. For quotes or information (with no cost or obligation) he can be contacted by emailing info@financialcompanion.ie or use the contact form on www.financialcompanion.ie or phone 087-6414570, or @Davekav_advice on Twitter and Instagram. Combined with his previous role of gym/nutrition adviser, he regularly gives talks and workshops at seminars and events for groups, companies and government departments on financial wellbeing,

By Dave Kavanagh

Another start of a year and despite Covid 19 still present, many people will still be intent on embarking on making some positive changes or improvements in their lives. The most recognisable of these is the ‘losing weight” one. It’s worth noting that if done properly, losing weight can have the added bonus of leaving you with more money at the end of each month. So how does that work? Well, by “doing it properly” I refer to NOT going on a diet, or buying products with magic properties that will make the weight just fall off. Instead, making small, sustainable lifestyle changes. It can be adding some exercise in week 1, drinking more water (and less alcohol/sugar laden drinks) in week 2, reducing portion sizes in week 3, substituting things like chips for wholegrain rice or pasta in week 4, breaking the association of biscuits/cakes whenever you have a coffee or tea in week 5, etc., etc. Doing it this way, makes it sustainable and when weight is dropped slower over a longer period of time, it is far more likely to be kept off. So how does that improve your wealth? When I analyse people’s spending budgets, it’s clear that takeaways, alcohol, sweets, cakes biscuits etc., pop up quite frequently. If you keep track of the savings when you cut down on many of these things, it’s easy to see how much you can save. Keeping a detailed spending budget where you log every day what you spend (not just the name of the shop, but the actual items) Lets you look back and accurately see what you have spent on the things you actually want to cut down on (one person told me “I can’t believe I ate 38 packets of crisps last month!!”) As for the xmas leftover junk, it can either go in the waste or on your waist. Make the right choices, one day at a time, and you bank account will thank you.

Dave Kavanagh QFA has been advising people financially for over 25 years. For quotes or information (with no cost or obligation) he can be contacted by emailing info@financialcompanion.ie or use the contact form on www.financialcompanion.ie or phone 087-6414570, or @Davekav_advice on Twitter and Instagram. Combined with his previous role of gym/nutrition adviser, he regularly gives talks and workshops at seminars and events for groups, companies and government departments on financial wellbeing, positivity and motivation. As heard on RTE 2FM and TV3.

By Dave Kavanagh

Recent surveys by the Royal London Group, have clearly illustrated the advantages in seeking fi-nancial advice. In Ireland, it showed that of those that received advice, savings were 55% higher, the average pension pot was €128,933 compared to €62,600 with those who had not sought advice. The vast majority felt more in control of their finances and felt they were getting the best value with the financial products that they paid for. In these times, Covid-19 has made people more anxious about money. So what stops people from seeking advice in such a crucial area of their lives? Some answers were, “I think it would be too expensive”, “it’s probably not for me” (believing it’s only very wealthy people that need advice!), “my bank looks after all of that” (when the bank is likely tied to one company and cannot fairly compare options for them.) Or “too proud or embar-rassed to let someone go through our finances”. In some ways, this can be likened to some people choosing not to seek medical advice (until potentially too late!) believing that it’s trivial or they can deal with it themselves. The one constant I’ve seen in all my years of advising clients, is the peace of mind and feeling of control that they feel. Even if the exercise of examining and analysing their finances uncovers some mistakes or wrong choices, at least they can now take action to rectify their situation, and move forward with confidence. If, like many, you are considering making New Year changes to improve your life in some way, you could do far worse than include a review of that which is connected to almost every aspect of your life, your finances.

Dave Kavanagh QFA has been advising people financially for over 25 years. For quotes or information (with no cost or obligation) he can be contacted by emailing info@financialcompanion.ie or use the contact form on www.financialcompanion.ie or phone 087-6414570, or @Davekav_advice on Twitter and Instagram. Combined with his previous role of gym/nutrition adviser, he regularly gives talks and workshops at seminars and events for groups, companies and government departments on financial wellbeing, positivity and motivation. As heard on RTE 2FM and TV3.

By Dave Kavanagh

Although it may be too late for some people, there are a few things that can be done to make the festive season less of a financial burden. Manage expectations: Most people can’t remember what they got 2 years ago, so don’t put yourself under too much pressure for “big” presents. Leave the credit card at home: At about 20% interest, adding debt for things you don’t need to overspend on, only starts the new year off in a negative. Be realistic with food shopping: The shops are only closed for 1-2 days, do you really need so much? In the days/weeks after Christmas, make a list of all the things you bought but didn’t really need or through out, and keep it for next year. Kris Kindle: Talk to family and close friends to agree to pick one person and buy them a present for a set limit, to ease the burden.Other things you can do all year round that can save you enough to cover the cost of Christmas: Switch utility providers, the savings can be quite substantial. Compare before you shop for larger items: Just because one store has a sign saying the fridge you want is reduced from €900 to €800, doesn’t mean that another store that does not have a sale on, isn’t selling the same fridge for €750. Take the time to shop around when your car or house insurance renewals come in, it can be well worth the effort. Review premiums that you pay regularly, such as mortgage protection or life cover, especially if they were taken out directly with a bank who could not compare. Finally, go through a few months’ bank statements: we regularly find people paying for things that should have been cancelled years before.

Dave Kavanagh QFA has been advising people financially for over 25 years. For quotes or information (with no cost or obligation) he can be contacted by emailing info@financialcompanion.ie or use the contact form on www.financialcompanion.ie or phone 087-6414570, or @Davekav_advice on Twitter and Instagram. Combined with his previous role of gym/nutrition adviser, he regularly gives talks and workshops at seminars and events for groups, companies and government departments on financial wellbeing, positivity and motivation. As heard on RTE 2FM and TV3.

By Dave Kavanagh

When people take out cover, such as life cover or serious illness cover, it is usually for a specific term, such as 10, 20 or 30 years. When these terms expire, the cover usually ends. People can ap-ply for new cover but their health at that time may prevent them from getting cover again or could include a premium rating. This is why having a conversion option is an extremely valuable bene-fit. It allows the person to extend their cover without having to provide any new medical details, so they are guaranteed to be accepted for cover (assuming they were accepted at ordinary rates when they first applied). It’s hard to know what your requirements will be in 10 years, never mind 20 or 30 years, so if you are taking out cover for the first time, it is important to make sure that you will have the flexibility in the future should you require it. For anyone that has cover in place, do you know exactly when it is due to expire? Do you know if it has a conversion option? It is far wiser to check and make sure you know these details now, rather than leave it until it is too late. If your health has deteriorated since you originally took out cover and you do have a conversion op-tion, it may be well worth looking at converting it now, as cover is more expensive the older you are, so you can lock in a lower premium and future proof yourself by getting the best value for your cover. In many cases, a lower level of cover may be sufficient as the financial loss that would have occurred 20 years ago may be reduced, for example, children may have grown up and moved out. Another aspect to consider, is if you were a smoker when you first took out cover. If you have been a non-smoker for over 12 months, you may be entitled to substantially reduced premiums.

Dave Kavanagh QFA has been advising people financially for over 25 years. For quotes or information (with no cost or obligation) he can be contacted by emailing info@financialcompanion.ie or use the contact form on www.financialcompanion.ie or phone 087-6414570, or @Davekav_advice on Twitter and Instagram. Combined with his previous role of gym/nutrition adviser, he regularly gives talks and workshops at seminars and events for groups, companies and government departments on financial wellbeing,

By Dave Kavanagh

We often see that on top of the more compulsory car and home insurance, that many people also have travel insurance, pet insurance, mobile phone/laptop insurance etc. When we ask about insurance on their most important and valuable assets, themselves, (outside of mortgage protection), it is often something that was never considered, despite the potentially enormous financial loss that would occur in the event of a fatality (especially when there are children to consider!). We understand, it’s not the most fun conversation to have, but the reality is these things happen all too frequently and often unexpectedly. For example, a couple with young children and an income of €50,000 per annum, who in the event of a fatality of one of the parents, could suddenly have to live on the state’s survivor’s pension, giving them a massive drop in income and lifestyle. Worth mentioning that the loss would be the same when there are young children whether it was an income earner or a homemaker, as the income earner would either be gone, losing their income, or have to give up work to raise the children. Surveys have shown, that the actual cost of cover is far cheaper than people expect, and there is a variety of options to suit people’s specific circumstances. Plans can either be selected based on levels of cover in relation to the financial loss that would be suffered, or tailored based on affordable premiums. If this is something that you have been considering, don’t keep putting it off. Contact your financial advisor to get quotes. In many cases these days, cover can be arranged over the phone with digital signing.

Dave Kavanagh QFA has been advising people financially for over 25 years. For quotes or information (with no cost or obligation) he can be contacted by emailing info@financialcompanion.ie or use the contact form on www.financialcompanion.ie or phone 087-6414570, or @Davekav_advice on Twitter and Instagram. Combined with his previous role of gym/nutrition adviser, he regularly gives talks and workshops at seminars and events for groups, companies and government departments on financial wellbeing, positivity and motivation. As heard on RTE 2FM and TV3.

By Dave Kavanagh

Making a little time occasionally to go through your finances and budgeting, can be very rewarding and leave you with more money left over each month. A few practical tips:

Carefully study 3 months’ bank statements. Make sure that you can account for every single trans-action. On a regular basis, I encounter people who have been paying for things that they should not be, direct debits they forgot to cancel.Make a detailed list for grocery shopping (and don’t shop while hungry). This leads to only buying what you actually need, a lower bill at the till and less throwing out of food gone off.Compare before you shop for larger items. Just because one store has a fridge you want reduced from €950 to €850 in their “Sale”, does not mean another store nearby that does not currently have a sale on, is not selling the same one for €799. Compare utility providers. Whether it’s electricity, gas, broadband, mobile phone service or similar, there can be substantial savings to be had by switching to better deals. Check when car/house insurance renew-als arrive. Don’t automatically accept a renewal premium without checking around. A few phone calls could save you hundreds of euro.Review premiums on life cover/mortgage protection/serious illness cover. Especially if you arranged it directly with a bank or insurance company that could not compare.In over 20 years of helping people with their finances, I have never seen anyone NOT make savings by doing the above. If anyone would like the free budget spreadsheet in excel format that will calculate totals as you input them, just email info@financialcompanion.ie with Budget in the subject line. Happy saving!

Dave Kavanagh QFA has been advising people financially for over 25 years. For quotes or information (with no cost or obligation) he can be contacted by emailing info@financialcompanion.ie or use the contact form on www.financialcompanion.ie or phone 087-6414570, or @Davekav_advice on Twitter and Instagram. Combined with his previous role of gym/nutrition adviser, he regularly gives talks and workshops at seminars and events for groups, companies and government departments on financial wellbeing, positivity and motivation. As heard on RTE 2FM and TV3.

By Dave Kavanagh

In an ideal world, people should plan to have savings for different requirements. Short term savings is aiming to have about a month’s salary put by, for things like the washing machine breaking down or similar. Medium term is aimed at planning for things that will be happening in a year or two, such as needing to change the car, having a wedding or having a special holiday (when we can again!). These might require 3-6 months’ salary. Beyond these is what is referred to as long-term savings. This is usually aimed at a period of 5 years or more. It can be anything from saving for children’s third level education to planning to buy a mobile home. The main difference with this time frame is that it opens up more options to try and get some reasonable growth on your savings.

As most people know, bank deposit accounts pay little or nothing in terms of interest. In some cases with certain balances, they are actually charging negative interest, meaning they charge you for minding your money! Savings plans that utilise investment funds are a fast growing option for people that want to get the best out of their savings. They are managed by experts that use a variety of investment types within their funds, such as equites and bonds. Your level of risk is assessed, and a fund or choice of funds that matches your requirements is used. With regular savings, the great part is that every time there is a fluctuation in fund value, you get more units for your premium that month. In the long term, these funds usually way out perform bank deposits. Plans can be tailored for your specific requirements. Talk to your financial advisor to find out more.

Dave Kavanagh QFA has been advising people financially for over 25 years. For quotes or information (with no cost or obligation) he can be contacted by emailing info@financialcompanion.ie or use the contact form on www.financialcompanion.