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THE EASING IN ASKING PRICE INFLATIONMAY REFLECT SOME SCALING BACKOF EXPECTATIONS AMONG SELLERS

KBC on the slowing growth in property prices

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Consumers tired of paying current account fees have anotherincentive to switch, following a new offer from Permanent TSB.The bank is trying to tempt switchers with the lure of €100

cash for those who switch their current accounts beforeNovember 8.PTSB hopes the offer of free money will get more people

switching bank, given the tiny numbers that have done so upto now. According to the Central Bank less than 1% of Irishconsumers switched their bank account in the past year.We take you through the deal and look at what other

switching incentives are out there.

WHAT’S THE DEAL?PTSB’s €100 cash offer is not without strings. The bankwill give you €50 for switching current account and €50

for applying for — and using — its Ice Visa credit card.For the current account bonus, you must have submitted an

account-switching form before November 8 and picked aswitching date no later than November 27.For the credit card bonus, you have to apply and be approved

for the Ice Visa card before November 8, and use the cardwithin four weeks.If your credit card application is rejected or you don’t use the

card, you get only the €50 bonus for switching current account.Assuming you qualify for the full €100 bonus, PTSB will

credit €50 to your current account and €50 to your credit cardaccount on December 31.

WHAT’S THE CATCH?For current account switchers, it’s a good deal. PTSB’scurrent account is one of the easiest to qualify for when it

comes to free banking. As long as you lodge €1,500 into theaccount every month, you don’t pay any quarterly fees or day-to-day transaction charges.Bank of Ireland current account customers have no way of

avoiding the €5 quarterly account maintenance charge, and

can avoid transaction fees only by keeping their account incredit by at least €3,000 at all times.The only downside is that you have to go through the current-

account switching process. However, banks are obliged toensure this takes no longer than 10 working days.It’s more complicated for credit card customers. PTSB

charges 18.4% APR on purchases on its Ice Visa card. The rateis competitive but not the cheapest in the market — that isAIB’s Click Visa card, which charges 13.6% APR.However, PTSB is waiving interest on purchases for the first

three months under the deal. New customers can transferbalances on existing credit cards and take advantage of 0%interest on balance transfers for six months.

DO OTHER BANKS HAVE SWITCHING INCENTIVES?Yes, but only in tandem with mortgages. AIB announcedrecently it was waiving its €4.50 quarterly account

maintenance fee and transaction fees for customers whopay their AIB mortgage by direct debit from an AIB personalcurrent account.New AIB mortgage customers will get the benefit

immediately, while it will be applied to existing mortgagecustomers’ current accounts from December.KBC gives new mortgage customers a 0.2% interest discount

on their mortgages, provided they mandate their salary toKBC’s current account and pay the mortgage by direct debit.

TOP TIPOlder people can get free current account banking withouthaving to switch. Bank of Ireland customers over 66 can

get a Golden Years current account, free of fees without anyobligation to keep a minimum balance in the account. AIBcustomers over 66 can open an Advantage account to get freebanking. KBC, Ulster Bank and PTSB waive accountmaintenance and transaction fees for customers over 60.

MARK CHANNING

MONEYMADEEASYYOURFIVEMINUTEGUIDETO...SWITCHING CURRENT ACCOUNTS

SAVINGSEASY ACCESSInstitution Rate Min deposit ContactRaboDirect 1.25% 1 €1 rabodirect.ieKBC Bank 1.25%2 €3,000 1800 51 52 53Nationwide UK 1.01% 3 €2,000 1800 800 31010.5% over €50,000. 20.5% over €100,000 3Six free withdrawals

NOTICE ACCOUNTSInstitution Rate Notice ContactRaboDirect 1.45% 1 90 days rabodirect.ieRaboDirect 1.25% 1 30 days rabodirect.ieNationwide UK 1.02% 2 30 days 1800 800 3101Min €1 2Min €2.000

DIRTFREEInstitution Rate Term ContactState Savings 2.26% 10 years 1850 30 50 60State Savings 1.24% 5.5 years 1850 30 50 60State Savings 0.99% 4 years 1850 30 50 60

FIXED RATES

Institution AnnualRate Term Contact

KBC Bank 1.20% 1 12 or 14months 1800 51 52 53

KBC Bank 1.10% 1 18 months 1800 51 52 53Nationwide UK 1.10% 1 24 months 1800 800 3101Min €3,000

MONTHLY SAVERSInstitution Rate Max monthly ContactNationwide UK 4.00% €1,000 1800 800 310KBC Bank 3.00% €1,000 1800 51 52 53EBS 2.25% €1,000 1850 654321

THE BEST LOANSLender Rate 1 Monthly

paymentContact

Bank of Ireland 7.50%2 €398.44 0818 200 334KBC Bank 9.80%2 €418.96 1800 51 52 53AIB Bank 9.99% €420.56 1890 724 724Ulster Bank 10.30% €423.37 1890 303 0041Based on €20,000 borrowed over five years²Current account customers only

Company Fuel Av. Annual Bill¹

Energia Electricity only €1,038Flogas Gas only €798Energia Dual fuel €1,850¹Online billing and payment by direct debit required. Prices are based on average annual use of13,800kWh gas, 5,300kWh electricity Source:Bonkers.ie

MORTGAGESBEST FIXED RATES — MOVERS/SWITCHERSInstitution Rate Term Contact

Mortgage Store 3.50%1 2 years mortgagestore.ie

Ulster Bank 3.30%2 3 years 1800 303 004

Ulster Bank 3.50%2 5 years 1800 303 004

Ulster Bank 3.60%2 7 years 1800 303 004120% deposit 240% deposit

BESTFIXEDRATES — FIRST-TIME BUYERSInstitution Rate Term Contact

AIB Bank 3.60% 1 2 years 1890 724 724

KBC Bank 3.60% 1, 2 2 years 1800 51 52 53

AIBBank 3.65% 1 3 years 1890 724 724

KBC Bank 3.65% 1, 2 3 years 1800 51 52 53110% deposit 2New customers only with KBC current accounts

BESTVARIABLERATES — MOVERS/SWITCHERSInstitution Rate Deposit Contact

EBS 3.30%1 50% 1850 654321

AIB Bank 3.35%1 50% 1890 724 724

Haven 3.35%1 50% broker

KBC Bank 3.50%2 40% 1800 51 52 531From October 1 2New customers only with KBC current accounts

BESTVARIABLERATES — FIRST-TIME BUYERSInstitution Rate Deposit Contact

EBS 3.70%1 10% 1850 654321

AIB Bank 3.75%1 10% 1890 724 724

Haven 3.75%1 10% broker1From October 1

HEALTH INSURANCETOP HEALTHINSURANCEPLANS

Insurer Plan Monthlycost

Contact

Public hospitals — basic cover

GloHealth Base Lite €32.831 1890 781 781

VHI Start Plan €37.42 1890 444 444

Laya Assure Vitality €42.83 1890 700 890

Private hospitals — semi-private (Corporate plans)

GloHealth Best Smart €91.502 1890 781 781

VHI Comp Plan Plus L1.3 €94.172 1890 444 444

Laya Simply Connect Plus €94.332 1890 700 890

1No direct settlement on this plan 2Includes day-to-day coverPrices are for individual adults and reflect changes to tax relief. Laya rates include a 3% charge formonthly payments Source: TotalHealthCover.ie

CURRENT ACCOUNTS

Institution ATM fee POS 1fee Quarterly fee

Ulster Bank €0.00 €0.00 €12.00

Permanent TSB €0.00 €0.00 €12.00

KBCBank €0.30 €0.00 €6.00

Bank of Ireland €0.25 €0.10 €5.00

AIBBank €0.35 €0.20 €4.50

1Point-of-sale or debit card purchases

CREDITCARDSBESTBALANCETRANSFERSCard Disc Rate Until ContactBank of Ireland 0.00% 7 months 0818 200 334Permanent TSB 0.00% 6 months 1890 500 121Tesco 0.00% 6 months 1800 555 743

BESTSTANDARDRATESCard Rate Interest free ContactAIBClick 13.60% 1 56 days aib.ieBank of Ireland 17.30% 2 56 days 0818 200 334KBCBank 18.25% 56 days 1800 51 52 531AIB internet banking customers only 2Annual fee of €76.18 Source:Bonkers.ie

12

The experts advise against gettingattached to a particular share;that it can damage your finan-cial health. I think they’rewrong. Renishaw is a FTSE 250company, whichmeans it’s one

of the 350 leading quoted companies inthe UK, but ranking below the elite FTSE100. It was foundedmore than 40 yearsago by a Dubliner, David (now Sir David)McMurtry and his colleague John Deer.McMurtry is still the chairman and chiefexecutive, at a sprightly 75.I boughtmy first Renishaw shares in

1998 at just over £4 (€5.4) a share. Theyearly dividendwas 11.44p, equivalent toan “interest rate” of 2.8% onmymoney.A pre-tax return of 2.8%was less than Icould have got (net) from the Post Officeat the time but I was confident thatRenishaw’s dividendswould increase.My confidencewas fully justified. The

dividend has increasedmore than four-fold, to 46.5p a share, equivalent to an“interest rate” ofmore than 11% onmyoriginal investment.As I write, the share price is £19.80,

almost five times the cost in 1998. Notbad, considering also the steady flow ofdividends in themeantime. NowonderI’m attached to the share.The problemwith such attachment is

DIARY OF A PRIVATEINVESTOR

that I consistently think it’s worthmorethan the value placed on it by themarket.Every time the price dips, and it fluctu-ates quite violently at times, I am temptedto increasemy holding. The end result isthat I now have farmore exposure toRenishaw than the experts, whoworship

at the altar of diversification, think isreasonable. They adviseme to sell someofmy shares to reducemy exposure.Should I take their advice? Let’s do the

sums. I have learned the hardway (seelast month’s column) not to buy or sell asharewithout first checking the num-

bers. Most importantly, Renishaw’sfuture looks bright. It is a world leader indesigning andmaking sophisticatedmeasuring instruments formanufac-turers. Increased complexity inmanufac-turing helps to ensure a strong demandfor its metrology products. It also hasexciting technologies in healthcare and3D printing.Through good times and bad,

Renishaw invests about 15% of its reve-nues in engineering and research anddevelopment (R&D). Published accountsmust showR&D expenditure asmoneydown the drain but in reality it is the bestpossible protection against obsolescence.Renishaw has no debt andmillions in

the bank. It ownsmany of the premises it

occupies, from Swords to Shanghai.Another positive is that the two founderdirectors ownmore than 50% of thebusiness between them, so their interestsare aligned tomine.The company refuses all requests for

“nod and awink”meetings with ana-lysts. The analysts don’t like this but itmeans that I, as a private investor, knowasmuch about the company as they do.Renishaw normally aims to pay around

50% of its profits in dividends. It alsoaims for a smooth progression of divi-dends from one year to the next. Inrecent years, dividend growth has notkept pacewith the fast growth in profits,so the dividend payout ratio has fallenbelow the targeted 50%. In the year to

Renishaw invests about 15% of its revenue in R&D each year so it is well placed to stay at the forefront of technologies like 3D printing

THE COMPANY REFUSESALL REQUESTS FOR ‘NODAND WINK’ MEETINGSWITH ANALYSTS, SO IKNOW AS MUCH ABOUTTHE FIRM AS THEY DO

Diversification’s a false god, believemeFinancial expertstake a dimviewof putting all youreggs in one basketbut the success ofengineering firmRenishaw showsthis is a flawed view

June 30 last, Renishaw’s earnings were£1.675 per share, but 2015was excep-tional. Profits weremore than doubletheir 2014 level, because of once-offorders from the Far East. The companyprojectsmiddle-of-the-range earningsfor 2016 of around £1.12 a share, down33% on 2015.In assuming virtually no repeat of last

year’s once-off orders, I believe the com-pany is too cautious in its forecast for thecurrent year. Despite the downturn inChina, which should have a greaterimpact on companies selling to con-sumers thanmanufacturers, I expectearnings of the order of £1.30 a share in2016, still a hefty 22% down on 2015.Over the last 15 years, Renishaw’s

earnings per share have grown bymorethan 10%per annum on average. I expectgrowth of similar order from 2017.Given Renishaw’s growth prospects,

I’ll be happywith an earnings yield of 5%in the current year (which implies a divi-dend yield of less than 2.5%). Onmyassumption of £1.30 earnings per sharefor 2016, I therefore value it at £26 a share(£1.30 is 5% of £26). In other words, myvaluation of Renishaw ismore than 30%greater than the current share price.I have no intention of selling at such a

large discount to Renishaw’s fair value—my assessment of fair value, of course. Ialso believe that the experts are wrongabout diversification: it is a false god thatwill not shieldme from the vagaries ofthemarket. My experience tells me that Iam better off investing in fewer than adozen companies, ideally in uncorrelatedsectors that offer the prospect of goodlong-term returns and limited downsiderisk. At its current price, Renishawqualifies as one of those companies.

COLMFAGAN