Salary increase but advice needed

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Westsider79

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Askaboutmoney.com - the


Personal details

Age:43
Spouse’s/Partner's age:44

Number and age of children: Two 12 and 10


Income and expenditure
Annual gross income from employment or profession: 70500
Annual gross income of spouse:50000
Also have an annual income from rent a room scheme of approx 7000
All childrens allowance goes straight into post office saving...have dipped into this over years for car payments and orthodontist treatment

Monthly take-home pay Me: 1742 per fortnight, spouse 750 per wek
Type of employment: e.g. Civil Servant, self-employed: Me Civil Servant, spouse: private sector

In general are you:
(a) spending more than you earn, or
(b) saving?
Saving

Summary of Assets and Liabilities
Family home worth €540k with a €240k mortgage
Savings of about €4000 in post office savings
Zurich investment account pay 215 per month into this: balance of around €11000
Rainy day fund in easy access savings €1000-would like to increase this though
Credit union savings(holiday savings) around €3500; currently planning on putting €1500 per month into this for some bigger foreign trips this year
Pension: Civil service pension will have full contributions by 63/64
Spouse has private pension current pot around €50000 I think


Family home mortgage information
Lender PTSB
Interest rate 2.9%
If fixed, what is the term remaining of the fixed rate? 18 months remaining on fixed

(No need to tell us the monthly repayments or what term is left)Other borrowings – car loans/personal loans etc
Credit union loan- 5.9% Interest around 13,000 left paying 435 per month

Do you pay off your full credit card balance each month? fully every month
If not, what is the balance on your credit card?


Buy to let properties
Value:0
Rental income per year:0
Rough annual expenses other than mortgage ininterest0
Lender
Interest rate
If fixed, what is the term remaining of the fixed rate?

Other savings and investments:

Do you have a pension scheme?

Do you own any investment or other property?

Other information which might be relevant

Life insurance: basic mortgage protection. Both myself and spouse have income protection


What specific question do you have or what issues are of concern to you?
I have been recently promoted and my salary increased by around 20k due to promotion and going back full-time. We now have surplus funds every month and whilst we are treating family to a big holiday I'd like to make sure we are being smart with our money to and future proofing overselves enough. All advice welcome.
 
Westsider79 said:
Credit union loan- 5.9% Interest around 13,000 left paying 435 per month
Click to expand...
This jumps out. You've a loan at 5.9%, but putting money into a Zurich fund? The Zurich fund would need to be making 12 to 14% (allowing for fees and tax) to cover the cost of the loan.

Pay off the loan first.
 
Thanks for the reply. I suppose we view the zurich fund as long term and preparing us in some way for kids college fees etc. Might be the wrong way of thinking but I'd feel anxious if we didn't have some form of long term savings in the bag?
 
Still makes sense to clear the loan first.
Not only are you borrowing €13k at 5.9%, you also have €3.5k in the CU most likely earning nothing.

What's the Zurich money invested in?

Pensions are normally the best investment once you have your home and don't have expensive unsecured loans. Maybe you're already covered with yours (or could you be boosting it with some sort of AVC?) but your partner's €50k at age 44 seems pretty paltry given the household income. It may need boosting?

Saving the child benefit in the post office probably isn't the best use of those funds.
 
Westsider79 said:
Thanks for the reply. I suppose we view the zurich fund as long term and preparing us in some way for kids college fees etc. Might be the wrong way of thinking but I'd feel anxious if we didn't have some form of long term savings in the bag?
Click to expand...
It's an expensive comfort blanket. You've enough in the Zurich fund and savings to immediately pay off the car loan, and save 1,100 in interest. Start fresh, build up a little rainy day fund (you don't need much - you're both in employment, and you both have income protection).
With the car loan out of the way, you'll have a much clearer view of monthly savings capacity.

Then focus on spouses pension, and the mortgage.

There is a really flexible feature with your PTSB mortgage that not many customers realise - if you overpay, you can build up a 'credit', and then take a break from mortgage payments in future when other expense come up.
Have a look through this: https://www.askaboutmoney.com/threads/how-overpaying-a-ptsb-mortgage-works.215065/

Keep it simple!
 
ClubMan said:
Still makes sense to clear the loan first.
Not only are you borrowing €13k at 5.9%, you also have €3.5k in the CU most likely earning nothing.

What's the Zurich money invested in?

Pensions are normally the best investment once you have your home and don't have expensive unsecured loans. Maybe you're already covered with yours (or could you be boosting it with some sort of AVC?) but your partner's €50k at age 44 seems pretty paltry given the household income. It may need boosting?

Saving the child benefit in the post office probably isn't the best use of those funds.
Click to expand...
Appreciate response and will seriously look at clearing the loan. The Zurich is a savings plus product split between cautiously management and prisma risk level 4? I do have some AVC and my spouse pays around 250 a month into his, we have been looking at increasing this though.
Will look at child benefit too thanks.
 
RedOnion said:
It's an expensive comfort blanket. You've enough in the Zurich fund and savings to immediately pay off the car loan, and save 1,100 in interest. Start fresh, build up a little rainy day fund (you don't need much - you're both in employment, and you both have income protection).
With the car loan out of the way, you'll have a much clearer view of monthly savings capacity.

Then focus on spouses pension, and the mortgage.

There is a really flexible feature with your PTSB mortgage that not many customers realise - if you overpay, you can build up a 'credit', and then take a break from mortgage payments in future when other expense come up.
Have a look through this: https://www.askaboutmoney.com/threads/how-overpaying-a-ptsb-mortgage-works.215065/

Keep it simple!
Click to expand...
Thanks for your response and I can see exactly what you are saying so we will have a good think about this.
I didn't know that about PTSB will look into this too.
 
Westsider79 said:
The Zurich is a savings plus product split between cautiously management and prisma risk level 4?
Click to expand...
If that's a long term investment then, in my opinion, the cautious part doesn't make sense. I would be of the opinion that it should be in a high equity content find, ideally a tracker rather than actively managed. But others may disagree.
 
ClubMan said:
If that's a long term investment then, in my opinion, the cautious part doesn't make sense. I would be of the opinion that it should be in a high equity content find, ideally a tracker rather than actively managed. But others may disagree.
Click to expand...
Thanks I'll be honest and say I know very little of the ins and outs of investments. A financial advisor through work set this up a couple of years ago, got us to fill out some forms to assess risk appetite and this is what they came up with??
 
Westsider79 said:
Family home mortgage information
Lender PTSB
Interest rate 2.9%
If fixed, what is the term remaining of the fixed rate? 18 months remaining on fixed
Click to expand...

It might be worth investigating switching your mortgage. Interest rates are going up and a switch might save you c. €1000 p.a. at current rates before break fees/solicitor fees. Your requirement for certainty will be a factor here. BOI/AIB might be an option here.
 
Itchy said:
It might be worth investigating switching your mortgage. Interest rates are going up and a switch might save you c. €1000 p.a. at current rates before break fees/solicitor fees. Your requirement for certainty will be a factor here. BOI/AIB might be an option here.
Click to expand...
Thanks our mortgage interest is actually 2.5% and since im still on probation in new job probably can't look at switching until I'm through that.
 
Westsider79 said:
The Zurich is a savings plus product split between cautiously management and prisma risk level 4?
Click to expand...
ClubMan said:
If that's a long term investment then, in my opinion, the cautious part doesn't make sense. I would be of the opinion that it should be in a high equity content find, ideally a tracker rather than actively managed. But others may disagree.
Click to expand...

RedOnion said:
They got their commission regardless of what you're invested in!
Click to expand...

I agree with Clubman, that the Zurich product is too cautious for your needs.

However as someone who has often dismissed the whole Financial Advice industry on here I wouldn't agree with RedOnion's criticism. The product you got may not be the best balance of risk/reward, but tilting the balance toward the less risk end is not malpractice or incompetence, as we see too often.

Pay off the car loan
Put spare cash into the mortgage
Put further spare cash into spouse pension

PO savings €4k, Rainy day €1k, CU €3.5k. This keeping things in different pots for things is not a good idea. Decide how much you need as a rainy day fund (maybe very little with a secure CS job), plus whatever for this years holiday, all in one acct. Then as above.
 
cremeegg said:
However as someone who has often dismissed the whole Financial Advice industry on here I wouldn't agree with RedOnion's criticism. The product you got may not be the best balance of risk/reward, but tilting the balance toward the less risk end is not malpractice or incompetence, as we see too often
Click to expand...
Fair enough, the advisor went with a standard 60/40 fund, which is difficult to criticise.

But just to be clear c. 30% of the assets have been invested in short term government bonds, which were negative yielding over the past few years. Plus the drag of fees and tail commission...

Someone holding a mortgage (a negative bond) to invest in bonds is questionable as a long term strategy in my personal view.
 
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