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The one question that determines your future wealth

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Inflation is an inherently personal thing. We quantify it in general terms with headline figures, but don't be fooled. Inflation isn't the same for everyone.

In Ireland, the inflation rate has fallen over the past few months from 9.6% in July to 7.7% in December, but this doesn't mean that everyone's life is now 7.7% more expensive.

How inflation affects you will differ depending on your age, location, job, savings and investments.

There will be winners and losers: net buyers and net sellers.

Let's take an example.

You bought a house before 2020 vs. you're looking to buy a home in 2023.

For those who bought pre-2020:

Initial fixed rate at 3% or lower (many of these will be approaching their fixed rate cliff)
Up to 40% increase in home value since purchase
Your mortgage repayments have remained constant while the value of your home has increased dramatically.

Yes, you're paying more for eggs, but your debt as a percentage of household net worth is considerably lower.

You're wealthier now than you were before the pandemic, in both absolute and relative terms, due to the inflation tied to your most significant asset.

Over two thirds of the Irish population have a mortgage or own their home outright.

For many of these, inflation has been a net positive due to the housing effect - a wealth-creation event.

For those looking to buy a home now, the past three years have created a very different scenario.

Wealth destruction

According to the Central Statistics Office, the average house price index has gone from €293,000 to €359,000 since 2019, an increase of €66k. Mortgage rates are now starting to increase. This is set to continue as the ECB looks to raise its deposit rate to 3.5%. (ECB rates were negative in 2019). As such, recent inflation has had a materially negative impact on both the purchasing power of the savings accumulated to buy a house and the future debt burden that the mortgage represents. The same inflation. Two very different outcomes.

The property divide

This is the very essence of how wealth gaps materialise, playing out in real time at an accelerated pace.

Many factors drive wealth inequality in Ireland, but it's bizarre to think that the side of the wealth divide you find yourself on may be determined by simply asking the question.

Did you own a home before the pandemic started or not?

With 70% of Irish wealth tied up in housing, the wealth effect of rising house prices is particularly strong relative to the rest of the world.

Remedies

Don't just listen to the headline numbers. Figure out how inflation is affecting you personally.

Are you being crushed by rising prices, or are you a net benefactor as prices increase?

Everyone isn't on the same boat here. The sooner you realise this, the sooner you can do something about it.

Want investment advice and personal finance tips that won't bore you to death?

Join the one thousand plus subscribers by scanning the QR code or go to www.theislandinvestor.com.

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JOE GAFFEY RIP A PERSONAL TRIBUTE

  By Eamonn Fitzgerald It was always uplifting to see and greet Joe Gaffey enjoying his work in Killarney. He kept the windows so clean, saying clean windows make a […]

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By Eamonn Fitzgerald

It was always uplifting to see and greet Joe Gaffey enjoying his work in Killarney.

He kept the windows so clean, saying clean windows make a great first impression, allowing natural light to enter, and helping to reduce energy costs.
He took such pride in his window cleaning business. I said, “Joe, even the humble flies are afraid to land on your cleaned windows”. Quick as a wink, he responded, “they’re afraid of skidding on my spic and span windows, like a jet crash-landing in these downpours”. With the trademark cloth whipped from his back pocket, he was back at work.
He loved the craic and the banter, but when it came to soccer, he was deadly serious, a brilliant player with Fossa FC (now extinct) where I first got to know the star player from Athlone and Jock (Alex Rintoul), his great teammate.
Teak tough, but a scrupulously fair defender, Joe was a godsend for the Fossa’s keeper. Not even the speediest inside forwards could get past him. He was a believer and practitioner of the Biblical and Lord of the Rings dictum ‘thou shalt not pass’. Not a blunt stopper, but you just could not get by such was his defensive skill and perfect timing, the sine qua non for brilliant players in any sports code. That lethal left leg, that trusted ciotóg never failed. He had the same sense of timing playing golf.
In previewing the 1976 All-Ireland final versus Dublin, I asked several members of the general public and GAA enthusiasts to predict the outcome for the Killarney Advertiser. All predicted a definite win for Kerry. A repeat of ‘75 was a dead cert. Joe was the only one to get it correct: a surprise win for the Dubs. He got a lot of mileage out of that episode.
How he would have loved Westmeath’s fairytale win over fancied Meath on Sunday last, his final day. Ach bhí an t-am istigh. The ref called for the ball. Game of life over, but our fond memories of Joe will endure. We’ll miss his professional expertise and his endearing and unfailing good humour. Slán abhaile Joe.
To his wife Julie, sons Darren and Jonathan, his extended family and his many friends and admirers, comhbhrón ó chroí.

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Killarney Advertiser remains Kerry’s last family-owned news publication

Following the announcement this week that Kerry’s Eye has been acquired by Webprint, the Killarney Advertiser now stands as the last remaining family-owned and in-house published news outlet in the […]

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Following the announcement this week that Kerry’s Eye has been acquired by Webprint, the Killarney Advertiser now stands as the last remaining family-owned and in-house published news outlet in the county.

The acquisition of the Tralee-based title leaves the Killarney Advertiser, and the Galway Advertiser, as the two longest-running independent publications of their kind in Ireland.
Established in 1973 – one year before Kerry’s Eye -the Killarney Advertiser was founded by the late Danny Casey in Woodlawn.
Danny’s vision was to create a publication that truly reflected the whole community, a mission that has remained the core value of the business for over five decades.
Today, the publication is led by Danny’s son, Cormac Casey. Having started his journey with the magazine as a delivery boy, Cormac has worked in every department of the business.
Under his leadership, the publication evolved from its original black-and-white format into the high-quality, full-colour weekly magazine that has become a staple of Friday nights in Killarney.
A key to the success of the Killarney Advertiser’s independence is its production process.
Every issue is written, designed, and published locally. To ensure continued local production, Cormac established KC Print at a state-of-the-art facility in Coolcashlagh.
Now one of Ireland’s largest trade printers, KC Print employs a workforce of 30 people, keeping jobs and expertise within the Killarney area.
“Our hyper-local news, led by our trusted journalists, ensures we are the community’s favourite read each week,” said Cormac Casey. “As we move into this new era for Kerry media, we remain committed to our roots. We are proud to be a local family business, and we want our readers to help us shape our content for the future.”
As the media industry sees further change, the Killarney Advertiser remains dedicated to independent, community-focused journalism. The support and goodwill of readers and advertisers ensure that, over 50 years since its first edition hit the shelves, the publication remains at the very heart of the weekend conversation in Killarney every week.

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