# Single 30 year old seeking Investment Income over Long Term



## foxyboxer (23 Feb 2011)

Age: 30
Spouse’s/Partner's age: Single
Annual gross income from employment or profession: €33,000

Type of employment: e.g. Full Time PAYE

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

*No Property*.

Other borrowings – car loans/personal loans etc
*No loans.*

Savings and investments: €85,000
Do you have a pension scheme? No
Do you own any investment or other property? No
Ages of children: None

*What specific question do you have or what issues are of concern to you?* 

I currently have a large amount of cash on deposit (70,000 of which is my own and includes a 15 gift).
This was achieved through being both frugal and working in a role where accomodation expenses and subsistence were covered for the best part of 3 years.

This capital is divided up between 10k in a current account and 75k in the local credit union. I am trying to establish a plan to gain financial freedom by the age of 50. So a 20 year time frame. 

My parents have been renting their property for the past 30 years and a new city council scheme will allow them to purchase the property at a 45% discount. Tenant Purchase scheme.

I realise that my savings are not working as hard as they can, which is fast becoming a source of frustration (especially as the dividend this year was a miserly 0.5%!!). I have done some initial thinking and have come up with the following plan. I'd like some feedback if possible to see if this is a valid/solid plan.

I have disciplined myself to live on €250 per week.
I estimate that to achieve an income of €12,000 per annum (€1,000 per month/ €200 per week), I would need have capital of circa €350,000 at a standard rate of 3.5%

I'd like to achieve this by doing the following initially.
1. €25,000 in index tracker funds over a 20 year period. (Divided into 2 funds so €12,500 in each).
2. €20,000 in the 10 year National Solidarity Bond at 49%
3. €30,000 in the 5.5 Year Savings certificate at 21% (and rollover and compound upon maturity)
4. Save an additional €300-400 per month. Assuming a 3.5% return annually.
5. Keep 10k on deposit as an emergency fund to protect againt job loss, medical expenses etc.
6. Pay €400-500 per month on the Council House over a 15 year period. Loan would be drawndown by parents but with me as guarantor. Based on current market value plus the discount. I would estimate that the mortgage here would be €75,000.

I think this is pretty conservative. Should I consider holding dividend paying solid stocks? Putting a 25% stop loss on initially and holding over the long term (20 years) too?


Any thoughts are appreciated. Would it be worth seeking paid professional advice with these goals in mind?


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## idkwatmi (23 Feb 2011)

I would also look at a pension for youself.

You sound like you have put some thought into this but have you factored in changes in your relationship status etc. for example you are basing your figures on remaining single. Why is it so important to be financially independent at 50? (perhaps I am not understanding this completely)


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## Protocol (23 Feb 2011)

A wife and children will put all these plans on hold.


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## foxyboxer (23 Feb 2011)

I know having a family would change the dynamic. To quote Francis Bacon "_He that hath wife and children hath given hostages to fortune, for they are impediments to great enterprises, either of virtue or mischief. "_

I just want to feel like the money is working and getting a return instead of sitting being unused and this seems like a viable plan in the interim. Maybe it would need flexibility to accomodate a family but may consider the savings cert as an education fund if it came to that.

No real reason for age 50 being a target. I certainly realise that there are no pockets in a shroud too.


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## aristotle (23 Feb 2011)

You haven't accounted for DIRT on the interest on a 350k amount. You would need about 450k to get 12k net of DIRT (assuming that 3.5% interest rate you mention).

Also, what you are doing is good but you should put more emphasis on increasing your income if you are not already thinking about that.


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## Protocol (23 Feb 2011)

Yes, a higher income is key.

Say you earned 53k gross, your cost of living should stay roughly similar, so that means you could save so much more.


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## millieforbes (23 Feb 2011)

This may be a little harsh but you might not get to financially independent if you are living with your parents in a house that they technically own - what happens if they get sick and need care etc or you need to support them in their old age?


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## mtk (23 Feb 2011)

First of all well done on 
1) saving so much 
and 2) having a plan - most people dont

Maybe u would be better off planning to get ur own place at some stage rather than staying with parents
Other unknowns a- re ur parents particularly old - in 20 years will be there be an inheritance ? ( i ask as i got inheritance at 40)
and related or why are u buying "their" house?


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## Greta (23 Feb 2011)

As far as I understand, OP isn't living with parents, but in accommodation provided by his employer.

However, I agree that it's a good idea for him to plan to get his own place at some stage, not relying entirely on either parents' house or employer's. After all, he could rent it out first, then move in himself if/when he needs to.


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## Bronte (24 Feb 2011)

Why would you be paying the mortgage on your parents house?


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## foxyboxer (24 Feb 2011)

Thanks for all the replies.

Not living at home. As has been said, for the most part accomodation is paid for via work when overseas (which has been a lot in recent years), but when based in Ireland it is at my own expense.

I figure at such a big discount (45% via the tenancy scheme) is a great opportunity to buy a modest property with a relatively small mortgage (circa 75-80k). The repayments on this would easily fall within the 20 year range, allowing for changes in circumstances.

They are retiring within the next five years and in order for them to secure a loan at that amount, then I may have to go guarantor. I am not on the rent book so cannot apply for said discount.

If circumstances change in future (settling down to raise a family), then a seperate family home may be in order. I will take on board your suggestions. 

In terms of earning more, I guess that depends on the assumption that my current job will continue. I have added in the emergency fund to cater for this. (With the current economy, a move abroad may need to be an option and I need to determine how this would affect the plan too.) As with all plans I guess it's the what-ifs that need most consideration.


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## Lsquared (26 Feb 2011)

I would definitely hold some dividend paying stocks if the companies have dividend reinvestment programs. This is a good way to increase your number of shares over the years with the compounding and when you decide to retire you can opt to take the dividends as income. That's what the lsquareds are doing anyway.


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## fizzelina (26 Feb 2011)

Protocol said:


> A wife and children will put all these plans on hold.


 
On my first read of the OP post I thought it was a woman. It's strange how people assume different things.


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