Special Investment Accounts limits announced in Budget

[Bronte]

The point about the SIA, is that the return from that product will be tax and admin free. This initiative is fantastic and has a real possibility of building wealth in parts of our society that otherwise would take a lifetime.

As far as I understand this product, the idea was to get people who hold the 170 billion in savings in banks out of that habit (of letting their money sit there in bank accounts) and into this new product.

It should never have been called SIA, as it's too confusing with the one euro for 4 SSIA.

As is evident I'm more skeptical about this building wealth, and even more skeptical about the fact the public will move state guaranteed savings in pillar banks into a product that has capital risk. But I think the fact it's a low amount, 50K, that will help. Earlier some of you were going on about this, but I now see it's actually clever. If it goes well, and makes the Irish rethink money like the American's do with their 401k's - which apparently is a great thing, then happy days.

The 1% simplified tax is also clever. As is the fact it's the banks have to deal with that. What will scupper it is if returns are terrible (worse than bank interest rates, which are on the rise), or if fund costs eat into the returns and god forbid the capital and worst scuppering is if capital is lost and people panic. Let's say Great granny put her last 40K into this, loses everything and they go onto Liveline with sob stories (which happened with the likes of Life Time loans)

 

[Wolframius]

That's not a helpful definition though since you can't invest in deposits in the PIA.

If most ETF are covered there will be the option of investing in deposit-like instruments like this: https://www.justetf.com/en/etf-profile.html?isin=LU0290358497

 

[Wolframius]

401k's - which apparently is a great thing, then happy days.

Most of us already have a 401k, the defined contribution pension schemes, which is subject to the same type of risks that the new SIA will have. Any sob stories on Liveline when the market crashed in 2020? When returns were awful in 2022?

 

[Corola]

deposit-like instruments

Yes, I'm curious if that sort of ETF/MMF will be allowed in the account, or if they have even considered that.

On the opposite end they have said no derivatives/crypto because they are too risky, but 3x leveraged/inverse ETFs possibly are allowed?

 

[mmclo]

I had not realised this is not a savings scheme, not one poster mentioned there was risk to investing in this “thing”.

You didn't read the title of the thread - "Investments". In that case, you should avoid most financial products

 

[Corola]

You didn't read the title of the thread - "Investments". In that case, you should avoid most financial products

Because up until the day the account was announced it was described as an SIA - Savings & Investment Account.

Factsheet: Savings and Investment Accounts (SIAs)

Connecting savings and productive investments.

finance.ec.europa.eu

Only on Budget day they announced the PIA and dropped the "savings" part of the name.

 

[mmclo]

Hardly anybody will pay any tax for the first 3 years.

For financial literacy, the best approach is learning by doing; very few will pay much attention in the classroom.

In reality, somebody losing a bit in the scheme is the best form of financial education; they might pull out but then hear their friends rode it out and are now back in the green - more learning. Then they might start searching online, find this site, and discover other excellent resources on various platforms. Even here and on other sites, I've seen countless people say, "I knew nothing starting out"

 

[balders93]

Only on Budget day they announced the PIA and dropped the "savings" part of the name

On August 31st there was no S or P in the acronym it was just an "Investment Account".

https://www.gov.ie/en/department-of-finance/press-releases/t%C3%A1naiste-simon-harris-and-minister-of-state-robert-troy-publish-roadmap-for-the-taxation-of-retail-investment/

 

[Corola]

The media was and still is currently describing it as SIA.

 

[ronaldo]

Possibly the most significant positive budget change in a very long time. If ‘SimonSaver’ catches on, he’s going to be very happy and a lot of credit will accrue to him for many many years to come.

It's hard to see many people praising the government, no matter what they do.

The government that introduced the tax policy that has so many multinationals in Ireland today faced a lot of criticism at the time. "What are they at, helping big corporations instead of the average Joe".

With hindsight, Charlie McCreevy's policies wee genius and our high employment in the IT and pharma sectors, and ridiculously high corporation tax, are the envy of the world. Yet we rarely hear his name in public today.

 

[Zion2022]

It's hard to see many people praising the government, no matter what they do

That is a fair point

Charlie McCreevy's policies wee genius and our high employment in the IT and pharma sectors, and ridiculously high corporation tax, are the envy of the world. Yet we rarely hear his name in public today

I think the beauty of the ‘SimonSaver’ if it caught on is ensures his name is forever attached inextricably to the product. Pretty much everyone now recognises the genius of our corporate tax policy. Charlie’s problem is everyone just forgets who implemented it!

 

[viperlogic]

The media was and still is currently describing it as SIA.

Ive seen SIA, PIA, and IIA been used, because who doesn't like even more confusion!!

 

[C_Pike]

The average Swedish ISK account holds about 506k SEK (€45,150 or so). The median account holds about 91k SEK (€8,100 or so).

All the focus on the limits and what to do above them (and I've done the sums up thread - in short, this product remains v attractive) misses the wood for the trees. The vast majority of people will never pay a cent in tax on their gains, and this will help them towards small to medium sized life events. The pension will remain the vehicle for millionaires.

 

[Duke of Marmalade]

no derivatives

Well now will that be applied on a look through basis to ETFs? It would rule most of them out if it did.

 

[Wolframius]

Well now will that be applied on a look through basis to ETFs? It would rule most of them out if it did.

All those that physically replicate the index should be fine. Those who synthetically replicate the index and the leveraged/inverse ones may be in trouble.

 

[ashambles]

CBI regulated funds fall under UCITS or AIF regulatory schemes, ETFs typically are UCITS and UCITS have strict rules on diversity and leverage limits.

They might just say only UCITS ETFs are allowed - that would seem a reasonable and easy to apply restriction.

 

[Duke of Marmalade]

All those that physically replicate the index should be fine.

Note the top of the second column in this KID for a passive index tracker. It reserves the right to invest in derivatives as I guess they all do.

 

[Brego888]

Will we be able to transfer other investments into these new accounts?
E.g. If i have 10k in etfs with trading 212 would I be able to transfer this into a new special investment account trading 212 might offer and use this as part of the 12k annual limit?

 

[ronaldo]

Will we be able to transfer other investments into these new accounts?
E.g. If i have 10k in etfs with trading 212 would I be able to transfer this into a new special investment account trading 212 might offer and use this as part of the 12k annual

Highly doubt that will be possible. It needs to be as straightforward as possible for providers and there's going to be tax due on current ETF investments.

 

[messyleo]

I see Ask Paul saying on insta he thinks the 12k limit is because it is only for half a year in 2027 and expects next budget to announce it will be 24k for a full year.
He'll be disappointed if you ask me! Don't see any chance of that whatsoever!