Irish Financial Review

Getting the basics of personal financial planning right

Question: How much would you have if you doubled one cent every day for the month of September?

Answer: Read on!

Taking care of the change matters

Developing a positive relationship with money will pay off in the long run

Personal financial planning is more important than ever especially if you are to believe medical experts who predict many of us will live to a ripe old age.

But all too often, financial planning is presented by financial planners as a mathematics exercise.

It’s a love affair, not a scare affair.

Financial services is flooded with archaic terminology which sometimes confuses even the experts. Take ‘Automatic Income’, a feature of unit linked bonds. While the term may signal an income feature, it is instead a cash-out feature, in other words, the customer simply taking their own cash back and NOT receiving an income at all. Within the pensions arena, things get much more confusing with layers of rules, regulations and terminology causing even the most seasoned experts to strain.

Personal financial planning must begin with a regular review of the basics. This can be achieved through five very simple tools: A personal income and expenditure sheet, income documents, bank account statements, credit card (and debit card) statements and receipts. That’s it for a majority of families.

Sweat the detail and the money will take care of itself

All too often, I hear people say how they have too little left over at the end of the month to save to retirement. However, after just three months of tracking their spending and improving their own personal relationship with money, many are surprised with the results.

Following are some simple steps all families need to take in order to improve their personal finances:

1. Identify where they are financially today. This includes analysing all income, outgoings, value of property, cars, pensions, stocks and bonds…everything that informs if one owns or owes more (or less).

2. Set goals. For example, how long do you plan to work…do you have children that will require third level education…have you made arrangements for possible inheritance tax bills for your children…will you need ready access to funds on retirement?

3. Develop a plan. Make sure you have a plan that will minimise future tax liabilities and that your investments are liquid which can be accessed quickly should you need. Illiquid funds like property can take far longer to access.

4. Monitor progress. When we set personal financial plans, we do so on the experience of today and future expectations. But future needs WILL change due a wide variety of factors, including loss of employment, family breakdown and illness. Because of this, it is really important that you review your financial plans to adjust accordingly to meet future needs.

But back to my original point about money. It is all about the relationship you have with it. Checking in often and inspecting it regularly will ensure it remains top of mind and under control.

One last thing, my opening question:

One cent doubled every day during the month of September will yield...€10.7MILLION!

Frank Conway is founder of, a personal budgeting and financial education resource developed for students and adults.


Property price rises unsustainable without robust mortgage market

The Irish mortgage market continues to be extremely weak. This is based on a detailed analysis of mortgage lending statistics published by the Irish Banking Federation for H1, 2014.

On a statistical level, the latest figures look promising; lending is growing. But all is not as well.

On review of the actual number of mortgage units for a house purchase, activity is very low. For this measure, I only use three of the five mortgage categories listed by the IBF, which are first time buyers, second time buyers and investment property mortgages (I omit top-up loans and switcher mortgages).

Combining the 1st and 2nd Quarter figures, a total of 7,463 mortgage units have been completed.

IFR - Mortgages Q1&2 2014

Irish Mortgage Lending (House Purchase) Q1, Q2 2014

Comparing the combined 1st and 2nd Quarters of 2013 to those of 2014 reveals a significant rate of growth, but such a comparison would be wrong since Q1, 2013 was a mortgage washout following the ending of Mortgage Interest Relief (MIR) in 2012, which ‘sucked’ a lot of additional mortgage business out of Q1, 2013.

A fairer and more reliable comparison would be Q2 and Q3 2013 with Q1 and Q2 of this year. Doing so reveals a more reliable growth trend.

Where all of this is going is what can we expect to see in terms of total lending for house purchases in 2014.

At a very minimum, if the best lenders can do is continue their current rate of mortgage lending growth, we should see in the region of 15,000 – 18,000 mortgages drawn (for house purchases) during 2014. Not too shabby when one considers that at the end of 2011, total units were barely more than 11,000.

But lets say lenders do reach the 18,000 mark, how does that compare to past years?

The answer is a little disheartening.

18,000 mortgage units for home purchase takes us all the way back to 1974, when a total of 18,313 units were originated.

IFR - Mortgage Lending 1970 - 1979

Irish Mortgage Lending (House purchase) 1970 – 1979

Too Few Lenders

The real problem in the current mortgage market is that of too few lenders. AIB and Bank of Ireland are the dominant players, lending up to 92% of the value of the property. Beyond that, other mortgage participants are active, but much less so with some still hampered by severe mortgage arrears.

Property Market

The ongoing ‘recovery’ in the Dublin property market is based on the narrow limitations of a significant cash audience. For a more sustained and broader recovery to take hold, we need a more robust mortgage market.

Great news for mortgage holders, bad news for savers as ECB holds firm

Today’s decision by the Governing Council of the European Central Bank to leave interest rates unchanged was in line with broad expectations.

Mario Draghi is hoping to nurse eurozone economies back to health by keeping interest rates low

With concern about eurozone economies, Mario Draghi and his team keep interest rates at record low

Good news for mortgage holders
For Irish mortgage holders, the decision means that interest rates remain at historic lows resulting in continued record low monthly repayments for the estimated 400,000 residential tracker mortgage holders here.

Bad news for savers

For Irish savers, the news should be less welcome. Over the course of the last 12 months, savers have been hit with a steady reduction in the amount of interest income they can expect to earn on their money. Additionally, the very significant rise in DIRT payable on interest earnings means that savers are being harshly punished for their prudence, a trend that is expected to continue as more and more banks reduce the rates of interest they are prepared to pay.

Across the savings spectrum, only one bank pays 4%, which is Nationwide UK on a regular savers account with a broad majority of banks paying, in some instances, fractions of a percent to their customers. Savers, who were broadly courted a few short years ago by banks, many of which were struggling to repair their capital ratios have now pushed those very same customers into the persona non grata category.

For those with a tracker mortgage, this interest rate environment is heaven. However, for those with a little extra cash, this current environment is hell” said Mr. Frank Conway, Founder of, the financial literacy initiative for students and young adults.

Working out the cost of buying a home

It’s that time of year where lots of would-be first time buyers and second time look around at their home-buying options and think about where they would like to put their roots for the next phase of their life journey. But before emotion takes over, first, they need to ensure they do the all important maths.

Following are many of the primary costs associated with buying a home that MUST factored into the home buying equation:

Stamp Duty
1% of property value (double over €1Million) but which one bank (Bank of Ireland) will now pay for qualifying first time buyers (i.e. those that take out a mortgage with that lender).

Working the costs of buying a home

Working the costs of buying a home



Local property tax
This is the big area of future consideration and the taxable amount your home will fall under in the future. For example, some local authorities are committed to reducing property tax rates which will be good news for those affected but watch out for where you buy. For example, it may just happen that you move from a one L.A. area where the taxable rate is lower, or higher, it mat just mean you pay more or less tax on your property.

Home Energy Efficiency
Properties across Ireland must be energy rated as a condition of sale. Home heating costs, while they have fluctuated still account for a significant annual expenditure ranging from a few thousand Euro to much more (depending on the size and energy efficiency of the property). So, when buying, it is important to factor in the energy rating of the property as this will incur a sizeable running cost later on.

Anybody buying a property would need to be out of their mind not to consult with a qualified surveyor to carry out a comprehensive survey of the property for the condition it is in. Even properties that were built within the last 10 years must be treated with suspicion as has been highlighted in recent high profile cases in the media.
The Society of Chartered Surveyors Ireland (SCSI) is the professional body for chartered surveyors. Costs vary, starting at €250 for a basic survey and rising to €1,000 for full structural surveys.

Legal fees
There are no hard or fast rules as to how much a solicitor will charge for the necessary work required. In the old days, it was pretty standard for a 1% of the value of the property to be levied, but that charging system went out with the Celtic Tiger. Today, solicitor’s will be prepared to compete for business so fees can range from as little as €1,000 but remember that other costs including what are grouped as ‘outlays and charges’ as well as VAT will usually be factored in. In this area, be prepared to put aside €1,500 – €2,000 minimum to ensure all the important legal work is completed to a satisfactory level. This could be significantly higher depending on the property type and location and whether or not a full Title search is warranted *

Estate Agency fees
With the return of the mini property boom, estate agents are in their element again and fees are no problem. Reports from the market is estate agents are in little mood for negotiating fees, which all look suspiciously similar across a number of brands. In this area, it is important to know that estate agent fees run at about 1.5% of the property price. Plus, you have to also factor in VAT and with some agents adding on ‘advertising costs’, the final charge can be pushed up even more.

Mortgage broker fees
Unless you are paying cash for the new property, if you plan on getting a mortgage, in some cases, buyers end up using the services of mortgage brokers. Brokers earn their keep a number of ways, one of which may include (it usually does) a mortgage application fee, which can cost €500 – €1,000. So it is important to factor this cost in at the onset.

If your new home is valued at a higher amount than the one you are selling then the cost of insuring it will also be higher. So, in order to keep costs at best value, best to call a number of different providers to compare costs and seek out best value. Remember to get quotes for best deals on the home replacement cost as well as the contents. If you have any questions, the Society of Chartered Surveyors of Ireland website provides some excellent guidelines on how you should value your home for insurance replacement costs ( so the rule here is get an estimate on the approximate replacement cost of the property you plan to buy, an estimate on the value of the contents and then set off to get some real quotes from 4 – 5 providers. Job done!

Possible commute costs
One thing that folks often to factor in to their costs evaluation factsheet is the additional cost of commuting from a new location to a job but this can really add up depending on how well a new location is connected to your place of work (or not). Remember, driving costs, parking costs, bus costs, all are either really expensive or on the increase.

Tracker mortgage costs
This is the big ticket item that is front of mind for so many existing mortgage holders these days. Banks ceased offering tracker mortgages at the height of the credit crunch in late 2008 and they haven’t looked back since. For those families with them, their general cost of borrowing is somewhere in the ECB + 1% range, which works out at 1.15%…this is really, really cheap money. By comparison, a pretty average standard variable rate mortgage in today’s market costs in the region of 4.5%, the difference in repayments on a €250,000 is massive. How much difference do you ask, well, the monthly repayment on the tracker option 1.15% (30 year loan term) would be €821.44 whereas the standard variable rate would cost in the region of €1266.71.
The rise in property prices presents a level of positive news not seen in the market since late 2006. However, for would be movers, the costs associated with relocating are not insignificant making it really important to conduct a thorough analysis of all of the relevant costs up front. This must include both the short term costs (estate agency, valuer, solicitor fees, and broker fees) as well as the long term ones (property tax, heating, water, mortgage and commute). Developing a full list in advance and working through those will help prepare those considering their options to be fully informed and prepared for the financial costs.

Life insurance costs
Your mortgage company will require you have Mortgage protection (this is Life protection policy) in place as a condition of the mortgage contract. In most cases, this should not present a problem but in some rare cases, it may. So, may want to have a discussion with a Life protection company or independent Life protection broker in advance to establish if you could encounter any obstacles to securing Mortgage Protection approval.

Frank Conway writes the Irish Financial Review ( and is founder of, a financial literacy initiative designed for students and young adults.

5 effective ways to protect your online data

With online commerce set to explode in the coming years, more and more consumers are turning to online channels to both shop and pay for goods and services. But what consumers may not realise is that while a central appeal to online shopping can be the ready access to comparative pricing and instant ordering, the convenience of the web is a two way street.

Consumers must increase their knowledge of protecting their online data

Criminal hackers are a growing problem for e-commerce providers, particularly those with less than robust technology platforms designed to prevent against the most tech savvy hackers.
Even consumers who feel they exercise extreme caution when it comes to their privacy settings may still be vulnerable to a cyber if they allow third-party applications to access their profiles.
Once a user’s information such as location, date of birth and family connections has been logged, this can be used to hack into their other accounts, such as banking.
1. Check for the https://
Before entering payment details into any website, check the web address has an ‘s’ – which stands for secure – after the http. If it doesn’t, don’t use it.
2. Keep a close eye on your bank statements
Really savvy people cross check their receipts with the payment history on their statements, in fact, this is central focus of digital learning website,, which promotes financial literacy and budgeting among students and young adults. So, don’t go overboard but do keep an eye out for any unfamiliar transactions to recipients you’ve never heard of.
3. Use multiple passwords
This can be a bit of a labour of love if you have many accounts but having more than one password / login can really increase your privacy. It simply makes life so much more for criminals if they do manage to find a password / login setting that they won’t be able to do so easily across other accounts.
4. Check your social media privacy settings
Change all Facebook settings to “Friends Only” for all posts for a more secure profile. Facebook often makes changes to these settings and, when it does so, can even reset your secure settings. NOTE – this can also be a good protection against not getting that next job…increasingly, prospective employers use social media (debt collectors too) to look you up…and even track you down!
5. Exclude important personal information from your social media profiles
Remember that your private information is being broadcast to the world via social media and when it comes to criminals and hackers, the more information the better. Just remember that you may be making the life of the criminal hacker easier every time you publish details including your phone number, address, children’s age or school. This is where you need to use extreme caution, cull ‘friends’ you don’t know and really try minimise the information you broadcast about yourself.

Askaboutmoney hack data breach warning

The online personal finance forum, Askaboutmoney has admitted its website was hacked and has advised users to change their passwords.

The Irish based website ‘thinks’ its systems were breached around June 21 resulting in the unidentified hackers downloaded usernames and email addresses.

The website owners admitted that the hackers may have been able to access user details, including passwords.

The breach first came to light around the time of the hacking in June, and was fixed.

At that stage the administrators did not think personal information had been compromised. However, suspicions were aroused further on Monday after users of received spam emails to addresses which they had used to register for the service.




Spotting the best credit card deals

Credit card users will end up paying significantly more in interest charges when they use them for cash advances compared to using them for purchasing goods.

MoneyWhizz - Credit Card Comparison 2014

Cost Comparison for Credit Cards in Ireland

This is the latest finding of an analysis of credit cards conducted by, the financial literacy website.
Within the Irish market, consumers that sign up for so-called ‘sweetener’ deals at zero percent interest on balance transfers will be liable for interest charges of 20% or more when they use their cards for cash advances. This higher rate of interest is charged from the point of the cash advance, there is no grace period and payable until the bill is paid in full. Card users could have be paying two rates of interest, one for purchases and one for cash advances until the bill is fully paid off.
“Consumers need to look beyond the interest-free periods and factor in what their credit borrowings will really cost them, particularly now as the holiday season is about to begin” said Mr. Conway.
For this analysis, compared the leading credit cards on offer from Bank of Ireland, AIB, Permanent TSB, Tesco Bank, KBC and Ulster Bank.
It analysed the cost of repaying a balance of €1,000 using a minimum payment formula popular with most card issuers (3% of the outstanding balance).
Best deals
AIB’s ‘Click’ card (statements must be accessed online) offered one of the best deals in the market on purchases while the Tesco Bank Club Card offered one of the best deals on cash advances.
Expensive deals
Bank of Ireland and Ulster Bank were highly expensive on their ‘Student’ cards for cash advances with interest charges exceeding 21%.
Additional fees and charges
Cash advances also typically incur various other charges and fees which impact on the card’s overall cost of borrowing, measured as the cards annual percentage rate or APR.

Full analysis as follows:

Some important tips on reducing cash advance fees and charges:
As outlined above, one thing to keep in mind when considering a cash advance on a credit card is the higher cost of interest (and APR). Also, users generally will not have a grace period before interest starts accruing. They also typically have transaction fees so it is important to know what this will be before making any withdrawal. Users will have received a copy of the fees from their card issuer or can access the same information on the issuer website ( was able to access fees data on all issuers for this analysis).
• Transaction fee: You will pay a transaction fee for credit card cash advances
• APR: The APR for cash advances is often higher than for credit card purchases
• Interest-free period: Cash advances often begin accruing interest at the time of the withdrawal, meaning there’s no grace period
Some easy ways to limit the fees associated with a cash advance
• Limit transaction fees. Some transaction fees are a percentage of the overall advance; in that case, you could limit the fee by withdrawing only as much as you need. Other transaction fees may be a flat rate or a combination of a flat rate and percentage of the transaction. In this case, if you take all the cash you think you’ll need at once, instead of making multiple smaller transactions, you only pay the flat fee once.
• Plan your repayment. Remember, your repayment will be accruing interest until the amount is paid off. Always try to have a plan for how and when you’re going to pay back the advance.
How to avoid taking a cash advance
• Make purchases with your credit card. If you have the option, you can often limit interest and transaction fees by charging purchases to your card rather than getting a cash advance.
• Avoid unnecessary purchases. Ask yourself if the purchase you intend to make with your cash advance is worth the extra fees, or if it can wait.
• Check your balance. Don’t use a cash advance as a buffer just because you’re unsure how much money you have in your bank account.
• Create a budget. A budget will help you compare your income to your costs, so you know how much you can save to cover unexpected expenses in the future (to learn more on how to structure a personal budget, check out this free website:
• Build an emergency fund. Occasionally you’ll need to pay for things that aren’t in your monthly budget, such as car repairs. By building an emergency fund when things are going well, you may be able to avoid having to use credit card cash advances for these transactions.
Why do cash advances cost card users more?
In a nutshell, risk! Bank all over the world use what is called risk profiling to assess the patterns, behaviours and risk factors associated with card users. Those that have come to rely on their credit cards are determined as a high risk category of potential default, which is why card issuers charge more. So, for users, they just need to think about the financial consequences.
Frank Conway is the founder of, the financial literacy initiative developed for students, young adults and not-so-young adults.


Get every new post delivered to your Inbox.

Join 103 other followers

%d bloggers like this: