In this Issue

1. Introduction

2. COVID-19 and the lessons learned for investors

3. Income Protection Insurance for Individuals and Business Owners

4. Succession Planning - Passing your Assets to the next generation


Interesting Links

Stocktake: Catching market tops is 'painfully tough'

Ten steps to a safer computer

Packing up a safe holiday

All signs point to an Irish economic bounce



Tom O’Gorman Property & Financial Services
Old Boley
Co. Wexford, Y35 W220

Phone: 086 2451421
Tom O’Gorman Property & Financial Services are regulated by the Central Bank of Ireland.

Welcome to our mid-summer Newsletter. There seems to be a lot of positivity in the air right now what with the vaccine roll-out giving us some hope of an end to a difficult period in our lives and also the lovely weather giving us plenty of opportunity to get out into the fresh air and sunshine.

We must surely have had some good learning experiences from our drawn-out periods in lockdown. In the first article we look at - COVID-19 and the lessons learned for investors. As surprising as it may seem to many, active investments actually performed positively after the immediate negative drop in values at the outset thus repeating 'history and the market' from previous upheavals.

Our second article looks at Income Protection Insurance and outlines its relevance to both individuals, sole traders and business owners. It concludes by asking if the need to have this cover is any less important than insuring your home, car or even your phone.

Finally, we have a piece on Succession Planning and the many considerations involved in passing assets to the next generation. It concludes with a number of tips that you may find relevant and useful.

We hope that you enjoy the rest of the summer whilst continuing to stay safe and healthy and please do not hesitate to contact us if you wish to discuss any of the topics further.

COVID-19 and the lessons learned for investors
There is an old saying that goes 'Time in the market not timing the market'. This is a saying that has been proven to be correct over and over again. The fallout from the last 16 months just highlights how accurate this statement is. What this pandemic has shown us is that, in most cases, we really cannot predict what is going to happen in the future and the impact it will have on us all.

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Something that has been talked about repeatedly during the Covid-19 crisis is just how much we don't know. It has been a lesson in how limited our foresight can be.

At first, we did not know how far or how quickly the virus might spread. Neither did we know how severe it may turn out to be.

Once governments started imposing lockdown restrictions, we did not how long these might last, or how they would be lifted. We couldn't be sure how many jobs would be lost, or how household incomes would be impacted.

The economic impact remains a point of extensive debate. How deep will the recession be? And how long will it last? Could economies still bounce back as quickly as we originally hoped they would?

As countries ease lockdown restrictions, how many people will be able to return to the jobs they had before Covid-19? Which sectors will return to productivity quickly, and which will continue to struggle?

History and the Market

The same can be said of investing and trying to forecast the right time to de-risk or withdraw your money and the right time to invest or be more aggressive. History and past experiences can be a great help here however given the many upheavals economies and investment markets have experienced over many decades.


Fund managers Dimensional just recently produced some interesting statistics around trying to time the stock markets.  They can be summarised as follows:


  • If you invested $1,000 in US Stocks in 1970, they would be worth circa $121,000 today.
  • If the best single performing day was missed, they would be worth circa $109,000 today.
  • Miss the five best days and they would be worth circa $77,000
  • Or miss the best fifteen days and they would be worth circa $43,000
  • And finally, miss the best twenty five days – circa $27,000


The key takeaway from this is consistent with what is mentioned above being “there’s no proven way to time the market” and the best approach is the “stay in your seat”.


Market Performance since Covid

The natural reaction when the pandemic struck was to be very cautious and indeed in the immediate period after February 2020 showed a fall in market values. Consistently since March 2020 the markets have performed steadily as can be seen from the chart below. This shows the performance of the “Managed Balanced” fund sector, the “Managed Aggressive” fund sector and the “Cash” sector from 28th February 2020 to 11th June 2021:


Chart, line chart

Source: FE FundInfo


€10,000 invested on 28th February 2020 is now worth on 11th June 2021:


A - €11,460.24 using the managed balance sector average (+ 14.6%)

B - €11,740.24 using the managed aggressive sector average (+ 17.4)

C - €9,912.73 using the cash sector average (- 0.87%)


In an ideal world we would all like to avoid declines. The anxiety that keeps investors on the side-lines may save them that pain, but it may ensure the gain is missed.   Historically, each downturn has been followed by an eventual upswing, although there is no guarantee that will always happen. Trying to avoid risk could itself be risky, since it is impossible to know when the right time is to get back in.

One of the key things here is access to sound advice and a good financial advisor will passenger alongside you on the journey.  


Income Protection Insurance for Individuals and Business Owners

Safeguard your income against long term illness or injury  

What is it?

Income Protection is an insurance policy that will pay you a replacement income in the event of you being unable to work due to illness or injury and will continue to pay until you can either recover and return to work or reach your retirement age. It is an extremely valuable form of protection considering the frequency of claims and the average pay-outs.

You can choose the level of annual income you wish the policy to provide up to a maximum of 75% of your income and less the state illness benefit. There is normally a deferred period before which benefit commences of between 4 and 52 weeks and your chosen retirement age can be between age 55 and 70. The benefit is payable once you are medically deemed to be unable to carry out your normal occupation due to illness or injury and this, incidentally, includes mental health.

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Income Protection Insurance is provided by a number of Insurance Companies and there are variations in regard to some “built in” benefits provided by them. These vary from features such as – Rehabilitation Support – Proportionate Benefit payment if returning to work in a reduced capacity – Terminal Illness Benefit to name but a few.

It is important therefore to choose the cover that is right for you and to have access to help in this regard.


Individual Suitability


Income Protection is suitable for anyone who relies on their income to meet their outgoings. The level of cover an individual requires depends on their level of savings, employer’s sick pay policy and maybe there is already cover provided by an employer. Revenue allow tax relief on premium payment to an Income Protection policy at your marginal rate which means that the cost can be effectively reduced by up to 40%.


Business Owner Suitability


For small business owners, Executive Income Protection can be taken out by the company to benefit the owner and/or key employees. When a company makes such provision tax relief on the premium payments is available. Providing Income Protection for key employees can help with improved retention rates and as a valuable tool in attracting talent.


Sole Traders


A relatively new feature of some Income Protection policies is the ability, where you have fluctuating income, to lock in a set payment in the future, regardless of your income at the time of a claim. This was not previously available in the Irish market and eliminates paying for a benefit you may not qualify for should you need to make a claim during a trading downturn.


Claims Statistics


  • The average age of claimants of Income Protection is 42. 
  • The average length of time income is paid during a claim is 6 years.
  • The two most claimed ailments in Ireland are Orthopaedic (back injury/pain) and Psychological (mental health/stress leave) with cancer and heart related conditions following.




You likely have your home, cars and maybe even your phone insured but do you have your earnings insured? Your ability to keep your home, cars and phone will likely rely on your continued income - surely insuring that is worthy of consideration. We would be delighted to help you to decide what is best for you.

Succession Planning - Passing your Assets to the next generation

Succession Planning encompasses many different issues and considerations including questions like – Should I make a will? – What tax considerations are there? – How do I proactively look at passing assets to the next generation?


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There are a number of fundamental questions that need to be considered in this context –


  • If I give my hard-earned assets away now do I have sufficient funds to live on?
  • Are my children sufficiently mature to accept a transfer of assets now?
  • Are they capable of successfully managing a business if this is part of the equation?
  • How do I achieve my objectives in the most tax efficient manner?


And the most important question of all –

  • What do I want in the future?


Capital Gains Tax (CGT) and Retirement Relief


If you wish to sell or transfer a business during your lifetime this can result in a costly Capital Gains Tax (CGT) liability. However, there is a mitigation known as Retirement Relief that may be available. Retirement Relief provides relief against CGT on the sale or transfer of certain business assets provided certain conditions are met. One of these is that you must be aged 50 or older although it should be noted that you don’t actually need to retire. The relief can eliminate the CGT due on shares in trading companies where the business assets and/or certain shares are transferred to the next generation. Transfers done between the ages of 55 and 65 have no cap on values. There is a valuation threshold of €3 million after you turn age 66.

While there are a few other limits and considerations this relief could result in significant tax saving in the appropriate circumstance. 


Capital Acquisitions Tax (CAT)

Transfer of business assets may result in a Capital Acquisitions Tax (CAT) liability for the individual or individuals receiving the gift but again there are certain reliefs that should be considered such as Business Property Relief and Agricultural Relief.

If the gift consists of certain business assets the market value can be reduced by 90% if certain conditions are met. This relief is aimed at facilitating the transfer of family businesses to the next generation.


Gifting Assets

If you plan to gift some or all of your assets during your lifetime you may be liable to CGT on transfers and the beneficiary may be subject to CAT on the same transaction. A credit can, however, be claimed against the CAT liability on the same event but a clawback may be applied if the asset is then sold by the beneficiary within two years.

A valuable exemption known as Dwelling House Relief is currently available. This relief allows for the transfer of a residential property either by gift or inheritance to occur free of CAT provided certain conditions are met. Furthermore, the value of the property is not taken into account when calculating the tax-free thresholds for future gifts or inheritances.

A much overlooked ability that you have is to gift an annual amount to your children or grandchildren up to €3,000 free of any gift tax. This sum can be received from numerous donors without being subject to tax.


Tips and Conclusion


  • Utilise the €3,000 a year small gift exemption.
  • Be mindful of age in relation to the Retirement Relief.
  • Consider transferring assets that have a market value below the original price paid where there will be no CGT liability.
  • Review gifts to children over age 18 to ensure they do not fall foul of Revenue guidelines.
  • If you have foreign property consider any foreign taxes that may arise in the event of your death.