# Show me the Money - Oversaving Cavanman



## Brendan Burgess (6 Feb 2004)

Posted in error


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## Not boring (6 Feb 2004)

*I enjoyed it*

Last night's show certainly wasn't boring. I laughed my socks off. It had; Cavanman, sparkly wife, over-saving, British property, Intel Shares, fear of taking profits and paying tax etc. The end was hilarious, and not an over-spender in sight!


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## Cahir (6 Feb 2004)

*Re: Hey who moved me*

She should have spent some money getting her eyebrows done - I swear to god I was hypnotised for the whole show!


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## paulie (6 Feb 2004)

*smtm5*

Not a bad programme last night. My only criticisms would be that once he had given the advise and they accepted it, the show went round in circles for the remaining 20 minutes. Eddie could also have followed up on whether they did actually take the plunge in Liverpool. 

Oh yeah and the fact that her hair was a different colour in every scene


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## The President (6 Feb 2004)

*overspending*

Nos so sure I agree there... I think i would call increasing their outgoings, potentially, with a UK "investment " property, while at the same time reducing the income when Cavan man works less days not the brightest  suggestion...


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## Tony T (6 Feb 2004)

*Cavanman*

Cavanman needs to donate half that wealth to Cavan general hospital before the whole population gets wiped out and Cavanman is no more on this planet.
Imagine that for a scenario!!


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## bluebean (6 Feb 2004)

*re*

I thought Eddie was being a bit reckless with his advice to spend, spend, spend....ok, they were saving a lot but its not like they were starving themselves in the process either.  I would have advised them to diversify too, but I thought Eddie ended up being a bit forceful in his 'spend some money on yourselves' spiel...
just my opinion!

The wife seemed to be listening though - wonder how cavanman felt about her spending all their money down the local hairdressers??!


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## Pat (6 Feb 2004)

*Property Prices*

What about Eddie's comment that house prices in Ireland have only one way to go DOWNWARDS and told the couple to invest in UK or Europe. His argument was that the yields in Ireland were below the UK level and Europe.
Does anyone know what the yields in property in Ireland should be. If you dont invest in property then the yield on a deposit account is at best 2%.

Also, Eddie didn't point out the exchange rate risk of investing in sterling.

Pat


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## Breeze (6 Feb 2004)

*Re: Oops*

obviously she was trying to compete with his guitars for attention. Look dear..today I'm blonde, red, brunette..


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## davidt (6 Feb 2004)

*intel shares*

what was the scoop on intel shares


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## Yield (6 Feb 2004)

*Eddie's Argument on yield*

Eddie in last nights program reckoned that property yields in the UK were twice that in Ireland. What did he mean by this ?

His example was the £150K house with a rental income of £9K per year.

That sounds pretty much like most places in Ireland - the rent just about covers the moprtgage ?


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## Protocol (7 Feb 2004)

*rental yields*

That's a 6% yield, which is above Irish yields.


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## Sally (7 Feb 2004)

*Bluebean*

C'mon Bluebean, thats pretty sexist stuff. She was great, and clearly changed over the programme. He had her accounting for every Euro, and saving €20,000 a year even though the Intel share price had collapsed. She woke up, and is driving the agenda to invest in property. I don't see whats wrong with that. Picking her up on her hair is just awful.


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## Brendan Burgess (7 Feb 2004)

*Re: intel shares*

I find a lot of people say that they can't make ends meet. When you look at their figures, you find that their expenditure includes €3000 a year into SSIAs and maybe €5,000 capital repayment on a mortgage. So they are net savers rather than net spenders. Eddie was right to bring this point home forcefully. It's a nice contrast to previous programmes - oversavers instead of overspenders.

However, it seems to me that he got the whole diversifiction thing wrong. They already own a property worth €400k. Their Intel shares are worth about €20k. Maybe they have €100k in their pension funds. So they are already heavily invested in property. To diversify, they should be buying more shares. Borrowing to invest in property is concentrating their investments rather than diversifying. 

Most people make this mistake. They leave their home out of the picture which they shouldn't do. 

Brendan


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## Harry (7 Feb 2004)

*Above*

Brendan, I didn't pick that up at all. I've two close friends who work at Intel where the show struck a real cord, because they are all heavily concentrated in Intel stock, and wrapped up in the share. They follow it closer than the most red Manu supporter. I thought the show said he was saving €20,000 not that he held €20,000. I reckon he held an awful lot more. My guess is that most of the 20,000 was going back to buy Intel in the share purchase schemes, and that a huge part of their balance sheet was equities, which is why Hobbs pointed out that their investment assets was cash and equities, mostly Intel.

One comment I recall was to build it up in Intel stock and diversify into property, which I thought was ok. Presumably the heavy AVC's were going into an Equity fund anyway. Anyway thats what I picked up.


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## EstorilB (7 Feb 2004)

*Re: intel shares*

Hi Brendan,

From the figures given on the show they had 750K worth of intel shares at the height of the bubble which had intel shares at around the $70 mark so I'd guess they'd be worth around the 300K mark at the moment....  Thats a lot of eggs in one basket.  However its the kind of problem I wish I had  :rolleyes 

EB


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## tgirl (7 Feb 2004)

*family home*

I'm afraid I agree with not treating your residence as an asset. It's not the same as an investment property which can be sold off with minimal impact to your lifestyle.  There are other arguments, but I can't think of any of them at the moment!!


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## Brendan Burgess (7 Feb 2004)

*Re: family home*

Hi Estoril

You are right. I got my numbers wrong by a factor of 10. His Intel shares are now worth around €300k. With his pension fund and his home, his total assets are around €800k. I would recommend reducing his Intel holding down to below €100k, unless there is some clear tax reason for not doing so. But Eddie made the point very well, that he shouldn't allow the tax tail to wag the dog. 

tgirl

I have argued this issue before on many occasions and few people agree with me. Take Cavanman. Had he sold his Intel shares 4 years ago and traded up to a home worth €1.2m would you use the same argument that he must omit the home from the calculations? 

If they decide to relocate to Cavan in a few years, his home will acquire a purely monetary value like any other investment. 

When he is 80 and has blown all his cash, he will be able to trade down to a smaller home or release equity in his home to supplement his income. 

If he accepted Eddie's opinion that Irish house prices will fall, then, from a financial point of view, he should sell his home and rent until they are cheap enough to buy in again. So he would have around €800k cash to invest. 

It seems very obvious to me, but most people don't agree with me. 

Brendan


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## tgirl (7 Feb 2004)

*residence*

I see what you mean Brendan, but if I had the money to trade up, I wouldn't 'invest' it in my own home, I would buy an investment property.  Typicaly people spend more money on their own residence than on a rental property, and on a 1.2million home that could be a lot of unrecoverable spending.  JMO!!!!  I would prefer to own my home outright and keep investing seperate.

Must go clean said home!


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## MAC (7 Feb 2004)

*Not so Steady Eddie?*

Eddie commented on teh stock price dropping from $70 to $14 and as I recall he then told him next time the share hits 23 or 24 SELL.  Given that the stock is now trading @ 30 after being up to 34 that might be something he hasn't thanked Eddie for?

MAC


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## <A HREF=http://pub145.ezboard.com/baskaboutmoney.s (7 Feb 2004)

*Re: family home*

You mean even EDDIE HOBBS can't predict the equity markets! I'm gobsmacked!!!


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## Harry (7 Feb 2004)

*Above*

I'd guess that that many of his share options become live again once the share price hit $24, and based on the outside meeting, the advice was given in the Summer, when Intel was hovering in the low twenties. There's never a perfect moment to sell, it only becomes clear after the event, so phased encashment would make sense. I gree with Brendan about the stock specific risk being taken.


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## ParkLane (7 Feb 2004)

*Perceptions*

It's always interesting to look at the furniture in the background. These people had nice furniture and nice kitchen fittings. The lady indicated during the programme that at one time she used to "spend". I guess when Intel share were riding high they spent with the secure knowledge that they had their Intel shares to fall back on. I think it must have come as a great shock to them to see the value of their nest egg drop in value. Their reaction must have been "God, we are losing everything". When in fact they weren't. It strikes me that they had no one to talk to and this fear multiplied tenfold.  
Having said that my good wife thought that these people were really on an ego trip appearing on the show.


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## Sludge (7 Feb 2004)

*My home is my investment.*

Many years ago I with no mortgage I had the choice of investing in 3 or 4 apartments or move home and get a bigger, better home in a better location. I chose to move home.
I am pleased to say that I feel I have made the right decision. The value of my new home has increased 8 fold in about 10 years. If I sell I have no CGT. I have also had the comfort of a better and more comfortable home for the past 10 years.
On the other hand if I had invested in the apartments I imagine that I would have ended up with the same pot of money at the end but with the headaches of being a landlord, CGT and a less comfortable home over the past ten years.
The also would have been the temptation of giving/selling at reduced price, to each of my children one of the apartments as each got married.


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## Brendan Burgess (8 Feb 2004)

*Re: My home is my investment.*

Hi Sludge 

You got there before me. Too many people invest in a separate property without comparing it to the advantages of trading up. 

On the positive side of a separate property:
1 - you can write the interest off against the rent for tax purposes
2 - you get a cash income from it
3- if you need cash, you can sell it, whereas you can't sell half your house.

On the positive side of trading up:
1) you have a far nicer house - maybe saving a lot of commuting.
2) your gain is tax free
3) you have no adminisitrative hassle

Depending on what assumptions you make for gains in the future, the net benefit from owning a rental property might not be that much

Brendan


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## <A HREF=http://pub145.ezboard.com/baskaboutmoney.s (9 Feb 2004)

*Re: family home*

Every time I read this topic heading I see "overspending CAVEMAN"! :lol


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## red (9 Feb 2004)

*"caveman"*

is that wishful thinking or a Freudian slip!


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## davidt (10 Feb 2004)

any mention that those buying intel shares are also currency speculators. the usd has weakened by over 50% since 1998, wiping out 50% of share value alone since then


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## Harry (10 Feb 2004)

*Fx Movement*

Intel staff watch the fx market and the swings in the Dollar / Euro just as avidly as the share. I don't think theres a European investor in direct US assets unaware of this factor.


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