Lump Sum to PayOff/Sell/Invest?

Brendan Burgess said:
That is how I manage my cash position. I have an overdraft facility. I use it from time to time. If dividends or other income don't clear it, I sell shares.
Click to expand...

That's your choice Brendan but that doesn't mean it's necessarily the right approach.

Carrying debt while investing is exactly the same thing as borrowing to invest. The size or term of the debt is simply a matter of degree.
 
Hi. I wanted to come back after 5 years and give an update on my progress after some great perspectives here 5 years ago.

Updated details:

Age: 45
Spouse’s/Partner's age: 43

Annual gross income from employment or profession: 90000
Annual gross income of spouse: 60000

Monthly take-home pay: 6,500

Type of employment: Both Public Sector

Usually saving €2000 /m - between myself and spouse we have taken a lot of different career breaks over the last number of years for childcare reasons.

Rough estimate of value of home: 450,000
Amount outstanding on your mortgage: 0

Other borrowings – car loans/personal loans etc: None

Savings and investments:
€270,000 National savings certs and deposits
€700,000 in shares and trust funds

Do you have a pension scheme? Yes - Both Public Sector

Do you own any investment or other property?
Property 1 - this property was sold since initial post.

Property 2:
Value: €180,000
Mortgage: €102,000 (15 years left)
Interest Rate: 0.6%
Monthly Rent: €850

Property 3:
Value: €265,000
Mortgage: €136,000 (15 years left)
Interest Rate: 0.9%
Monthly Rent: €900

Property 4 - this property was sold since initial post:


Ages of children: 8, 6, 4 years

What specific question do you have or what issues are of concern to you?
We made progress in getting more organised about our finances after the initial post. I feel much more in control than I did 5 years ago. We got lucky in the markets over the last year especially. The same performance will unlikely ever be matched again.

  • I am interested in starting a PRSA/AVC self directed pension for me and/or my spouse. I feel this would be more tax efficient - even if it eventually becomes overfunded. Does anyone have any perspective on this or see any flaws in this logic?
  • We have an option to sell property 2. But there's no obvious place to put the proceeds. The management of the property doesn't bother us and I know it's a good investment. But the prevailing winds in politics that are chipping away at the property rights of landlords is causing us a lot of concern. I can't see the logic of the new restrictions - given that it will disincentivise landlords from renting property. The lack of houses for sale is now being compounded by the lack of properties to rent. But I don't see a sensible policy for the medium term. I feel this is a real risk.
  • We intend to take more unpaid leave and career breaks between us going forward. While I intend to work long term - my spouse may retire early ~12 years from now. I'd like advice on how to best prepare for this eventuality.
  • In general - we've had a step change in where we were 5 to 10 years ago. I'm struggling to get my head around being in this position and feel that I may be applying 'just starting out' methods to an altogether different scenario. If anyone that has had a similar transition and has any comments on things I should be thinking of I'd love to hear them!
 
You both have 2 good jobs, 2 good pensions, 3 house, 1M in cash and shares and growing at 2K a month (seems small as you have no mortgage or loans apart from investment properties). You have more than enough to see you through this life so if it were me I'd forget about worrying how to build more wealth but just get out and enjoy life. Focus on staying healthy so you can enjoy your wealth.
 
Hi LocknBarrel, great to see an update as detailed 5 years on from the original post.

One question, and fair bloody play to you on this. Your wealth (assets minus debts) was €570,000 five years ago and it's now €1,627,000. How did you manage that? I know your three properties you retain have increased from €605,000 (€310,000 + €105,000 + €190,000) to a value now of €895,000. Plus the mortgages on same reduced from €312,000 to €238,000. So retained property increased your net worth by €364,000. But your other wealth increased by €693,000.

Is that all from equities? Did you sell Properties 1 and 4 for much higher prices than you valued them at in your original post? Did you inherit money? Did you have a windfall?

I would be interested to hear your equity investment strategy if it came from the equities route. Thanks!
 
locknbarrel said:
Hi. I wanted to come back after 5 years and give an update on my progress after some great perspectives here 5 years ago.

Updated details:

Age: 45
Spouse’s/Partner's age: 43

Annual gross income from employment or profession: 90000
Annual gross income of spouse: 60000

Monthly take-home pay: 6,500

Type of employment: Both Public Sector

Usually saving €2000 /m - between myself and spouse we have taken a lot of different career breaks over the last number of years for childcare reasons.

Rough estimate of value of home: 450,000
Amount outstanding on your mortgage: 0

Other borrowings – car loans/personal loans etc: None

Savings and investments:
€270,000 National savings certs and deposits
€700,000 in shares and trust funds

Do you have a pension scheme? Yes - Both Public Sector

Do you own any investment or other property?
Property 1 - this property was sold since initial post.

Property 2:
Value: €180,000
Mortgage: €102,000 (15 years left)
Interest Rate: 0.6%
Monthly Rent: €850

Property 3:
Value: €265,000
Mortgage: €136,000 (15 years left)
Interest Rate: 0.9%
Monthly Rent: €900

Property 4 - this property was sold since initial post:


Ages of children: 8, 6, 4 years

What specific question do you have or what issues are of concern to you?
We made progress in getting more organised about our finances after the initial post. I feel much more in control than I did 5 years ago. We got lucky in the markets over the last year especially. The same performance will unlikely ever be matched again.

  • I am interested in starting a PRSA/AVC self directed pension for me and/or my spouse. I feel this would be more tax efficient - even if it eventually becomes overfunded. Does anyone have any perspective on this or see any flaws in this logic?
  • We have an option to sell property 2. But there's no obvious place to put the proceeds. The management of the property doesn't bother us and I know it's a good investment. But the prevailing winds in politics that are chipping away at the property rights of landlords is causing us a lot of concern. I can't see the logic of the new restrictions - given that it will disincentivise landlords from renting property. The lack of houses for sale is now being compounded by the lack of properties to rent. But I don't see a sensible policy for the medium term. I feel this is a real risk.
  • We intend to take more unpaid leave and career breaks between us going forward. While I intend to work long term - my spouse may retire early ~12 years from now. I'd like advice on how to best prepare for this eventuality.
  • In general - we've had a step change in where we were 5 to 10 years ago. I'm struggling to get my head around being in this position and feel that I may be applying 'just starting out' methods to an altogether different scenario. If anyone that has had a similar transition and has any comments on things I should be thinking of I'd love to hear them!
Click to expand...

I have written a detailed analysis of maximum use of AVCs here

globalwealth.ie

Maximum AVC Contributions - Everlake

There isn't a maximum contribution you can pay into your pension. Pay a lump sum to your pension now and carry forward the tax relief.
globalwealth.ie globalwealth.ie

I
 
PebbleBeach2020 said:
Hi LocknBarrel, great to see an update as detailed 5 years on from the original post.

One question, and fair bloody play to you on this. Your wealth (assets minus debts) was €570,000 five years ago and it's now €1,627,000. How did you manage that? I know your three properties you retain have increased from €605,000 (€310,000 + €105,000 + €190,000) to a value now of €895,000. Plus the mortgages on same reduced from €312,000 to €238,000. So retained property increased your net worth by €364,000. But your other wealth increased by €693,000.

Is that all from equities? Did you sell Properties 1 and 4 for much higher prices than you valued them at in your original post? Did you inherit money? Did you have a windfall?

I would be interested to hear your equity investment strategy if it came from the equities route. Thanks!
Click to expand...
I especially wanted to answer this as I've seen so many threads in the past and wondered "how did that happen...". I semi-conciously under-valued the property values 5 years ago. I was still in post-GFC PTSD mode and wanted to err on the side of pessimism.
Other than that there was one relatively large share investment that returned 10x over 4 years. It was a one-off. At one stage it was down 70%:oops:. But it came through.
I wish I had done a post 10 years ago as well - we were ~1m euro in debt, property falling off a cliff and income was literally cut in half. I may do a post in another 5 years. Hopefully the trend won't go full circle.
 
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