© Annie Patton Investments Next Slide. © Annie Patton Aim of Lesson To increase your understanding of what one can do with excess money and what a company

© Annie Patton

InvestmentsInvestments

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Aim of LessonAim of Lesson

To increase your understanding of To increase your understanding of what one can do with excess money what one can do with excess money and what a company is.and what a company is.

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Preserving the spending power Preserving the spending power of your savingsof your savings

It is important that your savings preserve their spending power or even better increase the spending power as the cost Of living will be increasing.

But my €100 could buy lots 20 years ago and the thief

did not appear!!


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What can you do with What can you do with excess money?excess money?

• Put in a deposit account in the bankPut in a deposit account in the bank• Buy property Buy property • Buy SharesBuy Shares


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Choice depends onChoice depends on

• Do you want to be sure your investment Do you want to be sure your investment (capital) is safe or are you prepared to risk (capital) is safe or are you prepared to risk it.it.

• Tax implications.Tax implications.• Rate of inflation in comparison to the rate Rate of inflation in comparison to the rate

of interest you get in a bank.of interest you get in a bank.• How fast you might need access to your How fast you might need access to your

money.money.• The amount of hassle you are prepared to The amount of hassle you are prepared to

undertake in order to increase your wealth undertake in order to increase your wealth or preserve your spending power.or preserve your spending power.Previous Slide Next Slide

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Buying PropertyBuying Property

• A lot of people increase their wealth A lot of people increase their wealth by buying property.by buying property.

• They can either live in this property They can either live in this property or rent it to tenants. or rent it to tenants.

• As we have seen in other lessons, As we have seen in other lessons, they use their savings as a deposit they use their savings as a deposit and borrow the rest in the form of a and borrow the rest in the form of a mortgage.mortgage.

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Making money by buying Making money by buying property!!property!!

• If the buyer is living in the property, If the buyer is living in the property, they will save on rent elsewhere.they will save on rent elsewhere.

• If the property is rented, the buyer will If the property is rented, the buyer will receive rent.receive rent.

• Hopefully the property will go up in Hopefully the property will go up in value.value.

• However it must be noted that the price However it must be noted that the price of property can go up or down in value.of property can go up or down in value.


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Property AbroadProperty Abroad

• A lot of Irish people are now buying A lot of Irish people are now buying property abroad, in countries like property abroad, in countries like Bulgaria, Hungry etc.Bulgaria, Hungry etc.

• A lot of risk attached here, because A lot of risk attached here, because in addition to the risk of property in addition to the risk of property prices not increasing in these prices not increasing in these countries, a lot of different laws countries, a lot of different laws apply re title deeds etc.apply re title deeds etc.


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Buying SharesBuying Shares

• Often, when people are setting up Often, when people are setting up business, they do not have enough business, they do not have enough money, so they invite other people to money, so they invite other people to buy shares in their company. buy shares in their company.

• As a reward the lenders will expect to As a reward the lenders will expect to get a fraction of the profits, known as get a fraction of the profits, known as dividends, but note in most cases dividends, but note in most cases dividends will not be guaranteed.dividends will not be guaranteed.

• In addition to the payment of In addition to the payment of dividends, the buyers of shares can dividends, the buyers of shares can expect to make money by selling expect to make money by selling their shares at a profit.their shares at a profit.


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So two ways to make money So two ways to make money from buying sharesfrom buying shares


Share prices go up

Share prices go up

Dividends

Dividends

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So two ways to make money So two ways to make money from buying sharesfrom buying shares


Share prices go up

Share prices go up

Dividends

Dividends

Be warned Dividends are not guaranteed

and share prices can rise

as well as fall.

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Portfolio of sharesPortfolio of shares

• When people have shares in different When people have shares in different companies, they are said to have a portfolio companies, they are said to have a portfolio of shares.of shares.

• As share prices can go up or down, it is As share prices can go up or down, it is recommended that people who invest in recommended that people who invest in shares, buy shares in different types of shares, buy shares in different types of companies.companies.

• This is because, when shares in property This is because, when shares in property companies are not doing well, shares in companies are not doing well, shares in banking companies may be doing well. banking companies may be doing well.

• However shares in all types of companies However shares in all types of companies can be doing badly at the same time.can be doing badly at the same time.


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CommissionCommission

• The public are not allowed to buy or The public are not allowed to buy or sell shares on the stock exchange, sell shares on the stock exchange, but must engage a stock broker to but must engage a stock broker to do it on their behalf.do it on their behalf.

• This is the fee that you have to pay This is the fee that you have to pay the stock brokers for buying or the stock brokers for buying or selling shares on your behalf.selling shares on your behalf.


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On lineOn line

• Rather than go through a stock Rather than go through a stock broker a lot shares are now bought broker a lot shares are now bought and sold on line.and sold on line.

• The usual care needs to be exercised The usual care needs to be exercised when giving details on line and that when giving details on line and that you are dealing with a registered you are dealing with a registered broker.broker.


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Capital Gains TaxCapital Gains Tax

• This is the tax one has to pay on the This is the tax one has to pay on the gains made from the sale of property gains made from the sale of property or shares.or shares.

• The sale of ones personal home is The sale of ones personal home is exempt.exempt.


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ConclusionConclusion

• Important to make your savings Important to make your savings increase or keep it’s spending increase or keep it’s spending power. power.

• Three options, save in a bank, buy Three options, save in a bank, buy property or shares.property or shares.

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To see what a company is?To see what a company is?

Previous Slide

Go to http://www.teachnet.ie/apatton/companmywhole.htm

and complete

the workbook page 27 – 28 or the Investments worksheet.

Documents

© Annie Patton Investments Next Slide. © Annie Patton Aim of Lesson To increase your understanding of what one can do with excess money and what a company