Q. I would like to get into the stock market and invest my money more wisely. Most of my savings are on deposit earning buttons so I’m considering using those savings to buy shares directly. Is it a good idea to buy individual shares – and what kind of tax can I expect to pay on any profits I make ? John – Mullingar Co West Meath
A. Buying individual shares is a mug’s game John – a hit and hope strategy that could very well lose all your money. Yes I agree that interest rates are low and getting lower but if you do want any growth, you MUST accept a modicum of risk. The stock market has been the best asset class of them all. Between 1991 and 2020, the average annual growth was 10.72% ! Warren Buffet though said “the stock market is a mechanism for transferring wealth from the impatient to the patient”. That is why I particularly like the simple and easy to understand managed fund investments now available through all insurance companies. Managed funds in my view are the best route to enter the stock market. With these, you are generally asked to select a fund, risk-rated between 1 up to 7 where 1 is the safest fund ( government bonds, cash funds etc ) and 7 the riskiest ( emerging markets, technology and energy stocks, the BRICs countries etc ) You can swap to safer funds at any time and at no cost – most providers offer up to 12 free swaps a year – and you can avail of gross roll-up ( so no tax deductions except on withdrawals IF you have made profit at time of withdrawal. Only after 8 years if no withdrawals is the 41% tax payable on any profits at that time if there are any ) Leading the managed fund pack are Irish Life’s Multi Asset Portfolio funds ( check out their Dynamic Shares to Cash feature – automatically moves funds from aggressive to passive on global economic events ! ) Standard Life’s MyFolio funds and Zurich’s Prisma Funds. Remember, if you want growth, you MUST take some risk. Email me for details.