Stock market correction or bear market/crash? Either way I bailed.

Discussion in 'Investments' started by landlord, Sep 21, 2015.

  1. Gordon Gekko

    Gordon Gekko Frequent Poster

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    “Raided” is massively overstating it for starters; an average of 0.54% was taken each year for five years during the greatest economic crisis in the history of the State. Hardly cataclysmic.

    And with regard to choosing personal investments over pension investments, the numbers don’t lie. The choice is to invest post-tax monies in a manner that attracts tax all the way along versus investing pre-tax monies in a completely tax-free environment for a long period of time and then extracting a decent chunk of that tax-free with the rest at 20%, a lower USC rate, and no PRSI (post 66).
     
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  2. RETIRED2017

    RETIRED2017 Frequent Poster

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    Anyone who seen prsi over 19% taken from payroll at one stage in the eighties and over 15% on average from payroll until the retired most feel the paid enough in .I know where I worked I can go back to the eighties when we first put in a system where you got paid your wages if you were out sick In the old days the prsi Cheque had to be returned to the company it was monitored very closely .I remember at one stage the Company would look back over five years to see if there was a trend developing over several years I remember being amazed at how little was paid out over five years compared to the amount taken in payroll each week it was an eye opener the people in full time work with over 40 years stamp have paid enough to cover there pension,
     
  3. gnf_ireland

    gnf_ireland Frequent Poster

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    If my maths are anything close to correct - the state pension pot would cost around 300k for every pensioner. It takes a long time for most to save up a pension pot of that size

    And this is the madness of it all. This bubble is going to fail miserably at some stage and it is the likes of myself (aged 42 at the moment) who will feel the real pain of this.

    And to be fair, there is huge merits in what is being said here. Its the same people who end up paying and those who made no provisions for the future will get the handouts. That said, if the private pension funds were attacked again with another pension levy, I would hope it would bring people to the streets and say enough is enough. If they done this after mandatory enrollment into a pension fund was introduced, the numbers impacted would be much larger as well
     
  4. gnf_ireland

    gnf_ireland Frequent Poster

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    To be fair there were people who were impacted financially who had just had their pension funds crushed as a result of the greatest economic crisis in the history of the state.
    But it was not that - it was the principle that the government could simply tap this fund any time they liked. They did not dare touch deposit accounts in the state, but pension funds were fair game. This to me is wrong.
    They should have stopped the tax relief on the money put into the pension fund or reduced the cap on the size of the pension fund etc - but raiding the money in it set a very dangerous precedence and that is the worrying aspect of it.
     
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  5. Ceist Beag

    Ceist Beag Frequent Poster

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    This. 100% agree gnf, it's not the amount they took, it's that they saw fit to take it. It was rewriting the rules to allow theft as far as I'm concerned.
     
  6. RETIRED2017

    RETIRED2017 Frequent Poster

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    They will be calling to your door looking for your vote are you going to tell them you do not vote for guys or girls who robbed you unless the return the money before election day,

    That is the only way to ensure you don't get robbed again,
     
  7. Gordon Gekko

    Gordon Gekko Frequent Poster

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    How will you feel 20/30/40 years from now when you could have had a much larger pension pot but forgoed the attractive tax breaks in favour of doing your own thing?

    All because of a 0.54% tax that was brought in temporarily whilst the State was bankrupt!
     
  8. orka

    orka Frequent Poster

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    The numbers don't lie but they are based on assumptions, not immovable (over 20/30/40 years) facts. The more detailed and comprehensive numbers I have seen indicate that a pension is very likely the more sensible investment for someone currently on high rate tax who expects to be on low rate/no tax in retirement. For a high rate taxpayer who expects any additional pension income to be taxed at higher rate in retirement, it is very marginal - you really have to assume zero worsening of the taxation of pensions (still allowed 25% lump sum tax free, still lower USC and no PRSI - would you bet your house on these being unchanged?). Investing in a pension as a lower rate tax payer who might pay higher rate on the pension proceeds in retirement is madness.

    Overall it came out as about 2.4%. So my pension effectively has a permanent 2.4% surcharge tax applied to it throughout my retirement. I haven't put another cent into pension investments since and don't intend to add anything more to my 'sitting duck' funds again.
     
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  9. Gordon Gekko

    Gordon Gekko Frequent Poster

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    The pension sceptics are the equivalent of people claiming that the Earth is flat.

    Who would get relief at 20% and end up paying tax at 40%?!

    And what hasn’t been mentioned is the far greater effect that taxes have on the non-pension investments of a 20% rate taxpayer; personal investments are often taxed at 41% or 33%.

    Which of the following will outperform in every scenario?

    - €80 invested personally for (say) 30 years with income and gains taxed on an ongoing basis at rates of 20%/33%/41%

    - €100 invested via a pension for 30 years with income and gains arising tax-free for the entire period, with 25% of the accumulated value paid out tax-free and the balance drawn-down at rates ranging between 0% and 22%

    I would hope that the answer is obvious.
     
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  10. Fella

    Fella Frequent Poster

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    Gordon the large majority of your posts on this forum seems to be pro pension you either work for a pension company or you been extremely naive , I rang a friend of mine who works for a pension company he told me you'd be mad to pay into a pension on the low tax. You are the most extreme pro pension person I have come across I am not sure who you are trying to convince yourself or others.
     
  11. Gordon Gekko

    Gordon Gekko Frequent Poster

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    I do not work for a pension company, nor am I naive.

    I simply “get” the advantages of pension funding.

    But seeing as we’re getting personal, I fear that, based on your posts, you are foolish when it comes to your own financial affairs and I suspect that your “friend” is probably one of the shiny suited spoofers who make up the bulk of people operating in the pensions space.
     
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  12. Fella

    Fella Frequent Poster

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    thanks happy pancake day :)
     
  13. orka

    orka Frequent Poster

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    A young professional?
    Allow me to re-jig your scenarios a bit:

    - €80 invested directly at very low one-off cost in low(no)-dividend/high-growth shares and held for 30 years, then drawn down periodically with CGT payable

    - €100 invested via a pension for 30 years with income and gains arising tax-free for the entire period BUT with ongoing annual management fees, with 25% (or some other value, possibly zero, that the government of the day deems appropriate to apply to those fat cats in possession of their own pension funds) of the accumulated value paid out (possibly) tax-free and the balance drawn-down at rates ranging between 0% and 49% (current rates, not guaranteed in anyway to be remotely similar to the rates that will apply in your retirement).

    If the government could (but they can’t…) rock-solid guarantee that they would not apply another pension levy AND that 25% would always be tax-free AND that PRSI would never apply AND that low-rate USC would always apply AND that taxes will not be greater than they are today, then maybe you could have your flat earth discussion. As it is, you’re hoping things won’t change. I personally don’t think hope is a great strategy when it comes to planning for my retirement.
     
  14. Gordon Gekko

    Gordon Gekko Frequent Poster

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    This discussion is a waste of time.

    You’re right, the Earth is flat.
     
  15. orka

    orka Frequent Poster

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    The earth is not flat.

    Pensions are not always the best option for everyone at every stage of their working life.

    [I also don't agree that this discussion is a waste of time. If more people understood pensions, when they are and are not the best option AND what the risks (current and potential) are, it would be a good thing. Repeating the mantra 'pensions always good' doesn't make it so.]
     
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  16. Daddy Ireland

    Daddy Ireland Frequent Poster

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    I'm enjoying this. Please don't stop now.
     
  17. Daddy Ireland

    Daddy Ireland Frequent Poster

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    Just to add over 35k views so Gordon a lot of viewers do not consider this a waste of time. Is that a top 20 thread on these forums anyone ?
     
  18. Gordon Gekko

    Gordon Gekko Frequent Poster

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    It is very difficult to have a rational discussion with people whose default argument is that the State might reintroduce an immaterial measure that was in situ briefly during the biggest economic crisis in the history of the modern world.

    In the face of maths, one gets tinfoil hat stuff.
     
  19. Ceist Beag

    Ceist Beag Frequent Poster

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    Why do you assume that those objecting to the temporary "tax" have all stopped contributing to their pension? Some of us might just have been pointing out that the temporary "tax" was 100% wrong in our view, that even if you might not think so Gordon, in my view it did damage the pension industry in that it caused some (not all!) people to consider alternative options of funding their retirement, and set a very dangerous precedent. I know most people I work with were fuming about this raid and if it were to happen again, as gnf said, I would hope that it would bring people out on to the streets.
    I still see the merits in contributing to a pension but I absolutely will bring this topic up with to any candidate who comes to my door in the next election campaign (and would have said it at the last had anyone bothered to call!).
     
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  20. blured

    blured Registered User

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    What is this magical "high-growth" share that will grow for 30 years that we can invest in and forget about?

    I'm with Gordon - I do not think there is anyone out there that, whilst maintaining their own job and not being a full time trader, that can beat the 20% advantage that comes with investing into your pension for a person on the lower tax rate.

    Even if the tax environment changes as you say, the lump sum changes, PRSI would become applicable and USC increases - that is talking about the future. Right now, the investment is pretty much tax free. And, in this future where the Government of the day is "raiding" private pensions again and increasing taxes, what makes you think that the Capital Gains Tax that will be payable on the individual share you have picked won't also be affected by an obviously cash needy Government?
     
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