basilbrush
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We are a married couple, both about 70. We own a house, a holiday home, and about 50 acres of land that is rented out. We have grown and independent children (to whom we give the maximum tax-free gift each year). We have no debts or other liabilities, and about €2m that is currently in a bank account. We both receive partial state pensions. We enjoy living relatively frugally, so about €20k in spending per year is enough for us to live comfortably.
While we could probably continue on the current path without any worries, we are interested in better protecting our savings from inflation and perhaps earning a slightly better (but low risk) return on them. If there are changes that would make it more efficient for our children to inherit from us, we are also interested in those.
We are uncomfortable with the managed funds that most investment companies advertise, as they seem complex and opaque. We prefer simple products that we can understand, such as index-tracking passive funds. Vanguard's 40/60 LifeStrategy distributing ETF (40% global equities, 60% global bonds) would probably be ideal if it were not so tax inefficient (especially the dividends being taxed at 41%). Investment trusts have received attention on here recently as a tax efficient alternative to provide the diversification of ETFs, but the ones that we have looked at feel risky as their investments are concentrated in a small number of growth companies that seek high returns, and have the risk of generally being based in the UK which might lead to complications in the future. Berkshire Hathaway has also been proposed, but we do not wish to risk being subject to US Estate Tax.
We are considering evenly dividing a substantial portion of our savings between the ten largest companies listed on the Irish stock exchange that have wide geographic exposure (CRH, Ryanair, Smurfit Kappa, etc., but not Glenveagh, for example, as it is focused on Ireland). If we used €1m for this, I expect that it should generate dividend income of about 2% (some companies pay less, or none, but others pay more), which should more than cover our living expenses (when combined with the pension and land rental income). We could then invest €500k in the accumulating version of the Vanguard 20/80 ETF (equities exposure decreased to 20% to compensate for our equity exposure through directly held shares), accepting the taxation inefficiency (and additional work of applying the deemed disposal rule every 8 years) as the cost of lowering risk through greater diversification. We would keep the remaining €500k in a savings account for reassurance. We are comfortable with the somewhat increased volatility compared to our current situation.
One of our concerns with this proposal is that it results in a substantial portion of our wealth being in the type of investments (shares, ETFs, second house) that are likely to be targeted for increased taxation by parties such as Sinn Fein and PBP, should they get into power in the (potentially quite near) future.
Your thoughts would be appreciated. Thank you.
While we could probably continue on the current path without any worries, we are interested in better protecting our savings from inflation and perhaps earning a slightly better (but low risk) return on them. If there are changes that would make it more efficient for our children to inherit from us, we are also interested in those.
We are uncomfortable with the managed funds that most investment companies advertise, as they seem complex and opaque. We prefer simple products that we can understand, such as index-tracking passive funds. Vanguard's 40/60 LifeStrategy distributing ETF (40% global equities, 60% global bonds) would probably be ideal if it were not so tax inefficient (especially the dividends being taxed at 41%). Investment trusts have received attention on here recently as a tax efficient alternative to provide the diversification of ETFs, but the ones that we have looked at feel risky as their investments are concentrated in a small number of growth companies that seek high returns, and have the risk of generally being based in the UK which might lead to complications in the future. Berkshire Hathaway has also been proposed, but we do not wish to risk being subject to US Estate Tax.
We are considering evenly dividing a substantial portion of our savings between the ten largest companies listed on the Irish stock exchange that have wide geographic exposure (CRH, Ryanair, Smurfit Kappa, etc., but not Glenveagh, for example, as it is focused on Ireland). If we used €1m for this, I expect that it should generate dividend income of about 2% (some companies pay less, or none, but others pay more), which should more than cover our living expenses (when combined with the pension and land rental income). We could then invest €500k in the accumulating version of the Vanguard 20/80 ETF (equities exposure decreased to 20% to compensate for our equity exposure through directly held shares), accepting the taxation inefficiency (and additional work of applying the deemed disposal rule every 8 years) as the cost of lowering risk through greater diversification. We would keep the remaining €500k in a savings account for reassurance. We are comfortable with the somewhat increased volatility compared to our current situation.
One of our concerns with this proposal is that it results in a substantial portion of our wealth being in the type of investments (shares, ETFs, second house) that are likely to be targeted for increased taxation by parties such as Sinn Fein and PBP, should they get into power in the (potentially quite near) future.
Your thoughts would be appreciated. Thank you.
