I want to share something with you. In some odd way, I would call myself lucky when it comes to the experiences of life and places I go to. Maybe because I tend to find a silver lining even in most dull situations, but there is something to being scared by circumstances so much that you start making actual positive changes in life. Some behavioural scientists argue that trauma (I use here only to be clear) help to reset the brain (hence increased the probability of actual change) but realising in my early thirties that for most of my adult life I was really bad with my money, actually helps. Financial planing begins.
Financial Education for Everyone
After few events beyond my control I endup selling Insurance almost right after my university degree. Part of the deal is to maintain professional education, which by my opinion should be mandatory for every person living in Ireland. Did you all knew that that tax bill you pay at the end of the year could be offset by the PRSI contributions towards your pension? Did you know that if you have your personal pension and then you get the pension at work you can compensate both? Even at the lower bracket of twenty percent that can compare to twenty percent gain on the savings, something that no savings or low-risk investment could ever provide.
In 2016 on my work trip to Norway I met a young lad from UK. His parents both working stable clerical jobs made him set up pension right at his first employment when he was only sixteen. That in some years thanks to the beautiful thing called compound interest were reaching twenty thousand pounds. I stood looking at him thinking about what my parents made me do when I was his age, and for some reason could not recall any sound financial advice. Apart from forbidding going to the Art School to become the theatre director.
One foot in Finance
As what I do for a living is slowly prove to me is more like a hobby rather than profession I tend to lean back to the financial “foot in the door” I had for nearly eight months. I continued exams where I left off and went head deep into a rabbit hole. Joking, of course, information is quite fascinating and eye-opening. For a while, I considered to be somewhat literate when it comes to doing my taxes, but even at a professional qualifications level, interesting things started to emerge. Did you know that you can offset your taxes if you invest in the qualifying small to medium-sized Irish company? Did you all know that if you moved your deposit savings to solidarity bonds, you would not need to pay dirt, or that residential housing investments had some tax incentives too?
“Everything is a Function” my Mathematics Teacher
What it all means is that if you plan your savings, which you can maximise by buying specific products, you can ride the financial waves no matter the situation in the economy, “weather the storms” I think people say. Back to Norway for another mindblower. In 2008 Crude Oil price dropped due to the decrease in demand following reduced economic activity. However, after the sudden drop in 2009, it climbed back to 4 years in a row high. Norway at that time increased their production, and (this is my favourite part) used that money to buy property which was at its ten year low. And now when oil price dropped, property price is going back up. And also, the technology developed for the deep-water drilling currently serves for offshore wind farming.
Better Late Than Never
I realised that if I was financially aware in my twenties, I could have money to buy property when the price dropped. Even now in 2018 if you can manage paperwork and contractors first time buying is remarkably affordable. But no bank would give out small amounts to buy small investment property where no margin could be made, or loan is not packageable to be sold on. But if I was saving for all those years with a credit union or did the same with a bank and took a loan for a car, I would not be paying exuberant rent. Then once prices go up, I could sell it and use the money to invest where I could lose some and learn how investments really work. When searching the deep web in 2010, I find out about this thing called Bitcoin. It was 1 dollar back then.
What I came to (please correct me if I’m wrong) is that when times are good, one need to save or invest into more liquid assets and when times are bad, you buy assets that usually recover over time. For example, Bank of Ireland share price plummeted to 83 cents in 2008, and if you had bought those shares, you would have made ten times your money today. But being aware does not change the current situation, only by being aware I can clearly access and plan for next ten years. Take some simple steps to get where I want to be in the future. Maybe some of the information will be useful for others too.
My Two Cents
Soon it will be a year since I got rid of my car. Why do you ask? Maybe one of few good financial pieces of advice I got from my late father, was that if you invest in something (car, insurance, repairs) that investment has to bring you money. And with current changes in vehicle ownership in Ireland, money I make do not justify the cost. I chose to make my life around not having a car and got a motorbike instead for the city. As the economy picked up, all of the people I wanted to have in my Insurance basket left for the more premium options what would require me to finance the new vehicle. It’s almost cheaper to rent with a company account than pay insurance, tax, and car finance. And the best thing about renting is that whenever I don’t need it anymore, I just give it back.