Q – I would like to invest some of my money more wisely. Most of my savings are on deposit earning buttons so I’m considering using some of these 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 ? Paudie – Ennis Co Clare
A – Buying individual shares is a mug’s game Paudie – a hit and hope strategy that could very well lose all your money.. a little like buying cryptocurrency – you take your chances. Yes I agree that interest rates are not very attractive and if you do want any growth, you MUST accept a modicum of risk. From 1991 up to 2020, the average annual stock market growth was 10.72% ! Over any other asset class, the stock market has seen the best return but the key to success can be down to timing. We have had 26 BULLS and 26 BEARS ( falling market ) so when is the next one ? That is why I particularly like the simple and easy to understand managed fund investments now available from a number of providers. With these, you are generally asked to select a fund or funds that are risk-rated ( The European Securities & Markets Authority rate all stocks into “lanes” ) and where 1 is the safest fund ( government bonds, cash funds etc ) and 7 is the riskiest ( emerging markets, technology and energy stocks, the BRIC countries etc ) You can swap to safer funds at any time and at no cost and you can avail of gross roll-up ( so no DIRT tax every year only paying tax on withdrawn profits or after 8 years, whichever is the sooner.) .Capital Gains Tax is payable on any share profits while withdrawal tax is payable on managed funds. Leading the pack are Standard Life’s MyFolio funds, Irish Life’s Multi Asset Portfolios ( check out their Dynamic Shares to Cash safety feature ) and Zurich’s Prisma Funds. Remember, if you want growth, you MUST take some risk. Take professional advice.