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Informed Decisions Independent Financial Planning & Money Podcast

If you are looking for Independent voice on Investing, Retirement Planning & Financial Planning Podcast in Ireland, you may have just found it! Join me, Paddy Delaney as we talk straight and steer you towards a better financial future. Take control of your financial future and develop successful habits with your money. Join Paddy Delaney on Ireland's award-winning Personal Finance & Financial Planning Podcast & Blog. He aims to cuts through the sometimes confusing jargon of financial products and services, to help you make informed financial decisions, for you........No nonsense, straight up fact, and a little bit of a laugh at the same time! The Podcast is on a mission to enable it's listeners provide themselves with better financial futures, and ultimately to make a positive difference in the lives of listeners. Thanks so much for checking out the show! You can get in touch by email: admin@informeddecisions.ie Paddy Delaney Qualified Financial Advisor Qualified Retirement Planning Advisor Qualified General Insurance Practitioner Qualified Executive Coach
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Now displaying: 2017
Jun 25, 2017

PCP ('Phencyclidine' - not sure how that is pronounced!) was introduced in the 1950's as an anesthetic but was shelved in the 60's due to it's potentially lethal hallucinogenic effects. It was this hallucinogenic effect that made it so popular with recreational drug users and they have been producing it under the title of 'Angel Dust' since! It's chocka with Ketamine and apparently is the bees-knees if that is your idea of fun!

Another PCP, Personal Finance Plans, are on the scene now! This and other forms of consumer borrowing have rocketed in recent years, with experts saying the access to these loans is driving the new-car sales figures hugely, almost to hallucinogenic levels!

New Car Sales Figures for 2016:

Ireland 150,000

UK 2.7million

USA 17.5million

We love cars here at Informed Decisions, we don't necessarily spend lots of money on them however! We did a blog and podcast a while back to shed light on the true cost of cars, this proved really popular with many of you. We don't mean to suggest we have anything against cars, nor PCP Finance, but we do believe we should all understand the impact of what we are doing, so lets do the same with PCP Finance.

Before all that please do pop over here to find out why we exist, what our purpose is and why we are Ireland's first Financial Planning & Money Podcast. If you are looking for info on how to save or invest, protect your income, replace it when you retire or how you spend it in the meantime then this site is a useful resource here in Ireland! Also, if you have any questions or comments we'd love to hear from you, just drop a message to us here.

What is PCP Finance?

In Ireland, all we see to care about is mortgages, any time we have mortgages mentioned in our blogs/podcasts they are always the most listened to and most downloaded episodes, we just can't get enough of that wonderful stuff!

As always on this site we try to take a different view of things in order to help make it more practical and accessible to all, so we are going to 'mortgagise' PCP finance to try and make sense of it all!

To achieve this we will deep-dive PCP Finance, we will replace PCP Finance with 'mortgage' and 'car' with 'house'! See how you like that!

How Does PCP Work?

Most people have a good sense of it at this stage but let's have a brief over-view before we look at the figures. If you are thinking of buying a new house you can do so via PCP contract in your local dealer (pardon the pun!!). You select your house, pay a deposit in the form of cash or a trade-in house. You agree to a certain monthly payment for a certain period of time, typically between 3 and 5 years. At this stage you also agree the Guaranteed Minimum Future Value (GMFV), which is the final and largest payment you need to make in order to own the car at the end. This figure is based on the mileage, condition and estimate the dealer puts on the future value of the car after the 3-5 years.

What Happens At The End of The PCP Contract?

If you want to actually own the house at the end of the contract you must pay the GMFV as well as any 'completion' fees that may exist on the contract (you don't own it until you pay this by the way!).

Another option at the end is to hand back the house and walk away (where you would be walking to is another issue). Be aware that if the house isn't in agreed condition and wear & tear as set out at beginning of the contact then you may be subject to more fees.

The 3rd option is to roll into another PCP contract. The deposit you paid on the first house is not carried into the next contract, that's been and gone! If the actual market value of the house at the end is greater than the GMFV then you may have some equity to put to the new house you are looking at.

So that's a 'mortgagised' view of PCP contracts here in Ireland. Fairly straight-forward and sounds pretty simple. And we must try to remember that that is exactly how the dealer wants you to perceive it, the simper the better as more of us are likely to buy the produce!

How do the Financials of PCP Finance work in Ireland?

If you google 'PCP Quote' the first search is the Competition & Consumer Protection Commission This is a crackingly useful (not sure that's a word!) site with lots of information for us consumers to inform ourselves, worth checking out.

The next few are car manufacturers offering you the option to quote yourself for PCP. Having done this it still seems pretty easy and straight-forward, as they want it to be!

Let's take an example of a Hyundai i40 Tourer. A decent car by all accounts. There is an 'Executive' version of this 'house' for just over €29k, this is the base model of this house, so why it's called executive is a wonder. Seems a reasonable buy though, decent mileage and service etc.

Based on the illustrations on their site (and the rest are similar btw!), if you have cash deposit or a house to the trade-in value of €10k then you could be 'eligible' to 'qualify' for their PCP package! Yeah, congratulations! You could select the 2 to 4 year package, let's say you opt for the 3 year package to try get it paid off sooner rather than later. So you are in the house and all for €10k. Not so bad......

Your payments will be fixed at approximately €300 per month, based on a rate of 5.9%. You decide that this, along with the mortgage and the child-minding and whatever other expenses you have, is just about manageable to you.

The GMFV agreed (based on doing no more than 15,000kms per year) is just over €11,000 in 3 years time. That is what the dealer is telling you it will be worth in 3 years time provided the wear & tear is average and that the mileage is as predicted.

If this really were a house you are agreeing to pay a deposit of 30%, then agree to pay 6% interest on the repayments, which are over 3 years, and that the value of the house is going to fall from €29,000 to €11,000 in that 3 years, at which point you will then exercise one of the three options outlined above......really!!!??

You can the pay the €11,000 to own the house You can hand back the keys and walk away (provided it is in good nick). Or, you can trade it in against another house and pop some more PCP into you!

And therein lies the nugget here. PCP really is a bit like the drug in that once we get on it we may find it hard to get off it! What it does do is help us to really easily hallucinate and forget about the depreciation we are paying over the term. That amounts to €20,000 in this example, over 3 years.

If it was a house we just wouldn't buy it, PCP or no PCP! Who buys a large asset which will cost you €20,000 over a 3 years period, in depreciation alone!? It seems that lots of us do, that lots of us see the simplicity, see the easily manageable monthly payments, see the easily achievable max mileage and forget about the largest yet least obvious cost. Stop hallucinating!

Is PCP an illegal or unethical product? We don't think so, but we do think you need to know what they hell you are doing!

But hey, that is what makes the area of our behaviours, biases and what some would call our predictable irrationality around money so interesting!! You have the information now, what will you do with it?

Please share this article and check out the podcast while you're at it!

Thanks so much for listening. You're a legend.

Paddy Delaney

QFA | RPA | APA

 

 

 

 

Jun 19, 2017

Welcome to Episode #41 of the Informed Decisions Financial Planning Podcast, still the only dedicated resource here in Ireland.

In this episode Paddy speaks with Stephen Browne, who is owner and distributor of Voyant here in Ireland. There are several providers of this type of software for Financial Advisors and Planners, such as Truth, however Voyant is a leading player in the Financial Planning/ Financial Forecasting Software industry.

Stephen shares insights with listeners on what is it, what it does and importantly how financial panning software might benefit you in the long run.

While the software is generally only used by Planners, for their clients, here is a link to Voyant Ireland's website if you want to check it out.

Thanks for sharing...

Paddy Delaney

QFA | RPA | Qualified Coach

 

 

Jun 11, 2017

Last week we explored what will happen when the next crash comes......and importantly how we will react. It is the volatility of things which causes us to react, not the risk!

Volatility is not risk, risk is not volatility. I'm not trying to be profound (it's not one of my strengths!). In today's world the two are thrown together, interchanged in conversations, media and advertising, yet they are 2 completely different things. It's sort of like interchanging chalk and cheese in conversation:

Hey, did any of you students take the cheese I was using to write on this black-board? (showing my age there!)
Hey, would you like chalk on your ham & turkey sandwich?

Makes no sense, just as it doesn't to mix risk and volatility, yet we all do it, and I am as guilty as the next fella/gal!

Now this may help some of you, and it may not help, yet it is a critical aspect of retirement planning, pensions, investing and savings of any sort here in Ireland, it is vital to understand the difference between the 2, particularly if you want to make informed money decisions...speaking of which please do pop over here to find out why we exist, what our purpose is and why we are Ireland's first Financial Planning & Money Podcast. Also, if you have any questions or comments we'd love to hear from you, just drop a message to us here.

Jun 6, 2017

Regular readers & listeners will by now know that Informed Decisions isn't in the space of trying to predict the markets, we leave that to the fortune-tellers of this world!

We don't see any benefit in dissecting the daily news-feed and trying to interpret what that means for our investments, pensions, property prices etc. Nobody can do that with any degree of accuracy. Also, what difference does it make if the price of something which you intend holding for 10, 20, 30 or 40 years fluctuates by 0.1 or 1% this week??

And that is what this week's shortish blog is out to address, our human inclination to do something stupid at the absolute wrong time! It will be a real test of our Financial Planning here in Ireland, so listen to this podcast episode to be as well prepared as possible not to do the wrong thing when that time comes!!

Thanks for listening and sharing.

Paddy Delaney

QFA | RPA | APA | Qualified Coach

May 28, 2017

We were humbled to have been contacted by the Irish Times a few weeks ago and asked for our opinion on life cover for an article by journalist Eithne Dunne, published in the Sunday Times on 21st May.

We wholeheartedly gave our 'tuppence-worth' on some of the things we believe are important to consider when selecting Life Cover for yourself. However it also dawned on me how big a problem exists with regards Life Cover, so we are out to quash that problem right here and right now.........in a second!

Firstly, if you are a new visitor to Informed Decisions, welcome, and have a quick look over here to find out what we are all about & why we exist! We are on a mission to bring practical financial planning & personal finance to Ireland's millennials. If not, welcome back to Ireland's only dedicated Money & Financial Planning Podcast!

What's The Big Problem!?

Life Cover, it's a product (of many sorts!) and as someone recently said to me 'everyone and their Granny sells it'. The commissions paid to the intermediaries and agents who sell it can be pretty rewarding for them. So, do intermediaries and agents be they online or face-to-face make money if you buy Life Cover from them? Of course they do! As do people from whom you buy tanning lotion, cars, carpets, jewellery, cat milk, holidays, lawnmowers, home insurance, windows, taxis, shoes and every other consumable item or service on this planet!

However it is the fact that people make money from selling it that we believe leads to a wholesale dislike and general apathy to this form of 'insurance'! And this is a problem ( oh by the way I was recently told by a reputable source that it is actually OK to start a sentence with the word 'and'!). Consumers are often therefore also sceptical of the benefits and their potential need for Life Cover, and not knowing who to trust! We may all have heard someone (or ourselves) say 'sure yer man/ yer wan was trying to sell me bloody life cover, sure I don't need that stuff, a racket!'.

Maybe you do, maybe you don't but please don't let a sceptical view be a barrier to a potentially life-changing product for your heirs! In this episode we are going to  address this problem, we are going to outline how to figure out for yourself if you actually need any Life Cover, presenting purely facts, and you decide for yourself if you need to buy some or not, and also how much Life Cover to buy if you do decide you need some!

I remember almost 10 years ago when meeting a client who insisted that he did not need Life Cover (despite having 5 kids and a wife whom were all relying on his salary!), when I probed he advised it was because "he was not going to die, ever", and he wasn't joking. That's a separate issue and not sure it's one I can address in this blog!!!

May 19, 2017

Many of us have heard of psychology, many of us have heard of positivity, yet not many of us have heard of Positive Psychology, which is an emerging science in and of itself. That's why we are bringing it to you, and looking at how we can utilise it in managing our finances.

In this episode we are delighted to host Dr. Jolanta Burke, a Doctor of Positive Psychology, a visiting Professor in Trinity College's School of Psychology, and a Senior Lecturer in School of Psychology, University of East London. Whether you are considering your budgets, planning for retirement, planning on buying life cover, or indeed nurturing your kids there is something of note in this episode!

If you are a new visitor to Informed Decisions, please have a quick look over here to find out what we are all about & why we exist! We are on a mission to help normal Irish people with practical financial planning & personal finance info. If not, welcome back to Ireland's only dedicated Money & Financial Planning Podcast!

Thanks for checking it out, if you find it any way useful please share it or review it!

Thanks,

Paddy Delaney

RPA | QFA | APA | Qualified Coach

May 14, 2017

Apparently 66% of the 70,000 'landlords' in Ireland own 1 investment property. Surely you don't want to look a gift horse in the mouth, you want to be one of these?

"Sure property prices are climbing, you'd be mad not to own at least one investment property". You buy the place and rent it out so that someone else can pay the mortgage for you, job done! Right?! Seems not long ago when this was the regular 'pub talk', however it is over 10 years ago now, and that talk is coming back (to a degree!). For a long time a bank would ring the Gardai if you went in and asked for a 'buy to let' mortgage (a loan to buy an investment property which you would rent out). They have softened, and are actually advertising these again, just google it!

Now before we jump in it's worth noting that there is a large % of our generation who are making ends meet, putting kids into creches, working hard, and paying the bills, maybe stashing a few quid each month for future and for rainy days. For this % of us a buy to let is not on the radar at all.

Having said that there are also a fair % of our generation who have quite a bit of disposable (spare) income each month, their income may be comparatively high or their outgoings comparatively low, or indeed a mixture of both (if you are really fortunate!). It is this % that may be sniffing at the idea of buying another property or moving out of their home, renting it out and buying another.

Considering a mortgage for an investment property in Ireland? In this episode we will share with you the maths behind mortgaged investment property ownership, so you can make your own mind up on whether it is for you or not! And that is the point isn't it, in owning investment property, it must be in order to try achieve some form of financial gain, otherwise why would you even consider such an investment (unless you fell into it by accident of course!).

If you are a new visitor to Informed Decisions, have a quick look over here to find out what we are all about & why we exist! We are on a mission to bring practical financial planning & personal finance to Ireland's millennials. If not, welcome back to Ireland's only dedicated Money & Financial Planning Podcast!

May 8, 2017

We all know that money is not the be all and end all.....most of us appreciate that there is more to life and more to being a decent human. We might also recognise that living a fulfilled life is not about having full bank accounts, but it sure does help to have sufficient money to make your own decisions and live the life you want!

As parents we are naturally wired to try and create positive futures for our children, that probably why we care so much, right!? As part of that for some parents it will come naturally to instill an element of financial awareness and sense into our kids, and to maybe ensure they are a bit better able to manage money than we are! This episode is going to explore just a few ways of doing that, some you may have considered and some not......including a little bit about Andy Dufresne!

Thanks for reading, don't forget to drop me a mail at if you fancy a copy of that Excel sheet mentioned in this episode.

Thanks for tuning in.

Paddy Delaney

QFA | RPA | APA | Qualified Coach

May 1, 2017

Hi All,

Why Is My Defined Benefit Scheme Closing?

What Should I Do About My Defined Benefit Scheme Closing?

What Income Will I Now Have in Retirement?

In this episode we empathise whole-heartedly, then delve and explore the options available to the many many thousands of employees who have 'lost' their Defined Benefit Pension Schemes in recent times. We go about answering the above questions. All is not lost!

Most 'normal people' out there (with the exception of financial nerds & indeed yours truly until I started working in this area 12 years ago!) have no more interest in Defined Benefit and Defined Contribution schemes than the man on the moon! It's sort of like saying to your mate, 'you know, the price of beef in Kilkenny Mart today jumped from €3.60 per kilo to €4.05 per kilo in the space of an hour!!', not really that interesting or relevant to most of us, unless of course your mate is a beef farmer! If you know of anyone who is losing or has lost their DB scheme please do them a favour and pass this on.

Thanks,

Paddy Delaney

QFA | RPA | Coach

Apr 23, 2017

Risk. The Oxford Dictionary defines risk as 'the possibility of something unpleasant or unwelcoming happening'! It is therefore not a word which most of us are that much inclined towards.

There are many forms of risk which many of us don't really think of until it happens! In this episode we will unearth these risks, and indeed share ideas on what one can do to manage them (if possible!).

On a related but separate note we are delighted to tell you that we have written & launched our first ever quick-guide resource for you guys!

This was based on your feedback to our Financial Planning in Ireland Survey a few short months ago. We want you to download your own complimentary copy of the '4 Principles Guide' to Investment Success; simply click the pop-up or head over here and add your email, we'll mail it directly to you, for keeps, at no charge at all........limited time offer!

 

Flick over to the written version if you prefer to read this episode!

Thanks,

 

Paddy.

 

QFA | RPA | Qualified Coach

 

Apr 17, 2017

Some of us (yours truly included!) have been accused in the past of putting remuneration before romance! As if!! Many of us may be planning on 'going down the aisle' in the coming years or have done so in recent years, this is for you! Why? There is little doubt that clarity around how this impacts on our taxes is not that easily got, until now of course!

What is the best way to manage my taxes in Marriage/Civil Partnership?

What is the impact of Civil Partnership/Marriage on my Taxes?

All answered here on Ireland's only dedicated Financial Planning resource for millennials.

Before we begin, if you are new here please do check out this section to find out why Informed Decisions exists and what we are doing for our generation.

This episode (read the blog version here) will aim to share with you the impact of marriage on your tax assessment, what that means in money terms, and what your options are to maximise any opportunities which arise (from a financial perspective obviously!). If you haven't already then do check out Blog #28 where we shared the basics of Income Tax......a lot of this episode will make zero sense if not!

Please share and help some others out, they might buy you a drink!

If you haven't then do make sure to join our mailing list here, you'd be mad not to!

You're a Legend,

Paddy Delaney

QFA | RPA | Qualified Coach

Apr 10, 2017

Welcome to Episode 31 of The Informed Decisions Financial Planning Podcast.

This Podcast Episode took all of my efforts, Tax is not a subject I especially enjoy but you are worth it!

In this episode we explore how Income Tax works, what other tax is generally taken at source, and how to manage the levels of tax we pay. when we approach out Financial Planning in Ireland it can be so important to ensure we are paying the right amounts, and no more!

You can check out the full written version of this show here.

We are aiming to have all regular visitors to join our mailing list. If you are not on it please do so here. Email & first name is all we ask and we will send you a weekly exclusive update on what's happening at Informed Decisions.

You're a legend!

Paddy Delaney

QFA, RPA, APA, Qualified Coach.

Mar 31, 2017

Welcome to Episode 30 of The Informed Decisions Financial Planning Podcast.

In this episode I am going to open the can on Financial Advice full stop! I am going to outline why you don't need any initially, and how you can help yourself.

For the past 2 weeks our Podcast featured Dr. Daniel Crosby and discussed how we can enable ourselves to make more informed money decisions. One of his key principles was that 'we cant do this alone'. In this he outlined that all the research goes to support the idea that as investors we will do a lot better if we have the guidance of a competent financial advisor/coach. This point also related to the management of ones funds.

However on this show we are also conscious that a lot of us won't yet have accumulated large assets/investments, and that is who we are supporting in this weeks' episode.

You can check out the full written version of this show here.

We are aiming to have all regular visitors to join our mailing list. If you are not on it please do so here. Email & first name is all we ask and we will send you a weekly exclusive update on what's happening at Informed Decisions.

You're a legend!

Paddy Delaney

 

Mar 27, 2017

Welcome to the latest Podcast in Ireland's only dedicated resource on Financial Planning for millennials. In this episode we bring you Part 2 of the Dr. Daniel Crosby Interview (New York Times Best-Seller might I add!) as well as the results of our Annual Listener Survey. I promise to be as concise as is feasible!

If you are a new visitor to Informed Decisions, have a quick look over here to find out what we are all about and why this blog & podcast exists in Ireland. If not, welcome back! As always, you can check out our Podcast, Ireland's only dedicated Personal Finance & Financial Planning Podcast for millennials.

Thanks for checking us out!

Paddy Delaney

QFA, RPA, APA, BBS, Qualified Coach

 

Mar 15, 2017

It is not too often that we get to speak to a New Your Times Best Seller, so we are so chuffed to speak to Dr. Daniel Crosby, a specialist in Behavioural Finance. If this term is new to you then you are in for a treat. If you are familiar with it you are also in for a treat!

Join Paddy on Part 1 of this special interview to learn his fully researched strategies for managing your financial decisions for maximum results.

If you have not then you really need to join our exclusive mailing list here!

You can find Daniel's book here.

Thanks so much for tuning in and sharing what is Ireland's only dedicated personal finance and financial planning podcast.

Paddy Delaney

(QFA, RPA, BBS, APA & Qualified Coach!)

 

 

Mar 13, 2017

In this episode Paddy follows up on last week's show and shares the main ways of saving for education. Importantly it will highlight the main pros and cons of each and give you a sense of realistic growth expectations from each. If you would like to see the blog version of this episode you can get it here.

If you are a new visitor to Informed Decisions, have a quick look over here to find out what we are all about. As always, you can check out our other episodes in Ireland's only dedicated Personal Finance & Financial Planning Podcast.

If you have found this piece of any benefit whatsoever we would be super chuffed if you would share it with someone you know who might be in the same boat as you.......and of course make sure you join our exclusive weekly mailing list here. Ah Go On, do it here....

You're a Legend!

Paddy Delaney

Informed Decisions Financial Planning

Mar 4, 2017

 

In this episode Paddy shares the main costs of education so you can begin planning, but importantly will open your eyes as to 'how' to achieve the fund necessary to cover such costs! In Part 1 we share illustrations to show you what is involved in getting to your goal. Part 2 (next week) will delve into the pro's and con's of the different products and avenues available. If you would like to see the blog version of this episode you can get it here.

If you are a new visitor to Informed Decisions, have a quick look over here to find out what we are all about. As always, you can check out our other episodes in Ireland's only dedicated Personal Finance & Financial Planning Podcast.

If you have found this piece of any benefit whatsoever we would be super chuffed if you would share it with someone you know who might be in the same boat as you.......and of course make sure you join our exclusive weekly mailing list here. Ah Go On, do it here....

You're a Legend!

Paddy Delaney

Informed Decisions Financial Planning

Feb 27, 2017

Hi,

Welcome Back!

It was in my 'schedule of topics to blog about' and it seems it is timely as in the past 3 weeks only I have been asked about the above topic on 3 different occasions. In addition to that my present wife & I have just returned from a weekend city break to UK, and there is no doubt that flashing the oul' Credit Card around the place is an easy pit to fall into, hence the reason I don't currently operate a Credit Card (& hence why I use the term present wife!!).

The 3 people I have chatted to about the issue of Credit Cards in the past few weeks all have or have recently had fairly sizeable amounts owing on their cards, and all for various reasons. One was to pay day to day bills on a 1-income household and to tie them over till pay-day, another was an accumulation of expenses for house furniture and electronics, and the other was a big blow-out holiday last year. Each of them were really aware of the debt, however what was surprising was that two of the individuals were paying the minimum monthly payment only, and not making a concerted effort to clear the actual loan. Upon speaking to them this was not due to an inability to repay the debt but a lack of awareness of the cost of the debt. We are out to fix that in this week's Blog!

How Do Credit Cards Work?

Credit Cards may seem to many as a Celtic Tiger thing, when we over-indulged and purchased luxury items at a rate of knots and never bothered repaying them, only for the levels of personal unsecured debt to spiral out of control. They were, but they haven't gone away! Credit Cards are still a phenomenally profitable product for the providers, because for that very reason; many of us don't clear them each month and therefore pay really high interest on the balances and are exactly the type of customer which will generate very healthy profits for the providers. As outlined in our most popular Blog#3 we shared 5 basic principles in managing our finances, clearing debt and Credit Cards was one of them! So how not to do it?

The following are the steps involved in your being an ideal customer for a Credit Card provider:

  1. You Apply For Credit Card
  2. You Are Given Credit Card
  3. You Buy 'Stuff' On Credit Card
  4. You Repay The Minimum Repayment Amount Each Month (e.g. €10-€20 per month)
  5. You Are Charged The Maximum Interest On The Outstanding Balance (15-30%!)
  6. You Stay In This Pattern & Said Company Make Lots of Profit From You

If you were to follow steps 1, 2 & 3 however on step 4 you actually clear the balance the Credit Card provider will make next to nothing from your custom. Typically you can get between 30 and 60 days interest free credit on a Credit Card, which can be very handy! It is only when Credit Card users start coughing up the massive interest that the provider's gravy train rolls in!

The minimum repayment amount is a figure which will you are invited to repay on the card after a certain period of time of their being a balance outstanding on the card. Paying that amount will go nowhere near clearing your debt over a short period of time, typically it is a figure which will go towards paying the interest you owe at that point in time on the balance outstanding, plus fees. Therefore it is important to note that merely paying the minimum repayment amount is not in your best interests, if you can at all afford to pay more!

Why Get A Credit Card?

They are shocking handy! In the past they were particularly useful when we did not have Visa Debit Cards or indeed didn't use cheque books (how many of us here every wrote a cheque I wonder!?) and you needed to make purchases for items such as travel expenses etc. They quickly became a really convenient form of on demand personal loan, which is where it can get dangerous. However in today's society of 'see it- want it- buy it' the Credit Card can be a way of getting what you want without having to save for it, which in my book (not an actual book, yet!) is a habit which will erode your savings capacity and future wealth massively.

Can I Get A Credit Card Now?

After a few years of silence we now see providers back in the market of issuing Credit Cards; we are being enticed with cash-back offers, discounts on grocery bills, complimentary travel insurance and low introductory rates. We will shortly get to the latter and how it can be of real assistance to you in managing your Credit Card balance. So yes, provided you have a reasonable income and a reasonably clear credit history most providers will be open to doing business with you.

The providers are not giving these incentives for your benefit, they are profitable products and generate lots of income for them because many of us (including yours truly before I saw the light!) are often quick to purchase and slow to repay, a Credit Card provider's dream!

What Is My Credit Card Costing Me?

Every Credit Card attracts a €30 Stamp Duty fee per annum, no avoiding that one, unless you don't have one! We will run through an example of the cost of having a credit card and the interest payable on it, for illustration.

Credit Card Balance Outstanding €5,000

Rate of Interest is 23%

If you are paying €120 per month you might think that you are making progress, however it will take approximately 7 years to repay the €5,000 (assuming you cut up the card now and make no more purchases!). 7 years! Totaling just over €10,000 in repayments, €10,000!

If you decide you can pay more and repay €200 per month, you will have €5,000 cleared in just under 3 years time, a much much shorter period of time, and a much much lower amount of interest. Total Repayment of €6,900 approx. It is still a very saucy amount of interest, the typical rates of interest of 18-25% are really high and even over 3 years as above on a smallish amount can be quite difficult to stomach.

Should I Clear My Credit Card As Early As Possible?

Eh, yes! If you have the means to do so immediately then it can be a very prudent thing to do. Say you have €5,000 in the bank, and you have a €5,000 credit card debt it makes a lot of financial sense to clear that debt, and then start building your emergency, retirement, education funds etc thereafter. Purely on the basis of the prohibitive cost of the Credit Card.

Is There Another Way To Clear My Credit More Effectively?

Yes, potentially. There are 2 angles to tackle this from. The first is the good old fashioned 'ask for a discount' approach. It has been known to work in the past. If you contact your provider and ask them to reduce the rate on your outstanding balance, they may just do it!

Secondly, I mentioned above that many providers offer an introductory discounted rate, and indeed most offer 0% balance transfers. Essentially what that means is that once your are granted the card you can transfer your outstanding balance from the old card to the new card and not pay any interest on that for a period of typically 6 months. This allows you the opportunity to really pay off the actual loan of €5,000 and not just interest.

If you were to do this, and even if you don't get a better rate than the illustrated 23% on your existing card it can have a massively positive impact on the time it takes to clear the debt (again assuming you cut up the card on receipt of it so you don't use it!).

In the above example your €120 would have this new card cleared in just over 5 years instead of 7 years. Might not sound earth shattering however that is a saving of  €2,800 approx, on a debt of €5,000. Massive!

In the case of the €200 monthly payment example you would have your debt cleared in less than 2 and a half years instead of 2 years 11 months, which is a saving of €1,200 on a €5,000 debt!

I was delighted to hear in one of the cases at the start of this piece that the couple who were telling me about their need to use the Credit Card to tie them over till pay-day have managed to clear their Credit Card debt, it is a financial as well as emotional weight lifted and allows them to focus on managing their money in a proactive way and to plan for some family events and milestones which are very close to their hearts, so well done to you guys down in Limerick, you know who you are!

As always I need your help and support in spreading the Informed Decisions word so please do share this with anyone who you believe may benefit from the information, and if you have yet to please do take the 4 minutes involved in completing the Annual Informed Decisions Survey.

Many thanks for your interest and for sharing the love.

Paddy.

 

 

 

 

 

 

Feb 20, 2017

Hi All,

This week we are sharing something a little 'off topic'!

I have been looking for an opportunity to donate this year, so for every completed Informed Decisions Survey in the next 6 days I will donate €1 to Irish Cancer Society. Given that I am doing all 'this' at no monetary gain I need to cap this at €200, so please help me get to that mark.....share it like there's no tomorrow!

Six months after the very first Informed Decisions Podcast it probably is a good idea to check-in with you 'regulars' and provide a bit of an update on how this little website is progressing! I am also reaching out to you and seeking your help; with an important invitation for you to have your say on the shape and format of Informed Decisions via a short but important anonymous Survey/Questionnaire!

If you have got any value from us in the past 6 months we would really appreciate your time (4 minutes!) in completing this and having your say. It will allow us to identify a broad profile of who is listening & reading, and importantly your preferences. Ultimately it will ensure we provide information and tips which you want! How novel an idea is that!?!

If you would prefer to jump straight to the Questionnaire you can please do so on this page here. If you would like to know a bit more about the website, how it started & how it is getting on then keep reading...............

How Did It Begin?

December 2015 during the Christmas Break I took it upon myself to start writing on the LinkedIn blog platform 'Pulse', just as a little exercise in creativity. I have a deep interest in all aspects of money management and Financial Planning and was quite fond of writing, so it was a natural thing to do! Another catalyst was that so many of my own circle of friends have a self-declared lack of interest or knowledge in this space, so I knew it would be a help to my own generation (millennials!). The feedback from these initial articles were positive, and I really enjoyed the process of creating the pieces. I was hooked!

After a bit of consideration I decided then to go about starting my own blog, one which I could manage myself instead of it being owned by LinkedIn. As you know I work full-time as a Financial Service Trainer so I approached my employer to confirm there would be no conflict of interest in me doing so. They were most generous in giving it their thumbs-up and wishing me every success, provided I clearly expressed that my views were my own, naturally enough. The scene was set! After much research and procrastination the website www.informeddecisions.ie went live in April 2016.

"What keeps me going are my original motivations; to support my fellow millennials with making informed money decisions, to exercise a creative muscle and to ultimately to make a positive difference."

Where Did The Podcast Come From?

Podcasts in the Financial Planning & Personal Finance space are rare, even in much larger countries like UK, almost like hen's teeth! They require a lot of unseen preparation and are notoriously difficult to get audiences so that probably explains why there was none in Ireland until Informed Decisions Personal Finance Podcast. Producing a Podcast seemed like a major stretch of my imagination in April 2016 but I researched the idea over the following months, and with the support of some great folks in the UK and here in Ireland it started to come to fruition. In early August we launched our first podcast, which was an exciting time for Informed Decisions, an achievement of a once galactic goal! What I have found is that I have learned so so much about an awful lot in the process, so it has been win win really.

Where Are We At Now?

Well the iTunes reviews have started coming in and the feedback has been really positive. Please do check it out here and feel free to add your own iTunes review if you are using it and feel this site has been of benefit to you here.

Writing a Blog & Podcast each week takes consistent effort which was not always my most obvious strength! Both from a research, planning and indeed writing & recording perspective there is lots to consider, not to mention the computer side of things! What keeps me going are my original motivations; to support fellow millennials with making informed money decisions, to exercise a creative muscle and to ultimately to make a positive difference.

I heard a quote recently from Shane Mulhall (RIP) of The School of Philosophy which really resonates with me "Do for the joy of doing, not for the purpose of advancement". I hope that doesn't sound too waffly but that sums up Informed Decisions pretty nicely. I am enjoying it and the feedback and value others are getting from it is real, so again it's a win-win!

Speaking of feedback, we have received lots or really positive comments from readers of the Blog and Podcast listeners. People have got in touch to say that as a result of it they have been able to take proactive action with regards to their budgeting, retirement planning, protection, goal setting etc. This makes it worthwhile for me personally.

It was not something that I had kept an eye on at all but I was recently told that the Podcast was in the Top 20 in iTunes Chart in it's category! Top 20!! I was dumb-founded and obviously thrilled to see that the word was spreading and more and more people all over the country are benefiting from it.

What Does The Future Hold?

Who knows! Many folks have asked me am I going to turn it into a business and will I do x,y or z. To be completely frank I really enjoy my role as a Trainer, and I really enjoy Informed Decisions, so for as long as both sensibly co-exist I am delighted to do both! As long as you continue to get benefit from the site, blog and podcast I will keep producing it.

My Ask Of You?

We have no way of identifying the broad profile of you, those who are actually listening or reading, nor have we any sense as to what you guys actually want from us. Therefore I have created what I hope is an attractive and quick questionnaire which gives you the opportunity to input into what we are doing and how we do it. We will compile & share the findings (anonymously obviously!) once we have sufficient responses to it. So do it now (please)!!

If you have got any value from this website then we would be so appreciative of your participation. Click here or click the image below to get stuck in.

Thanks so Much.

Paddy

 

 

Feb 13, 2017

Hi,

Firstly, thanks for joining us! If you are a new visitor to Informed Decisions, have a quick look over here to find out what we are all about. If not, welcome back to Ireland's only dedicated Personal Finance & Financial Planning Podcast!

Everyone has been told to do one, but 'why & how' needs to be answered first! Join Paddy as he demystifies the topic in this 16 minute audio show....

Thanks for sharing and spreading the love, the message is getting out there. Thank You.

If you prefer to read this episode then please do check out Blog #21.

Cheers,

Paddy Delaney

 

 

 

 

 

Feb 3, 2017

Hi,

A pretty influential insurance 'evangelist', Hesus Inoma is founder & CEO of WeSavvy, a Dublin-based start-up in the process of reshaping how we engage and manage our insurances.

If you have ever gotten a Health, Home or Motor Insurance renewal letter in the post or via email you will know it is not always the most rewarding experience!

WeSavvy is working to forge the future of how consumers interact with their Insurances, get rewarded and essentially earn cash-back by living healthy life-styles.

Thanks to Hesus for his time and sharing what he sees as the future of Insurance across the globe.

Thanks to you too for tuning-in!

Paddy Delaney.

You can join the WeSavvy movement at www.wesavvy.com

 

Jan 29, 2017

Hi, and thanks for popping in to listen to this weeks' Episode, which promises to be an interesting one for anyone who owns a car (so that represents the vast majority of us!). If you are new here please do check out this page, which will tell you a little about why this project exists and what it's aiming to do for you. Episode 21 is here:

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While some would argue that the cost of running a car hardly qualifies as a Financial Planning topic, I would beg to differ. Seeing as many of us possess one for the duration of our adult lives our choice of car represents a significant life long investment. What I am hoping to uncover is exactly how much they cost and what if any differences there are in buying a 'newish' car versus an older car!

Some of you at this point will hit the red 'x' in the top right hand corner, you like your cars, you don't care what they cost you, provided you can afford to have a 'nice' car you will continue to do so irrespective of the financial costs. I respect that, hit the red 'x', but might do you no harm to see what it is actually costing!

In the interest of being up front I will state that even before we look at the figures I have always had a strong bias towards owning older cars (6-10 years old) where the largest depreciation costs have been absorbed by a previous owner, however I am always open to correction, so lets see which option is the more informed from a  financial perspective!

Assumptions:

For the purpose of this exercise I based my findings on 2 family sized cars. The 'newish' car is a 2013 Volkswagen Passat 1.6 Diesel from a dealer, with 62k miles on the clock costing €20,450- listed on Carzone.ie at time of the research.

The 'old' car for the purposes of this exercise is a 2007 Ford Mondeo, 1.8 Diesel, 90k miles on the clock costing €4,700 from a dealer, again it's listed on Carzone.ie at time of research.

Our exercise will assume we hold the car for 3 years, before changing it again for another car. Mileage assumed at 13,000 miles per annum.

The Cost of Owning a 'Newish' Car for 3 years:

  1. Depreciation: €12,450 - Buy it for €20,450. Based on the research when you go to sell a car of this type in 3 years, assuming average mileage and it being well maintained, you will get approximately €8,000. Irrespective of selling it privately or trading it in this is the approximate value achieved (even VW which historically hold value reasonably well).
  2. Fuel Cost: €4,029 - This modern car will give approximately 55 miles per gallon on average. www.honestjohn.co.uk is a great website for honest mileage numbers. Using a diesel price of €1.25 per litre, and traveling 13,000 miles per annum, that's the cost over the 3 years!
  3. Motor Tax: €570 - As a post-2008 car, with relatively low emissions of 109g/km motor tax will set ou back €190 per annum
  4. Maintenance: €1,200 - This assumes carrying out 1 annual service and changing 2 tyres per annum, with no other major outlay on this relatively young car
  5. Insurance: €1,800 - This one is a big variable dependent on the driver and his/her status and years of no claims bonus etc, however the same figure will be used on both examples
  6. Total Cost = €20,049

The cost of having this car for the 3 years is over €20,000. With good fuel economy and low tax it still amounts to a fairly sizeable amount of cash! If we break that down annually it is €6,683. Per month that is €557. If you are on the higher tax bracket you need to earn €1,100 Gross Salary in order to pay for your car..........................If you earn €50,000 Gross, that is 1 week's work per month to pay for your car! Seems hefty, but lets now compare it to the alternative, a cheaper, less flashy, less efficient and perhaps less reliable motor!

Cost of owning an 'old' car:

  • Depreciation: €2,220 - Buy it for €4,700. Based on the research when you go to sell a car of this type in 3 years, assuming average mileage and it being well maintained, you will get approximately €2,500. Irrespective of selling it privately or trading it in this is the approximate value achieved.
  • Fuel Cost: €5,039 - This less modern car will give approximately 44 miles per gallon on average. Using the same diesel price of €1.25 per litre, and travelling 13,000 miles per annum, thats the cost over the 3 years for this car.
  • Motor Tax: €2019 - As a pre-2008 car, with a 1.8 litre engine you are in for a juicy €673 per year road tax, no avoiding it!
  • Maintenance: €2,400 - This assumes carrying out 1 annual service and changing 2 tyres per annum. In this instance we have included €300 per annum for ad-hoc repairs. While this could be quick a lot more or less on a car of this age and mileage this average is an industry accepted figure.
  • Insurance: €1,800 - This one is a big variable dependent on the driver and his/her status and years of no claims bonus etc, however the same figure will be used on both examples
  • Total Cost = €13,478

So there you go, the estimated cost of 3 years of motoring in such a car will cost you just south of €13,500, which works out at €4,492 per year and therefore €375 per month. Before tax you are looking at earning €750 Gross Salary to put this car under your back-side.

The single biggest cost differentiation between the two options is depreciation, yet this is the one factor which many many of us do not give due consideration to. We fail to include that in the cost of ownership, however it is a very real part of the cost, and in some circumstances is the single biggest aspect to the overall cost. Fact.

Many of us millennials see the shiny new shapes, we see what our peers are driving, we see the latest adverts, we see the 171's on the road and we start to feel that our 'old' car is giving a poor representation of ourselves and portrays a lack of success. I'm being somewhat melodramatic here obvously but there are elements of these emotions behind our decisions in buying 'newish' cars. I often look to the example set by Mr. Warren Buffet (3rd wealthiest man on the planet). He drives a regular joe-soap car, and seems pretty happy with it!!

car-cost-warren

Conclusion:

As always I believe you are more than capable of drawing your own conclusions from the above. As with many of our financial decisions there is more often than not an emotive drive determining the outcome. One could choose to drive an older car, and to use the 'savings' to save for the future, enjoy an extra holiday or some other experience. Likewise one may prefer to be seen driving a 'newish' car, they may like the reliability and feeling they get from a more modern car, and are happy to sacrifice the 'savings' in favour of these aspects. Likewise they may not realise the costs of owning a car, until now!

Ultimately the choice is yours of course, but at least now you have a greater sense as to what your car is costing you, and indeed if you have 2 cars in your household what they are costing you.

If you are trying to budget and manage or indeed reduce your cash outflows the ownership of cars can be one of the single biggest factors in doing so.

I have included a sample calculator which I created for you to run your own numbers here, have fun!

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Thanks for reading, sharing and spreading the love!

Paddy Delaney (QFA, RPA, Coach)

 

Links:

MPG Information for use in above calculator:

http://www.honestjohn.co.uk/realmpg/

 

 

 

Jan 23, 2017

Hi again dear listener!

If you are new here, welcome! This is a great place to begin the journey if you are a new visitor.

This is the 2nd in our 'financial foundations' series, and will further explain one of the many protection options available to us all in today's market. For the first in this series we looked at the ins and outs of specified illness cover. Click here to listen.

 

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Income Protection, also known in some quarters as Income Continuance, Income Insurance, Income Cover & Permanent Heath Insurance. Confused yet!!? I'm gonna stick with the label of Income Protection on this one, purely because that is what it is designed to do, protect your income if yours stops!

Before we get into the basics of this potential financial foundation lets picture the following. (Disclaimer: this might seem like an old insurance sales technique but bear with me!!).

Imagine for a second that you had a printer in the corner of your bedroom, every morning as you wake up you hear this printer printing out the equivalent of a day's wages for you. Because there is no such thing as work in this dream-land you survive on your printer's ability to print this money for you every morning. Having said that, like all printers on this planet yours is prone to breaking down occasionally, indeed it is also susceptible to breaking down permanently. If it does your income will stop, cease, finish. Bearing in mind it is your sole form of income would you insure this printer against such an incident, bearing in mind it is your sole form of income? If you woke up one morning and it was all flashing red lights would you feel it prudent to have a back-up plan to help pay the bills?

On the face of it it probably seems like pure gambling to not do so, yet the fact is that a huge percentage of us do not have such a plan in place. If we go back to the analogy of building a home on solid foundations, it would seem that doing so without a core foundation would be a risky approach. So why don't people have this protection in place? Personally I believe there are a few core reasons for that; cost, awareness and understanding of what it actually is! So here goes.............

What is it?

As already mentioned above, it is a type of protection which should pay you an income if you are medically unable to work for a minimum period of time due to an accident, illness or injury. As with the majority of income sources it is taxable.  (You will note that this is quite different to Specified Illness Cover which pays you a lump sum (one-off) upon diagnosis of a certain type of illness, and not related to your ability to continue to work or not).

So its Sick Pay, right?

No! Typically 'sick pay' from an employer is paid for a set period of time, for example 2, 6, 12 months, after which time the benefit stops and you are on your own. Income Protection however is designed to continue to provide the income benefit until either a)  you are deemed medically able to return to work or b) your protection plan reaches the end of its term, you can select usually between 55 and 65 years of age, at which point the benefit stops.

What about the State Disability Benefit?

Importantly receiving Income Protection, while it is a taxable income, does not immediately impact on your ability to receive your entitlement to State Benefits. The State 'Illness Benefit' is paid for a maximum of:

a) 2 years if you have at least 260 (5years) weeks reckonable social insurance contributions paid since you first started work

b) 1 year if you have between 104 and 259 weeks reckonable social insurance contributions* paid since you first started work

How much Income do I get from an Income Protection Plan?

Depends on how much your printer prints each morning! You can protect up to a max of 75% of your Gross Income with one of these plans. When/If you do claim as a result of being unable to work you make your claim, have it supported by medical evidence of you being unable to work, and the insurance company essentially become your employer, they deduct the tax payable and you get the Net Income paid into your bank account.

Example: You are 34 years of age, an Accountant, non-smoker. Your income is €50k. You put in place an Income Protection plan which will cover 75% of your income (€38k per annum benefit). You are married and 1 child. Your spouse is working also. If you were to become ill/injured/sick for a minimum of 1 week you could apply for State Disability Benefit, if successful it would provide in the region of €940 per month. (11k per annum).

How Much Does it Cost?

The above plan would cost in the region of €130 per month to put in place. Do note however that the Revenue recognise the importance of having this in place and have generous tax relief available on the cost of putting it in place, so if our Accountant above was on the 40% tax rate his actual cost would be around the €70 per month mark...........not bad for a potential monthly benefit of €3,167 if in a claim, and a claim which could last from now until he/she gets to 60 years of age!

Worth noting that the more physically perilous or manual your occupation the more expensive the cover would be for you.

Who Can Have It?

A lot of folks might want it but not everyone can get it! Typically anyone in an occupation which involved mostly driving or very heavy manual labour can have difficulty in getting an application through what is often very rigorous underwriting/assessment. But once you have it you have it! If you are not sure if your occupation would qualify you can easily check this by 'googling' income protection quotes, and they all ask you your occupation, before either quoting you or saying 'thanks but no thanks'!

Likewise, if you have previous medical history or medical/physical illnesses or conditions it may impact on you getting the cover at 'standard rates', which simply means at the price you were quoted for, and covering you for all eventualities.

Are There Any Down-Sides?

Like everything, it is important to know what you are covered for and what you are not covered for with these types of things. For example, you would likely not be covered if you were out of work due to an illness/injury suffered as a result of something you did while under the influence of alcohol, so no climbing trees or lamp-posts after a trip to the 'local'!

Another thing to watch out for, is if you intend traveling for a period of time, as in moving to another country. Most plans will only pay you for a short period of time if you are living abroad at the time of claim, so it's one to be aware of if this might apply to you. As always, read the details, be informed of all the facts.

You need to be medically certified as unable to work, if this is not the case then a company would likely refuse your application. The company covering you are charging you a price which will ensure they make a profit, pay the advisor/agent, and also ensures that other people who have the cover will get paid if they have a valid claim, so it is in everyone's interest to be upfront and honest about what is and what is not covered, and when it would or would not be paid.

Conclusion?

As always I will leave it to you to form your own conclusions on this. If your income stopping would have a massive impact on your financial, physical or mental well-being then it could be a worthwhile foundation for you. If you feel the State Benefit would not be sufficient, and you have few other crutches to support you should you be out of work for a considerable period of time, then it could be worth considering, big-time!

Please use this information in the manner it is intended, inform yourself and supporting you in creating a better financial future for yourself. Thanks so much for reading, sharing and spreading the word.

Paddy Delaney (QFA, RPA & Now Qualified Coach too- yay!!)

 

 

 

 

 

 

 

 

 

Jan 17, 2017

Hi,

Welcome to Informed Decisions Podcast #19! Thanks for continuing to listen and learn about critical aspect of Personal Finance & Financial Planning.

Specified Illness has been getting the 'Joe Duffy Treatment' for years, lets see if it is deserves it!

PODCAST HERE:

 

 

 

If you are new here, welcome! This is a great place to begin the journey if you are a new visitor.

Any (decent) builder would tell you that in order to build the house of your dreams, you need to put in place solid and durable foundations. While these foundations can be expensive, are no addition to the overall look of the house, and often more expensive than initially envisaged, I'm sure we all agree that they are a must have.

The same can be said of our financial lives; solid foundations will help support you if there is an earthquake, landslide, or even some mild tectonic shift! We addressed the basics back in earlier blogs and podcasts, but lets dig deeper on one of the core aspects of financial foundations, protection. Many of us in our 30's have some sort of cover in place, have been offered it or seen adverts online. What to do!? Over the next few weeks we will explore of each of the main types of protection on offer to us today, and whether they are something to consider or not!

Specified Illness Cover, Serious Illness Cover, Critical Illness Cover, Disability Cover, Income Cover, Permanent Health Insurance, Income Cover, Income Protection, Bill Cover, Inability to Work Cover......these are just a few of the names thrown around for various types of 'living benefits' (you don't have to die to claim them!) which may or may not help you financially if you are unable to work due to accident, ill-health, injury, mental or physical illness. In this blog we will dig deeper on Specified Illness Cover, aka Critical Illness Cover as it stands in Ireland today.

What is Specified Illness Cover?

As it's name suggests when you are medically diagnosed with a specific illness, injury, ailment or condition you would receive a tax free lump sum payment. It is for that reason that i always refer to this as Specified Illness Cover, because it's claim is dependent on whether is was one of the specified illnesses.

When you apply for this cover you will/should be given a clear list of the illnesses, the definitions of each, and the severity of which you must be diagnosed in order to be considered valid for a claim under any particular illness. If you suffer from something which is not on this list, or is not of 'sufficient severity', or does not meet the 'definition' you do not get your claim. If it does you do.

What sort of illnesses are covered by Specified Illness Cover?

Every serious life company in Ireland offers Specified Illness Cover under one title or another, each one will largely cover the same illnesses, however some have different definitions and severities under different illnesses. This is where it can get a bit murky and subjective in terms of which route is best. It's important to research this yourself, as well as taking the input from the providers, in order to make an informed decision on which is most appealing to you.

Irrespective of that, all providers will cover the 'Big 2'; so if you are diagnosed with having had a Heart Attack (of specific severity!) or Cancer (of specific severity!) you will be covered.

There are also another approx 50 less common, more bizarre illnesses covered by the various providers. For example surgical removal of an eye is a regular on the list, indeed diagnosis of flesh-eating bugs is another more recent addition by one provider! Hmmmm.

What definition must be met to claim my Specified Illness Cover?

Here's an example of the definition involved for claiming on a cancer diagnosis under specified illness by one provider, as of Jan 16. Worth noting that not many of the providers make the definitions available online. Doesn't inspire trust does it! Here's the high-level definition for Cancer:

Any malignant tumour positively diagnosed with histological confirmation and characterised by the uncontrolled growth and spread of malignant cells and invasion of tissue. The term malignant tumour includes leukaemia, sarcoma and lymphoma except cutaneous lymphoma (lymphoma confined to the skin).

So there you have it, if you had Specified Illness Cover and were diagnosed with a form of cancer, that is the definition your condition needs to meet in order for you to have a valid claim. If it doesn't currently meet that definition then you don't get your cash. If it does then you submit your claim, backed up by medical evidence from a medical professional and you can await your cash payment.

While no official figures can be found to show how many Specified Illness Claims there are every year from all the insurers I gather there are in the region of 2,000 claims each year in Ireland. That is just under 8 individuals in Ireland each and every working day either being diagnosed with a specified illness, sending in their claim, or receiving their claim cheques. That again is scary. The average amount each individual claims is estimated at €60,000.

What would you do with the money? What's the point in laying this foundation?

As a result of us being 5 to 6 times more likely to suffer from one of these illnesses than we are to die before 60, it is therefore in the region of 5 times more expensive than life cover. As a key element of our financial foundation it ain't cheap, and it is because it is statistically so likely to happen, unfortunately.

Consider if you were in the situation of being diagnosed with a cancer which displays levels of 'uncontrolled growth and spread'. It's scary, it's hard to picture, however many of us will have had first or second-hand experience of this.

What sort of an impact will it have on you and your circumstances? Will it impact on your ability to work, to earn your current income? Will your partner need to take time out of work to support you or replace you in some way? How will you pay for medical treatments? Will you be under financial pressure to return to work as soon as possible as opposed to taking time out? What impact will it have on your financial goals? Will you have to rely on loved one's to support you? Will you have financial concerns?

If you answer 'yes' to any of these then having some level of Specified Illness Cover may be appropriate to you. The level of cover you should have will depend on many factors, among them; what emergency fund you have in place, what impact a diagnosis will potentially have on you, what your income is, what your affordability allows and ultimately it will boil down to how big a problem you feel it would be if it did happen.

Irrespective of how much there is no doubting that for many of us it is prudent to have an element of it in our financial foundations, no question. In conjunction with some of the other foundation protection types we will discuss over the coming weeks it can help keep your house intact while you overcome the earthquake.

Whatever you do or do not do with this information at least make sure that you make an informed decision with regards your financial foundations.

Thanks for reading, liking, commenting and sharing the love!

 

If you prefer you can follow the link below to listen to the podcast, or subscribe to the podcast via iTunes.

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Thanks,

 

Paddy.

Jan 9, 2017

Hi All,

Thanks for visiting the Informed Decisions Blog.

The last few Blogs have been focused on informing you on how you can access money from your Pensions, both Personal Pensions and Employer Company Pension Schemes, when that time comes.

If you are a new visitor you can check these out here and here!

For many of us I am conscious that the single biggest financial mountain to climb is one's mortgage. This can often lead, and I'm sure has done for some of you, to the question;

"Should I invest and save for the future, or focus on getting rid of my mortgage."

You can access the full show notes below, or jump in here:

 

 

 

I had the very same question put to me by a friend recently, he had a large lump sum of money which he had been managing for several years, rolling it over in various accounts, the interest rates constantly falling. He was considering throwing it at the mortgage, bring down the term left. What should he do...................................................What would you do?

Listeners to the Informed Decisions Podcast will recall Episode 8 (listen here) where we saw the massive impact a relatively small change in mortgage repayment can have on the term of one's mortgage. This Episode was hugely popular and the Pro's below outline why.

For completeness sake lets look at some Pro's and Con's of 'Clearing my Mortgage' instead of 'Investing my Money For the Future'

Clearing My Mortgage – The Pros…(not exhaustive)

  • Guaranteed Return on Investment: If you invest your money in clearing your mortgage you are guaranteeing your return on that investment, there is no danger that the mortgage could come back in future if markets got rocky! You achieve the immediate return of eliminated interest expense.
  • Save on Interest Costs: As above it can save you tens of thousands in interest, which you would have been paying had you not cleared the mortgage.
  • Peace of Mind: This is probably the single most obvious and rewarding one, the fact we now own our home can be a great source of peace of mind for the future, irrespective of what might happen your income.
  • Reduced Cost: By removing the mortgage payment from your monthly outgoings you are reducing your costs, and for some it's big-time!
  • No Need for Mortgage Protection Insurance: If you have no mortgage loan the lender does not need you to have Life Cover on that loan in order to repay it if you die, another cost reduction.
  • Satisfaction: Many of us will remember forever the people we meet who tell us they have 'no mortgage'. It's akin to meeting a celebrity, it is that highly revered! Not necessarily justifiably so, yet it is a primal instinct in us to own the roof over our heads. Achieving that can result in a great sense of satisfaction.

Clearing My Mortgage – The Cons…(exhausting!)

So there are lots of really great 'Pros', but before we write the cheque lets look at the full picture, this side is somewhat technical, so brace yourself!

  • Low Return on Investment: If you invest your money into clearing your mortgage you could be signing up for comparatively low returns on that money. Why? A mortgage is likely the cheapest money you will ever borrow. The rate on majority of mortgages in existence today is in the 3-4% region. You are essentially signing up to that rate with the investment you are making to the loan. Consider for 1 second that in the 1980's when our parents were in the same position the rates were upwards of 20%! There would be no debate in those circumstances!
  • Savings Are in Lower Future Value: All the monetary Pro's were in future savings, meaning they need to be adjusted for inflation. This has a large impact. For example, let’s assume you pay off your mortgage in 25 years instead of 30. Using this Investopedia present value calculator, you’ll see that €1,000 in 25 years time is only worth €423 in today’s terms at a 4% inflation rate. In other words, you have to discount all savings by inflation because the payments you avoid will be in this lower future value. Takes the sheen off slightly?
  • All Eggs in One Basket: Investing all your funds into clearing your mortgage (property) flies in the face of logical and informed Investing.
  • Make Money by Owing:  If you have a Tracker Mortgage or indeed a very good deal on a fixed rate it could in time be lower than the prevailing inflation rate. Inflation rate is currently hovering around the 0% but if it were to rise you could literally be earning by borrowing, in real terms (after inflation), even though you’re paying interest every month. If your mortgage rate was 1.5% and inflation was 1.6% you essentially make more by owing than by owning. If you clear your mortgage you give away that potential financial advantage.

 

As you have deduced by now, the 'Pros' to clearing your mortgage are fairly obvious and appetising to most of us, however the 'Cons' are somewhat more murky and financially complex, reliant on long term inflation effects and discounted present and future values!

Debate:

If you sought advice on the matter many Financial Advisers may will quickly highlight to you the long-term historical returns for a given investment product of 6-8% per annum. When this is compared to mortgage rates of 3-4% it seems there is no debate. Common sense would also suggest the following:

Investment returns via such a vehicle are highly variable, they can have periods of double digit growth which far outstrip mortgage rates, and indeed periods of double digit downside (losses) where even paltry mortgage interest rates represent a far superior return on your investment.

As we all know the future is not the past and returns will vary, but mortgage interest saved is a bird in the hand. It is important to acknowledge however that suitably chosen investment funds have more often than not outperformed mortgage interest rates over the term of an average mortgage (20-30 years).

While the mathematics may well point to the fact that investing for the future should provide the investor a greater return in the long term than clearing the mortgage it really is a personal decision. This decision will usually be driven by one's motivations and by how they want to feel, and that to me is proper, provided it is an informed decision.

 

Thanks for tuning in, please do share, tell your friends, and support Informed Decisions in becoming the leading personal finance podcast in Ireland.

Paddy Delaney. QFA, RPA

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