# Financial health check please (high income, what to do with cash on deposit?)



## Evo10 (11 Jan 2008)

Self - Gross income -€120,000 plus bonus of up to €60,000
Spouse - Gross income - €50,000

Jobs - self - paye Financial Sector
Spouse - Paye - motor industry

Ages - Self - 37
Spouse - 38

Mortgage
House - Value circa €525k
Mortgage bal - €377k
Monthly repayment - €2,040
First Active - ECB + .7%

Investments -

Property 1 - value circa €130k, mortgage €95k, income 4.5% guaranteed, shortfall of €225 per month. in France

Property 2 - value circa €265k, mortgage 175k, shortfall of €550 per month.

Savings - 30k on deposit

Other loans - car loan - 300 per month, bal of 5k.

Credit cards - bal cleared each month.

Pensions

Self  - no employer scheme - contribute max 20% each year.
Spouse - no employer scheme - contribute max 20% each year.


Children - 3 yr old


Need advise on what to do with 30k and also have circa 1k a month excess funds


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## Guest120 (11 Jan 2008)

*Re: Financial health check please*

Pay off the car loan, then we'll talk about what you can do with the 25k.


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## John Rambo (11 Jan 2008)

*Re: Financial health check please*

As Bluetonic has said, eliminate the car loan...I can't understand why you'd even have one given the healthy state of your finances. Personally, as your PRSA contributions are maxed out I'd look to start eating into the three mortgages in the most tax efficient way possible by overpaying. Look at the income that the two investments are generating and work out the tax relief situation. I do think at your level you should seek professional advice.


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## Evo10 (11 Jan 2008)

*Re: Financial health check please*

Thanks for the quick replies.

Had been thinking of paying off the car loan, we took out the car loan 3 years ago when our financial situation wasn't as good. New baby, new house and I wasn't earning at the same level.

Having been thinking about using some of the savings to invest in a BES windfarm company but need to get some tax/finance advice on this.


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## ClubMan (11 Jan 2008)

*Re: Financial health check please*



Evo10 said:


> Having been thinking about using some of the savings to invest in a BES windfarm company but need to get some tax/finance advice on this.


_BES _investments are generally at the very high end of the risk/reward scale. You should probably only consider them once you have created a more balanced/diversified portfolio covering other asset classes (you seem very concentrated on domestic _Irish _(?) property right now), risk/reward profiles, geographic regions, investment timeframes etc. and catering to your short, medium and long term goals and how these need to be financed.


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## RainyDay (13 Jan 2008)

*Re: Financial health check please*



John Rambo said:


> Personally, as your PRSA contributions are maxed out I'd look to start eating into the three mortgages in the most tax efficient way possible by overpaying. Look at the income that the two investments are generating and work out the tax relief situation.


Focus on repaying your PPR mortgage before the two investment mortgages to maximise your tax relief.


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## snowey (17 Jan 2008)

Hi Evo10

As the other posters sid, pay off the car loan and keep some of the remaining €25k in a high yielding 'safety cushion' account. 

Look at your investment properties - the large monthly shortfall suggests that they are repayment mortgages as opposed to interest only mortgages. It might be worth considering changing to interest only and thereby reducing how much you have to fund the shortfall.

Focus in the short term on reducing the mortgage on your PPR.  Use your extra €1000 per month to this end.  Keep about €120k on your PPR mortgage to maximise tax relief.

Then look at paying off your investment properties & investing in shares and possibly further properties down the line - if structed correctly, you could have a great Investment portfolio in 20 years time.  Initially though my advice is pay off your home mortgage.

All the best!


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## Evo10 (18 Jan 2008)

Thank you for all the advice.

I have contacted my bank about clearing the car loan so thats a start.

I'm also going to get professional advice on our situation as ideally I would like to put a proper investment/financial strategy in place.


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## ubiquitous (22 Jan 2008)

*Re: Financial health check please*



ClubMan said:


> _BES _investments are generally at the very high end of the risk/reward scale.



Definitely the high end of the risk scale, sadly in most people's experience they're at the low end of the reward scale.


ClubMan said:


> You should probably only consider them once you have created a more balanced/diversified portfolio covering other asset classes



I agree 100%


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## ubiquitous (22 Jan 2008)

I think you should concentrate on reducing your €377k domestic mortgage. Its a big commitment, especially on top of your investment mortgage shortfalls/


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## ClubMan (22 Jan 2008)

*Re: Financial health check please*



ubiquitous said:


> Definitely the high end of the risk scale, sadly in most people's experience they're at the low end of the reward scale.


Fair point - I guess the potential risk and reward profiles of an investment should be measured on separate scales!


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## clubsandwich (22 Jan 2008)

*Re: Financial health check please*



ClubMan said:


> Fair point - I guess the potential risk and reward profiles of an investment should be measured on separate scales!



??? there should be a direct relationship between risk and reward on any investment decision and the potential rewards should be measured DIRECTLY against the potential risks - not sure where you are going with your separate scales - sounds like comparing apples & oranges to me, not an enlighten investment appraisal method


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## ClubMan (22 Jan 2008)

Fair enough. Don't mine me.


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## Purple (23 Jan 2008)

Evo10, you seem to have a good grasp on things. With two well funded pensions and investment properties you are, in effect, well invested in property and shares. 

While you income is high it's not massive and you have substantial commitments. I hope you are enjoying life, going on holidays, eating out etc. Life can be short, have fun.


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## Evo10 (23 Jan 2008)

Purple,

There was me thinking an income of over 200k as a high enough one lol!!

We are having fun, usually manage 2 foreign holidays and a couple of mini-breaks in Ireland a year. As for eating out, well with a 3 year old that is easier said than done, but we manage to get out at least twice a month on our own.


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