With Budget 2020 just around the corner I thought it may be interesting (in a nerdy way) to see who pays what in our tax system. With that in mind I recently read the Irish Tax Institute Pre-Budget Briefing. Below are what I found to be interesting and salient points.

https://www.irishexaminer.com/breakingnews/business/financial-advisors-baffled-by-irish-discriminatory-savings-tax-rates-930559.html

Beware! An investors enemy is likely to be himself........

In previous communications I have flagged that I believe that volatility will return to the market, and that the relative serenity of recent equity markets will give way to choppier waters. This has broadly come to pass in 2018.

Budget 2019 was announced and although there was not much wildly exciting or unexpected, I thought it may be useful to outline the main changes that could affect / be of interest to you.

Given the recent volatility in stock markets I thought it timely to write to you about a number of things fundamental to investing.

2017 looks as though it will have been another good one for equity (shares) investors. Equity markets have delivered positive returns, supported by stronger economic fundamentals. Corporate profits has seemingly trumped politics as far as investor sentiment was concerned. Recently even the political scene is showing some glimmer of improvement. Theresa May’s Brexit breakthrough heralds the next difficult phase of negotiation, but at least it is progress.

Budget 2018 was announced and although there was not much wildly exciting or unexpected, I thought it may be useful to outline the main changes that could affect / be of interest to you.

Stock markets, in general, have continued their upward trajectory. Share prices, benefiting from the extraordinary monetary policy that Central Banks have implemented via Quantitative Easing, have now been on a bull run since March 2009, the second longest in history. There has been relatively little volatility in markets. Furthermore bond markets have been in a bull market for the last 3 decades, benefitting from falling interest rates, which are now effectively 0%. Cash is still yielding nothing. So where to from here? I think we are at the start of a new stage in the economic cycle, one in which there is more risk to the downside than of upside potential, and I would suggest that investment portfolios at this point in time should therefore be defensively tilted.

The past twelve months have been instructive in teaching investors about the volatility that should be expected when investing in equities (company shares). In early 2016, some investment markets had dropped by over 10% in a matter of days and the harbingers of doom were predicting a stock market meltdown. As we look back on actual stock market performance of 2016, we see that the FTSE World (Total Return) returned +11.9% in Euro terms and the S&P 500 returned 12.9% for the full calendar year. This would imply that those who sold their holdings as a result of the early falls, may well have ended up in a position where they crystallised a 10% loss and missed out on a 12.9% gain, a swing of 22.9%.