Views on eiis schemes

I

irishguy

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I am considering on investing in one of these schemes this year. The Davy one in particular looks interesting as its spread over a number of companies so should be lower risk. What are peoples views on this? As the potential return look good
 
I prefer the fund approach also. You shouldn't be investing money unless you can lose it all though.
 
Just got the prospectus on Friday. Will be having a read through it today. The investment element itself is certainly higher risk so having a fund with a number of different companies in it than investing in just one company. While the tax breaks are attractive, especially as it's all income, you still want to get your money back from it at the end of the term.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
I don't know much about these schemes. However, the DAVY one probably invests in more than one company. That is some form of safety net, as if one fails, then the others may survive. If you invest entirely in the one company and it goes under, then you lose all. The returns are capped at 110% of investment, so the broader you spread it the safer is seems to me.
 
The fund option is certainly a better way to go instead of putting all your eggs into one SME basket.

I've been looking up some of the companies that they have invested in in the past and they are very profitable companies, with turnover in the tens of millions, some of them with fairly low operating costs too.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
SBarrett said:
The fund option is certainly a better way to go instead of putting all your eggs into one SME basket.

I've been looking up some of the companies that they have invested in in the past and they are very profitable companies, with turnover in the tens of millions, some of them with fairly low operating costs too.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
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Ya I think ill be going with the fund option alright, unless something particularly good comes up
 
I researched the market and the different schemes to offer for my clients and the the BDO/ Davy one is the best one I found. They have years of experience in producing these schemes and using a fund structure, they reduce the overall risk. Afterall, you are investing in Irish SME's. While some of them have gone on to be very profitable businesses, that is not the case for all of them. No need to put your eggs in one basket.

Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
Unless things have changed since the days of the old BES scheme - when Ireland was booming economically - EIIS investments are best avoided as the vast majority of them will lose money or else deliver a negligible return if you're lucky enough to get your money back at all. The old saw about friends, family and fools is as relevant as ever. Caveat emptor.
 
T McGibney said:
Unless things have changed since the days of the old BES scheme - when Ireland was booming economically - EIIS investments are best avoided as the vast majority of them will lose money or else deliver a negligible return if you're lucky enough to get your money back at all. The old saw about friends, family and fools is as relevant as ever. Caveat emptor.
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People do have to be aware that they are investing in SME's and the risks that go with it.

There is a huge appetite for tax breaks that are not pension contributions.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
Still waiting to exit DAVY 2006 scheme with minimal return except for tax break, hardly an incentive to go again
 
I agree with sunnydonkey. In my experience, EIIS investments fall into the following categories:

- The fund approach which, given the tax break and the inherent diversification, is one I like.

- "Nod and wink" one off investments into businesses that will clearly be successful.

- The vast majority of EIIS investments which are utter tripe and only looking for EIIS because everyone else said no.
 
sunnydonkey said:
If an investment doesn't look like a good investment in its own right, then it's still not a good investment even if there are tax breaks connected to it.
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You are 100% correct. No point in letting the tail wagging the dog.

There are a lot of single company EII schemes out there. Given that the scheme invests in SME's, you are taking a huge risk in investing in just one SME company. Some of them will make it and you will share in the rewards. A lot won't and you may end up with nothing back. That is why I looked at the fund approach, spread the risk.


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
Hi guys

Just been looking at the BDO/Davy fund option for this and like many have said above the diversification of the fund option appeals to me. Does anyone have any recent experiences of this - good or bad?
 
Just thought I'd chip in to represent the recipients of EII funding.

People do have to be aware that they are investing in SME's and the risks that go with it.
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This cannot be emphasised enough. If you want to take a little more risk than buying Microsoft shares there are plenty of lower tiers of investments with higher risk (AIM, penny stocks etc.) before you reach the typical company seeking EII funding. This is not to denigrate these companies at all, but I think if people were more aware of how small these companies are and thus how high the risks are, the perception of the scheme would be much better.

...if you're lucky enough to get your money back at all
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At a bare minimum you get 30% of your money back from Revenue when you invest, if the company is still around and has grown by a single employee four years later you'll get another 10% back from Revenue. While losing the other 60-70% would obviously be very bad, having a floor set on the amount you can lose, while investing in such high-risk assets is pretty rare.

The returns are capped at 110% of investment, so the broader you spread it the safer is seems to me.
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Just to point out that this cap you mention is put in-place by the fund you are investing in, not the EII Scheme specifically. You can invest in EIIS companies directly with no cap on your returns, just like you would invest in any other company. There is a big difference between investing in EII companies through a fund vs. directly, with the fund just trying to get an unsophisticated investor a small but more likely return, while investing directly is similar to investing in any other company where you may get a big winner 1/10 times. I appreciate there is a market for what these funds do, but if you saw the fees-upon-fees they layer on the companies who receive money (which the investor will never see) and how their focus is much more about this than your return, you might not feel too comfortable about it.

Just some thoughts from the other side :)
 
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