Paul Overy of Neville and Partners joined us on Tuesday evening to speak about wealth creation and financial freedom.
Here’s a summary of some of his key points:
1. Make a plan:
Paul discussed how those with a financial plan accumulated significantly more assets than those without one. Separately a Wells Fargo 2016 study showed that on average, clients with a financial plan hold 60% more advisory assets than clients without a plan.
Paul explained the importance of educating yourself on personal finance particularly in the absence of such education in schools. We might spend 14 years learning Irish but nothing on how to manage ones own finances. He quoted Jim Rohn who said “Formal education will make you a living; self-education will make you a fortune”.
3. Financial Freedom Number:
Paul discussed calculating your financial freedom number looking at your lifestyle income, expected life expectancy and with relatively conservative growth estimations. There are a couple of online calculators, a quick scan online and I found this article with an explainer of the authors logic and link to his google doc spreadsheet that you can download and input your own details into.
4. Tools of wealth:
Investing tax free and borrowing other people’s money to build up your wealth are two rules which he cited as powerful levers to build up your wealth. Avoiding taxation (when your circumstances and structures legally allow) on investing in Ireland doubles the amount being investing and the amount being returned.
5. Borrowing money to invest:
While this is highly contingent on what you might be investing in, your circumstances and the investment structures available and suitable for you, Paul cited ‘’Once the return on borrowed money is greater than the cost of the loan, the investor is making money for FREE’’.
6. Retirement Legislation:
Retirement Legislation in Ireland allows all business owners the potential to withdraw €2M from their companies and pay ZERO tax. Private Retirement Funds offer business owners the security and control over their investments that allows them to take advantage of the best tax concessions available in this jurisdiction.
7. Investable assets within these structures:
These structures can invest in Property, Equities (public and private), Land, Gold Bullion…etc. and all returns are EXEMPT from income and capital taxes These allowances are “personal” so the more owners/managers there are the greater the tax-free amounts available.
8. Borrowing to enhance returns:
A €250,000 apartment, producing a 7% rental yield and a 2.5% p.a. value increase over 20 years, nets down to a 4.84% per annum return after all taxes The same property, with 70% borrowings (interest only) at 4%, delivers a 9.04% per annum return after all taxes
By changing HOW you make this investment, the annual return is INCREASED by 86% + The net cost of the interest on this loan is 2.34% after tax relief (80%) and as long as the net return on investment is higher than this number, you are making money for FREE! (It’s important to remember property is quite an illiquid asset and basing your pension on purely Irish property is very undiversified and risky but this point is to underline the mechanic of borrowing to invest and the opportunities afforded by it.)
*As always there are summary notes from Paul’s presentation and should NOT be taken as recommendations and as always please also do your own independent research and speak to your own financial advisor.*
If you would like to discuss the above further with Paul, he is happy to meet any prospective client on a “no foal, no fee” basis. He will follow up preliminary meeting with an outline of the services that can be delivered, their costs and benefits, in writing If any product/service does not deliver the promised benefits, he has a fee refund guarantee
Call Paul on 086-4103638 or email him at email@example.com