Scenario:
Married couple, aged 68-75, pensions plus self-employment income 45-50k gross, 10% direct tax paid
Assets:
House = 250k approx
ARF fund = 70k, from which 5% income drawn each year
An Post savings = 150k
Other deposits = 50-100k
Managed fund = 150k
My query is about the managed fund.
Started May 2007, 100k premium + 1% extra allocation from Eagle Star = 101k, plus 3.5% commission rebate from discount broker = 104.5k initial net allocation.
Zurich Matrix funds, 8 funds, split evenly, 12.5% into each fund.
Fund value went as low as 85k I think.
Value June 2012 = 94k.
Value May 2015 = 150k, very strong recent gains, especially on 2 bond funds.
8-year 41% tax applied this month, so approx 20,000 tax paid on the gain.
It's staggering to pay 41% tax on gains, when your average income tax rate is 10%, and your MTR is 20%.
The tax is paid now, so can't do anything about it.
Question: will this happen again in 8 years time?
Question: any alternative more tax-efficient ways to hold savings?
ETFs, which I know a bit about, maybe?
Direct shares - couple may not be happy with this, they are risk-adverse.
Another question: could we get a lower AMC? I think the AMC is 1%. Even moving the 130k to an assurer with 0.5% or 0.75% AMC would save 325 to 650 pa.
Note that it is very unlikely these funds will ever be encashed, they will end up in estate.
Married couple, aged 68-75, pensions plus self-employment income 45-50k gross, 10% direct tax paid
Assets:
House = 250k approx
ARF fund = 70k, from which 5% income drawn each year
An Post savings = 150k
Other deposits = 50-100k
Managed fund = 150k
My query is about the managed fund.
Started May 2007, 100k premium + 1% extra allocation from Eagle Star = 101k, plus 3.5% commission rebate from discount broker = 104.5k initial net allocation.
Zurich Matrix funds, 8 funds, split evenly, 12.5% into each fund.
Fund value went as low as 85k I think.
Value June 2012 = 94k.
Value May 2015 = 150k, very strong recent gains, especially on 2 bond funds.
8-year 41% tax applied this month, so approx 20,000 tax paid on the gain.
It's staggering to pay 41% tax on gains, when your average income tax rate is 10%, and your MTR is 20%.
The tax is paid now, so can't do anything about it.
Question: will this happen again in 8 years time?
Question: any alternative more tax-efficient ways to hold savings?
ETFs, which I know a bit about, maybe?
Direct shares - couple may not be happy with this, they are risk-adverse.
Another question: could we get a lower AMC? I think the AMC is 1%. Even moving the 130k to an assurer with 0.5% or 0.75% AMC would save 325 to 650 pa.
Note that it is very unlikely these funds will ever be encashed, they will end up in estate.