Money is for enjoyment

I was at the Financial Planning Standards Board annual conference a few weeks back. They had a number of speakers from the world of finance and financial planning. But two of the speakers took my interest. It wasn’t exactly what they said, it was what they had in common.

The first was a private equity guy. He went through his spiel about why private equity was the place for your money, how it takes a number of years to invest and to see a return. With everything going to well, when the assets were redeemed, the best thing to do was go back into the next opportunity, building your wealth continuously.

The last speaker was the tax guy. Everyone always waits for the speaker on tax in case he reveals the secret of how you can make money and not pay any tax on it. He spoke about retirement and entrepreneur relief, which are great ways to get money out of a company.

He then spoke about the use of Holding Companies, which can sell shares in a trading subsidiary company without CGT. But how do you get the money out of the holding company? You can either:

  1. Move from Ireland and become tax resident in a country that has favourable CGT rules. Monaco? Dubai?
  2. You hold the shares in the holding company for life and the company is liquidated on death

While the investment may grow your wealth and the holding company may help you avoid tax, what struck me is that there is absolutely no enjoyment of the money. If you have accumulated significant assets over your lifetime, shouldn’t you get enjoyment out of it at some time? Even if it isn’t on yourself, you can get enjoyment helping your family or worthy causes. It will mean you have to pay tax to get your hands on the money (there is no secret of making money and not paying tax) but isn’t that better than just seeing numbers on a page accumulate in value but not getting any joy from it?

What do you think? Should avoiding tax indefinitely be a key driver or should you be looking at being tax efficient but being open to paying tax at some point so you can enjoy your money? Let me know what you think at