Vodafone Shares / Investments Factsheet – January 2014

Vodafone Shares

Background

If you are a shareholder in Vodafone you will have received a documentation pack in the past few weeks.

As a result of Vodafone’s agreement to sell their shareholding in US carrier Verizon Wireless, they have decided to return some of these monies to shareholders.

Each Vodafone shareholder will receive the following:-

  • A cash payment, the amount of which will be determined by Vodafone at the end of February.
  • New Verizon shares
  • New share certificates in Vodafone.

What action do I need to take now?

The correspondence you received included a Form of Election.  It is important that this is filled out and returned by 20th February next.  We have outlined below a guide to filling out this document:-

Section 1 – Place X in the Euro box

Section 2 – There are 2 options here, to receive either a Capital or Income Payment.  If you opt for the Capital Payment, then the monies you receive would have been taxed at the Capital Gains Tax rate of 33%.

However in recent provisional guidance issued by Revenue they have indicated that there will be no CGT liability, as investors are still sitting on losses from the original Eircom flotation.

The income option will result in the payment taxed at your marginal income tax rate.

Section 3 – If you wish to be issued with a share certificate for your new Vodafone shares, rather than a Share Account, then X this option.  If you opt for the Share Account, and decide to dispose of your Vodafone shares in the future, then this will have to be done electronically through your Share Account.

Section 4 – Signature

A considerable number of Irish shareholders will have small holdings in Vodafone.  If you do not wish to receive the new Verizon Shares then complete the ‘The Dealing Form’ in Section A and sign same.  This will mean that the Verizon shares will be sold for you automatically and you will receive a payment.

For a lot of people this has been a long road since the Eircom share issue.  As a result, it is possible that many shareholders will use this opportunity to dispose of their entire holding in Vodafone.

2014 BRINGS NEW OPPORTUNITIES FOR INVESTORS

As we have now reached a stage, where concerns about the break up of the Eurozone have diminished dramatically and the recent upturn in the outlook for the Irish economy, there is no doubt that investors are rapidly getting over the ‘Fear Factor’.  This is evidence by the fact that a greater number of investors are now prepared to take on a degree of risk.

We have outlined, what we believe, are the main factors that you should consider in order to maximize the potential for your monies this year?

NEW OPPORTUNITY TO OFFSET PAST CAPITAL LOSSES AGAINST FUTURE GAINS ON YOUR INVESTMENT PORTFOLIO

2014 has seen the introduction of a number of investment products where any gains made are taxed at the Capital Gains Tax rate (CGT) of 33%.  Obviously this is very attractive when compared to DIRT at 41%.

There is also the added potential benefit of offsetting any past capital losses that you may have had, through maybe the sale of property or possibly losses you incurred in the stock market, for example through the sale of bank shares.  For some people this could present a very attractive opportunity to minimize your tax liability on future gains.  In addition a number of products have been launched, where once again any gains made are taxed at the DIRT rate but are treated as income tax.  This could be attractive for an investor whose marginal tax rate is 20% or is outside the tax net.

To avail of these products, it is not necessary to increase your risk profile, as they offer an element of Capital Protection.

Please contact us and we can provide you with further details.

INCREASED APPETITE FOR RISK

As we all know, we would like to be in a position where investing money provided attractive guaranteed returns and no risk to our capital.  Unfortunately, no such investment has ever existed.  The only route you can take, to avail of such features is  to placing your monies on deposit, but with  interest rates at a historical low, and likely to remain so for some years to come, this not a viable option.

A Balanced Portfolio of investments should always contain some element of risk.  This can be achieved through investing in low to medium risk products or alternatively through a ‘Soft Capital Protection’ bond.  The latter is essentially a product which will provide a large element of guarantee but not full protection, whilst at the same time minimizing your risk exposure.

Please contact us for further details on the Soft Capital Protection bonds currently available.

DOUBLE BLOW FOR DEPOSITORS DUE TO A DRAMATIC FALL IN RATES AND MAJOR INCREASE IN DIRT

As we have been advising our clients for the last 2 years, retaining monies on deposit is something you should only consider for convenience, rather than as an investment decision.  This has been reinforced by a dramatic fall in interest rates (currently 2% Gross for 1 year) and with no likelihood of any major increase in the coming years.

As if the drop in rates has not been bad enough, the last budget has now seen an increase in the DIRT rate to 41%.  This has resulted in depositors receiving net returns which are derisory.

So what can I do?

Obviously we all have to keep some monies on deposit for day-to-day or unexpected financial events.  However, recent events mean that depositors need to be more creative with their monies, in order to gain some sort of reasonable return. 

In order to do this you should look at moving your monies into a Term Investment Bond.  These products offer a variety of risk levels ranging from Medium/High to Full Capital or Soft Capital Protection.  In addition, these bonds have a variety of investment features and terms ranging from 3 to 5 years.

Once again if you require further details we can provide you with the options available that suit both your circumstances and risk profile.

—————————————————————————————————————

Our Services

As a leading financial advice company, our aim is to provide our clients with a range of services that will allow them to plan their financial future in a coordinated and efficient way. 

Financial Health Check Review

Banking Consultancy

Savings & Investments

Retirement & Pension Provision

Life Assurance

Serious Illness Cover

Ongoing Financial Advice

Share Transaction Service

 

 

Kindly find outlined below the range of services we offer.  This services list is not exhaustive, as occasionally some of our client’s contact us on a once-off basis to seek assistance for a particular issue that they need addressed.

Kind Regards,

David McCarthy,

Managing Director.