QFA Investment cheat sheet

DIRT (Deposit Interest Retention Tax) is charged at 33% on deposit interest for Irish-resident depositors and is deducted at source by the institution.

Irish life assurance investment funds and unit trusts carry a 41% exit tax on gains, charged on encashment and on unrealised gains at each 8-year deemed disposal date.

Irish-domiciled UCITS ETFs are taxed like shares: 33% capital gains tax on disposal, no 8-year deemed disposal, and losses may be offset against other CGT gains.

Approved Retirement Fund (ARF): an imputed distribution applies annually from the year the owner turns 61 - 4% of value, rising to 5% on assets above roughly €2m, whether or not money is withdrawn.

Approved Minimum Retirement Fund (AMRF) must retain a minimum of about 20 times the annual State Pension (roughly €277,000) until age 75, and is required where the investor has no guaranteed pension income.

Pension contribution relief is granted at the marginal rate on a percentage of net relevant earnings that rises with age (15% under 30 to 40% at 60+), subject to an earnings cap of €115,000.

State Savings products (Savings Certificates, Savings Bonds, Instalment Savings) are free of DIRT and PRSI for EU-resident holders.

Closed-ended investment trusts are companies: their shares are subject to 33% CGT on disposal and are outside the exit-tax/deemed-disposal regime.

Retirement lump sum: 25% of the fund may be taken tax-free up to €200,000 lifetime; amounts above that are taxed at 20% up to €500,000 and 40% thereafter.

Modified duration approximates price sensitivity: % change in bond price ≈ −(modified duration) × (change in yield in percentage points).

Bond prices and yields move inversely; a 7-year duration bond falls roughly 7% in price for a 1 percentage point rise in yield.

Credit spread = yield on a corporate bond minus yield on a government bond of matching maturity; widening spreads signal rising default or liquidity concern.

Fisher relation: (1 + nominal return) = (1 + real return) × (1 + inflation), so real return ≈ nominal return − inflation at low rates.

Money market instruments have original maturities of one year or less and are typically issued at a discount (Treasury bills, commercial paper).

Beta = Cov(Ri, Rm) / Var(Rm); the market portfolio has beta 1.0, defensive sectors typically below 1 and cyclical sectors above 1.

An inverted yield curve - short-term rates above long-term rates - has historically preceded recessions and signals tighter monetary conditions.

REITs are listed property companies that must distribute most rental profits and are exempt from corporation tax on those distributions; Irish REIT dividends carry 25% withholding tax unless an exemption applies.

Central bank policy rates anchor the short end of the yield curve, while quantitative easing asset purchases push long-dated yields lower.

Portfolio expected return is a weighted average: E(Rp) = Σ wi × E(Ri), using the portfolio weights of each asset.

Portfolio variance is σp² = ΣΣ wi wj σi σj ρij; the covariance terms are what make diversification reduce risk below the weighted-average volatility.

Correlation lies between −1 and +1; combining assets with ρ < 1 produces a portfolio standard deviation lower than the weighted average of the components.

Sharpe ratio = (Rp − Rf) / σp; the higher the ratio, the more excess return is earned per unit of total risk, allowing comparison across portfolios.

CAPM: E(Ri) = Rf + βi × (E(Rm) − Rf), where the bracketed term is the equity risk premium and only systematic risk is rewarded.

Total risk = systematic risk + unsystematic risk; diversification removes unsystematic risk only, so beta, not standard deviation, is the priced risk in CAPM.

The efficient frontier plots portfolios offering the highest expected return for each level of risk; portfolios below the frontier are dominated.

Rebalancing to target weights imposes a disciplined sell-high/buy-low process and prevents drift in the portfolio's risk profile.

Risk tolerance combines attitude (willingness to accept volatility) and capacity (ability to bear loss, driven by horizon, income stability, liquidity needs and wealth).

MiFID II suitability requires a documented assessment of the client's knowledge and experience, financial situation and investment objectives before any personal recommendation.

The PRIIPs KID is a maximum three-page pre-contract document containing a 1–7 summary risk indicator, four cost figures and up to four performance scenarios.

The Investor Compensation Scheme pays 90% of a client's loss up to a maximum of €20,000 per investor per failed investment firm.

The Deposit Guarantee Scheme covers €100,000 per depositor per credit institution, aggregated across accounts at that institution rather than per account.

Irish CGT is 33%; the annual personal exemption is €1,270; capital losses offset gains in the same year and any excess carries forward indefinitely.

Stamp duty is 1% on transfers of Irish-quoted shares (normally borne by the buyer) and 7.5% on transfers of Irish commercial property.

The Central Bank Consumer Protection Code requires a suitability statement, appropriate warnings, and a record of the advice and reasons for the recommendation.

A politically exposed person is someone entrusted with prominent public functions plus their family members and close associates; enhanced due diligence is mandatory.

Best execution obliges firms to take all sufficient steps to obtain the best possible result for clients, considering price, cost, speed, likelihood of execution and settlement.