Connections Autumn 2009
Welcome to the first edition of our client Newsletter. In these difficult times, I feel it is more important than ever to stay connected with our customers. At CMCC Financial Solutions Limited, we are continuously striving to provide a first class financial service to all our clients. It is our intention to communicate with you twice a year through Connections the next of which will be sent to you in early Spring 2010. We will of course continue to provide you with information on your existing arrangements through your annual review. Connections will cover regular features including market comment together with highlight topics which I hope will be of interest to you. I also hope that in some way we can add value to your particular financial planning needs and would be delighted to receive your feedback.
I am pleased to announce that Mary Fitzpatrick has been appointed to our sales team as a financial adviser. Mary has been with us since January 2007 and successfully completed her qualified financial adviser (QFA) exams in January 2008. In this edition we are encouraging everyone to take the opportunity to avail of our free financial health check. Mary is available to provide your free Financial Health Check and can be contacted on 01 2130773 or email@example.com. Finally, be sure to enter our Free Draw to win a weekend in Dromoland Castle, Co. Clare, details on page 6. Conor Murray
CMCC Financial Solutions
We have just been through the worst global financial crisis in living memory and values are down significantly but funds are well poised to benefit from any recovery in the world economy.
INVESTMENT REVIEW by Conor Murray
Reflecting on the past 18 months 2008 felt like a non-stop downward stretch on a roller coaster ride. The important thing about a roller coaster ride is to have a firm grip on the track. This hasn’t been the case for some investors who invested in a small number of shares. Investors in companies such as Lehman Brothers, Anglo Irish Bank and Woolworths have literally and quite tragically come off track.
MANAGING YOUR MONEY! Money management is vital for everyone in the current economic climate in which we live. Effectively managing your money can have many benefits. If you don’t manage your money well your salary can easily dwindle from your bank account without you noticing. Now more than ever it’s time to take stock. Get a Financial Health Check done today! The best way for you to manage your money is by budgeting. Before you work out your budget, it is a good idea to get a realistic picture of your current financial situation by completing a Financial Health Check with someone in the know. We offer all of our clients a Financial Health Check on at least an annual basis. Please take us up on our offer and if you wish to avail of the opportunity please contact us here at the office.
One of the best ways to stay on the track is to invest your money over a wide range of companies and assets. You might still feel the lurches but you can have the confidence that you are not going to fall completely off the track. That is the key benefit of putting money into investment funds that provide for a wide spread in terms of investment diversification. We have just been through the worst global financial crisis in living memory and values are down significantly but funds are well poised to benefit from any recovery in the world economy.
Outlook The growth in the markets over the last three months has been a very welcome respite from the turbulence of the previous year. The rally which started in March was sustained through in the second quarter of 2009 as some positive stories began to offer a glimpse of light. More importantly, the markets were more stable as volatility reduced considerably.
The most welcome change in the world markets is that focus is moving from banking problems and financial crises back to economies. Company valuations are becoming less erratic and are more to do with the outlook for earnings rather than fears for the financial system. Many of the major worldwide companies have cut their costs and are in a leaner, healthier position going forward. The international Monetary Fund does believe that the global economy is beginning to pull out of recession. It predicts a return to conservative growth in 2010. Obviously, Irelands’ problems are deeper and our recovery will lag other countries. Our economy will benefit from improvements in our major export markets but this will take time. However, it is important to note that the performance of Irish investment funds has a much more immediate relationship with the fortunes of the global economy. We will continue to see ups and downs, that is the nature of equity investment. However, the current mood is conservatively positive.
CMCC Financial Solutions
Currently you will receive tax relief at your marginal rate on the contributions you pay into your pension plan.
PENSION TAX RELIEF MADE SIMPLE
by Mary Fitzpatrick
If you think that taxation is all about take, take, take - then it’s time to think again. There is a way to cut down on the amount of your money that the Government takes. Not only will you benefit from a lower tax take now, but you’ll also see a financial benefit at a time in your life when you might appreciate it most: when you retire. Tax breaks in relation to pension plans are distributed in three ways:
1) Tax relief on the money you pay into your pension plan
Currently you will receive tax relief at your marginal rate on the contributions you pay into your pension plan. In effect this means that every €100 you pay into your pension actually only costs you: • €80 if the highest rate of income tax you pay is 20%, or • €59 if the highest rate of income tax you pay is 41%. There are annual limits to the amount of your income that you can pay into your pension for tax relief purpose as follows; Age Under 30 30-39 40-49 50-54 55-59 Over 60
% of annual income 15% 20% 25% 30% 35% 40%
Tax relief on contributions is also subject to an upper contribution limit of €150,000 per annum for 2009. In 2008 this limit was €275,239; therefore all pension contributions paid in 2009 can avail of this limit.
2) Tax-free growth on the money invested in your pension The money you contribute to your pension plan is invested on your behalf by your pension provider, usually in a mix of shares, bonds, currency, property and cash. Normally any growth in the value of an investment fund would be subject to an exit tax of 28% - but this tax does not apply to pension investment funds. This tax-free growth is a significant advantage over placing your retirement money in a savings account where it would attract DIRT tax of 25% on the interest earned. Likewise, investing in property normally attracts Capital Gains Tax of 25% on the disposal of any property that is not your primary residence.
3) Tax-free lump sum when you retire Upon retirement, the value of your pension fund is calculated. Usually you can then take a cash lump sum of up to 25% of the value of your pension fund tax-free. The balance, 75%, must be used to provide you with an income for the rest of your life, but the tax-free lump sum is yours to do with as you wish.
CMCC Financial Solutions
Nobody wants to think about what life would be like should disability or illness strike.
IS YOUR GREATEST ASSET PROTECTED? by Conor Carey
We don’t usually think of our current income and our future earnings as an asset. However, if you take a moment to think about it, the money you earn pays for almost everything you have…. mortgage, car loan, bills, children’s education, insurance and so on. Without it, you are faced with a pretty worrying picture.
Nobody wants to think about what life would be like should disability or illness strike. But the reality is that 1 in 6 Irish people will be out of work for more than 6 months at least once during their career. It is surprising then that we protect ourselves against so many of life’s eventualities, yet so few of us protect our salaries. This is why an Income Protection plan is so important. It is appropriate to anyone earning a salary, both the self-employed as well as other employees, regardless of their age or stage of life. With Income Protection you pay a monthly premium which is based on your occupation and the state of your health. This ensures that in the event of an accident or illness, which leaves you unable to work, the policy will pay you a regular income. As there are no restrictions on the type of injury, illness or disability that an income protection plan policy covers, you get complete peace of mind. Best of all, you get to choose and tailor an income protection plan that suits your individual circumstances, with a range of cover
types. What’s more, as your needs and circumstances change, you can adapt your income protection policy to suit changes in your life. In general, we tend to be overly optimistic about how we would manage if we were unable to work due to illness or injury. We over-estimate sick pay arrangements and the support provided by the State. Some employers will cover sick pay for the first 6 months of illness, however, they are not obliged to. The State Illness benefit for 2009, is only just over €10,000 (for a single person) or €20,000 approx. for a family of four. And if you are self-employed you don’t even qualify for this. The reality for most people is that their level of “outgoings” either matches or exceeds their income. So, for a person who is no longer earning that income there will be a significantly negative impact on their lifestyle. But what can you do to protect your salary? We strongly recommend that Income Protection should form a core part of any financial plan.
CMCC Financial Solutions
If you review your finances in detail you’ll probably find enough money there to start a savings or investment plan which could make the effort really worthwhile at a later date.
FIVE STEPS TO FINANCIAL FITNESS
by Michelle Curley
their financial status may have changed. You should regularly review your loans to see if your circumstances would now enable you to pay back more per month and thus pay the loan back early, or even pay off the entire outstanding amount. You’d be surprised how much you can save in this way in terms of interest.
2. Clear credit cards and overdrafts to lighten the load
Everyone wishes that their personal finances were in better shape. The question is how and where to start? Because everyone’s circumstances are different, the solution will be different for each individual, but there are five basic steps that anyone can take right now. Some of these steps will have an immediate effect on your finances and some of them will have a longer term effect.
1. Work off those outstanding loans The majority of us have a need to borrow money, usually to finance a significant purchase such as a home or a car, or to pay college fees or to furnish or extend a house. Many people take out a loan and after a while forget about it even though
Credit cards and overdrafts are the easiest ways to borrow money, but they’re also the most expensive. Typically, the interest rate on a credit card will be between 15 - 20% while an overdraft rate might vary between 8-15%. Therefore if you pay off €1,000 on your credit card, you’ve saved up to €200 in annual interest at a stroke. Similarly, your bank charges you interest each time your current account is overdrawn and usually applies the charge to your quarterly banking fees, where you may not notice it. Get your overdraft down and you’ll see your bank charges fall too.
3. Think ahead by starting a pension You might think that starting a pension is going to cost you money, but the truth about pensions is that not only will you be setting money aside to spend and enjoy later on, but you will also receive tax relief on contributions paid to your pension plan. Refer to page 3 for more information on the reliefs available.
4. Your money works harder when you save or invest If you review your finances in detail you’ll probably find enough money there to start a savings or investment plan which could make the effort really worthwhile at a later date. There are now so many saving and investment products on the market that you’re bound to find one that suits your circumstances and fits your financial ambitions: saving for a new car or a holiday, or investing for an early retirement or a second home. You can start saving or investing with a oneoff lump sum or with a smaller, regular amount. Whatever your preferences, starting a saving or investing plan is one of the smartest ways to get your money working harder for you.
5. Fast track your money on the stock market Few investments are quite so exciting or potentially rewarding as investing in the stock market. Because you are essentially a part-owner of a real company, you will feel a personal connection with its business fortunes. But the biggest appeal of all, of course, is the potential returns from investing in company shares. Not only can you get a periodic dividend payment (essentially a pro-rata share in the profits generated by the company) but there is also the prospect of a capital gain in the value of your shares. Over the medium to longer term, shares have proven to be best way of earning an investment return.
CMCC Financial Solutions
With Hibernian Aviva Health you can now get faster access to medical treatments and more medical facilities while making significant savings.
FREE FINANCIAL GET BETTER HEALTH CHECK HEALTHCARE FOR LESS FROM HIBERNIAN AVIVA HEALTH Benefits
At CMCC Financial Solutions we provide a free and confidential Financial Health Check covering areas such as Pensions, Life Cover, Income Protection, Mortgages and Savings & Investment Opportunities.
Following the launch of a new suite of health insurance plans by Hibernian Aviva Health you can now get faster access to medical treatments and more medical facilities while making significant savings. Offering savings of up to €190 for individuals and up to €455 for families, the new Hibernian Aviva Health plans provide a real choice without compromising on benefits, access or value.
The new plans focus cover on core healthcare requirements such as quick access to day case procedures like colonoscopy and cover for cardiac and cancer care. The plans have been built to guarantee policy holder’s better benefits compared to any other insurer, access to more hospitals, scan and treatment centres and all at better value compared to that on offer from other health insurers.
• • • • •
Completely free of charge and confidential Advice from a qualified financial adviser No obligation to purchase We’ll meet you when and where it suits you best Its quick, a full review will take just one hour
CMCC Financial Solutions Free Draw
All Hibernian Aviva Health plans include: • Access to high tech hospitals, such as the Mater Private, for listed cardiac procedures and some of the latest advances in cancer care • 24 hour access to nurse-on-call service • Access to the widest range of approved treatment centre’s for out-patient PET CT, MRI and CT scans. (46 Hibernian Aviva Health, 24 VHI, 20 Quinn) Hibernian Aviva Health predicts that switching in health insurance will become the norm this year as consumers realise that moving health insurer is easier than switching their electricity or phone supplier. With just one simple phone call you can be covered immediately. See how much you could save by switching to Hibernian Aviva Health: Hibernian Aviva Health
Please include your name and contact details. Closing date for all e-mails is 02nd of October 2009. Winner will be announced in the next edition. Good Luck!!
(Plan B Option)
TO BOOK AN APPOINTMENT
€900 €190 €2,520 €455
(Level 2 Hospital)
Adult Annual Premium Saving Per Adult Family Annual Premium Saving Per Family
HOW TO ENTER: To enter our free draw for a fabulous weekend away in the luxurious 5 Star Dromoland Castle, all you have to do it either: 1) E-mail us at firstname.lastname@example.org and indicate your wish to avail of our complimentary Financial Health Check OR 2) E-mail email@example.com and refer a friend/colleague to receive a copy of our newsletter and we will enter you BOTH in our draw.
All prices are net of tax relief at source at the standard rate, age related tax credits and are correct at time of going to print August 2009. Hibernian Aviva Health and VHI Prices include 10% group discount. Family quote is based on 2 adults, 2 children and 1 student.
Dublin Office: Arena House Arena Road Sandyford Dublin 18. Tel: + 353 1 2130733
*€455 saving is based on the price differential between Hibernian Aviva Health Level 2 Hospital and VHI Plan B Option for a family of two adults, two children and one student.
CMCC Financial Solutions is regulated by The Financial Regulator
Galway Office: 2 The Friary Main Street Headford Co. Galway. Tel: + 353 93 34033