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Costs escalate but vital charity work continues

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Dedicated volunteers with a charity initiated in Killarney close on 20 years ago are actively re-engaging with their vital humanitarian work following the hardships and travel restrictions imposed during the COVID-19 pandemic.

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The Kenya Education Project, established by retired Killarney schoolteacher and Fossa resident Eddie Sheehy, in 2003, is again providing crucial, life-enhancing support to the people of the slum village of Embulbul, 25kms south of Nairobi, and the students of the Edmund Rice Catholic Education Centre.

Life is still very difficult for the people of Embulbul however, and that highlights the importance of the Kenya Education Project’s feeding programme with children receiving food packages to enable them to have one nourishing meal a day when, otherwise, they would have to go without.

The programme is run by the parish and it helps to provide food for the children of the village from Monday to Friday with up to 80 school pupils receiving meat, vegetables and rice.

“The facility where the meals are prepared and cooked has been fitted with an upgraded kitchen with modern wood-burning stoves and two people have been employed to prepare the meals each day and maintain and clean the kitchen. Their pay amounts to €200 per month,” Eddie explained.

“Other significant ongoing overheads include the outlay on vegetables, rice, meat, maize flour and firewood and that requires a spend of €600 per month. This has resulted in our overall monthly costs rising from €650 to €800 per month,” he added.

Additionally, the Kenya Education Project continues to support the school fees that need to be paid for students attending the local school as well as providing washing points and water stations and organising extra-curricular activities, including sports, for the children to enjoy.

To help meet the escalating costs involved, the registered charity always welcomes financial support from the public which can make such a difference to the children and make their lives a little more tolerable and any donations from the people of Kerry are always particularly welcome.

Anybody seeking more information on the work of the Kenya Education Project or those willing to get involved or contribute can contact founder Eddie Sheehy on 085 7497271.

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Housing Will Never Be The Same

Last week I wrote about the pathetic investment options out there for Irish investors. Despite high ongoing fees (mortgage, maintenance, insurance etc.) and the actual headache of being a landlord, […]

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Last week I wrote about the pathetic investment options out there for Irish investors.

Despite high ongoing fees (mortgage, maintenance, insurance etc.) and the actual headache of being a landlord, it’s easy to see why real estate functioned as the de facto investment portfolio for an entire generation.

Wealth creation was a rinse-and-repeat function where couples put money away until they had enough for the ‘next house’. As a result, we have an economy where 70% of household wealth is tied up in real estate.

Driven by the profits it created, Ireland became obsessed with owning real estate.

But real estate as an investment won’t be nearly as successful for our generation. (If you are able to get a house, that is)

All you have to do is look at the anecdotal evidence all around us to confirm this.

My parents bought the house they currently live in for 30k (pounds) 35 years ago. The house is now worth roughly 450k.

I typically despise these back-of-the-envelope calculations when It comes to property, given the endless variables and ongoing costs involved, but bear with me.

That’s a gross return of 15 times the original value. Now there are upgrades, a change in currency and other adjustments to consider here, so for argument’s sake, let’s call it 10X.

To achieve the same level of growth over the next 35 years, you would be left paying 4,500,000 euros for what is a pretty modest house.

Sure, we will still see property prices increase over time, but the rate of growth won’t be anywhere near as meaningful for one simple reason.

Interest rates.

Artificial Growth

Over the last 30 years, real economic growth has been stagnant, yet Ireland has experienced enviable nominal growth.

How did we manage it?

We created imaginary wealth.

We pushed interest rates lower and lower to stimulate economic growth.

And it worked.

After all, if you make 100k/year you can probably afford a 400k mortgage at 4%. At 2%, with the same 100k/year salary you can now take on 600k in debt.

So, were we getting richer, or was the debt just easier to afford?

Where do we go from here?

We have now squeezed interest rates as low as they can go.

The house price appreciation we have seen was justifiable because the mortgage rates on housing continued to fall in recent decades. This allowed people to take on more debt without severely impacting their ability to repay that debt.

If we go back to my parents, they were paying 14% on their mortgage. Mortgage rates are currently between 2 to 3%.

A relentless drop in interest rates gave way to higher and higher prices for houses, but interest rates are now on the floor.

The juice has been squeezed.

In fact, the trend has started to reverse, with rates expected to rise 1.5% in the first half of 2023

Be mindful that the same credit expansion cannot happen again.

How the next generation thinks about their investment options has to change.

Banks offering 0% returns for the use of your money and a housing ladder you can’t get on are not your only two options.

If you need help creating your own investment portfolio, just reach out to me at mike@theislandinvestor or simply scan the QR code above.

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Biddies performance celebrates St Brigid

Two local Biddies groups performed at Muckross House as part of St Brigid’s Day celebrations in aid of Kerry Parents and Friends Association. The Killarney Parents and Friends Biddy Group – formerly […]

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Two local Biddies groups performed at Muckross House as part of St Brigid’s Day celebrations in aid of Kerry Parents and Friends Association.

The Killarney Parents and Friends Biddy Group – formerly known as the Beaufort Biddy Group – and Kilgobnet Biddies came together for the event.

The tradition of the Biddies is one of the oldest and most colourful customs in Ireland, a blend of pagan and Christian pageantry, held on February 1 each year, heralding the beginning of springtime and honouring St Bríd the patron saint of the farming community.

Master traditional craftsman, Pat Broderick, at Muckross House, was also part of St Brigid’s Day celebrations, making a St Brigid’s Cross as part of the traditions.

 

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