The Importance of Financial Planning

Stand Back from the Scrum Snips #5

Its happening again, Stock markets are at all-time highs and confidence is flying high. But at Lifetime Financial Planning we use our tried and tested Value Based Investment Strategy to identify good value for our Clients. And from the 600 largest companies in the US and UK, only 12 meet our value criteria currently, which means 98% are not good value. However, the good news is we are likely to see a lot of Volatility in 2017, and volatility always means good value buying opportunities for our Clients.

Talk to us if you would like your Pensions and Investments to be managed in a strategy with a long (20 year) successful track record, and with a focus on value for money assets.

As always, bear in mind that Investments fall as well as rise, and past performance is not a good guide to future performance.

The Importance of Financial Planning

Does the Market Decline Worry You?

Howard Marks, Chairman of the US based Oaktree Capital was recently asked a question by a Bloomberg reporter – ‘does the market’s decline worry you?’ – he answered the question by writing the following in a memo to clients which we believe is a far more useful answer than the current sensational media headlines.

Does the market’s decline worry you? “The answer lies in another question: What does the market know?” Is the market smart, meaning you should take your lead from it? Or is it dumb, meaning you should ignore it? Especially during downdrafts, many investors impute intelligence to the market and look to it to tell them what’s going on and what to do about it. This is one of the biggest mistakes you can make. As Ben Graham pointed out (many years ago), the day-to-day market isn’t a fundamental analyst; it’s a barometer of investor sentiment. You just can’t take it too seriously. Market participants have limited insight into what’s really happening in terms of fundamentals, and any intelligence that could be behind their buys and sells is obscured by their emotional swings. It would be wrong to interpret the recent worldwide drop as meaning the market ‘knows’ tough times lie ahead.”

The Importance of Financial Planning

Tax Saving Tips for Managing Your Stocks and Shares

Many people now own shares in publicly listed companies such as Glanbia, Ryanair, Kerry, Vodafone etc, but some are unaware that a little care and attention in managing your stocks and shares can save you a considerable amount of money in tax.


Shares sold at a profit or Gain incur a Capital Gains Tax liability. The current rate is 33% of the Gain.

The Gain is the difference between the sale price and the original cost price of the shares. So it is important to have a record of the original cost of the shares. This is known as the Base Cost.

Tax saving – Previous Losses

Previous losses on assets such as Property, Bank shares, (Anglo), etc are available for set-off against future gains. So any Gains will be tax-free until the previous losses are completely used up.

Tax saving – Annual Tax Exemption

Individuals can make a Gain of €1,270 free of Capital Gains Tax in each tax year. By holding the shares in joint names, spouses can generate Gains of €2,540 tax free each year.

It is important to utilise the annual €2,540 Exemption from Capital Gains Tax. This is done by “bed and breakfasting” the shares.

Bed & Breakfasting

“Bed & breakfasting” means selling a sufficient number of shares each year to generate a Gain of €2,540 (€1,270 for an individual), and buying them back again after a minimum of 30 days. The effect is to increase the Base Cost of the shares, and thereby lessen the Capital Gains Tax liability.

There is a risk that during the 30 days, the shares might jump in price. Of course if you sell, and buy back at a higher price, you lose some of the benefit of “bed & breakfasting”.

Dividends and Scrip Dividends

Dividends are a significant element of value in ownership of shares. By ensuring that you own the shares at the “ex-dividend date” you maintain your entitlement to the dividend.

Some companies offer the option of “Scrip Dividends”. This means the company issues new shares instead of paying cash dividends. There is no tax advantage for the owner, and scrip share certificates are liable to be lost. Replacing a lost certificate is expensive, and may cost more than the shares themselves are worth, making it uneconomic to replace a certificate for a small number of shares.

Our Recommendation

The paperwork generated by even a small amount of shares held in paper certificates can be daunting and confusing. We recommend holding shares in a Stockbroker account.

This ensures that

  • no loss of share certificates occurs,
  • accurate records of Base Cost are maintained,
  • Bed & Breakfasting is made easy,
  • Scrip Dividends happen automatically,
  • no more lodging (or losing) small dividend cheques,
  • paperwork is minimised,
  • a statement is issued every year setting out the Capital Gains Tax and Dividend Withholding Tax calculations for your Accountant/Tax Advisor.

To discuss this further, give Aidan a call at 087 2621006.

Aidan Wall Financial Services Ltd Trading as Lifetime Financial Planning is regulated by the Central Bank of Ireland.  Investments can fall as well as rise. Past performance is not a reliable guide to future performance.