# 47k in savings, pay off the mortgage?



## CadetStimpy (3 Oct 2007)

Hello,

I've been lurking here for years (great site btw), but this is my first time posting.

I've just left my IT job after 11 years in the same company, and I'm now doing some contracting work for 3months. After that I fancy a career change, which could mean reduced income for a while, or I might continue on as self-employed contractor.

We have a small wodge of cash (SSIAs plus shares) and we're trying to work out the best way to get the money working for us - possibly pay off the mortgage, set up PRSAs - we even looked at a 6 year guaranteed investment with an Eagle Star fund.



Age: 34
    Spouse’s/Partner's age: 34 

   Annual gross income from employment or profession: 60k last year, not so sure about next year!
    Annual gross income spouse: 40k

    Type of employment: I've just recently become self-employed,  she's a civil servant. 

 Expenditure pattern: In general are you spending more than you earn or are you saving? Saving

    Rough estimate of value of home: 360k
    Mortgage on home: 185k
    Mortgage provider: AIB
    Type of mortgage: Tracker
    Interest rate: 4.75%

    Other borrowings: None

    Do you pay off your full credit card balance each month? Yes

    Savings and investments:

Shares: 21k
Cash: 26k (recently rescued from NR and now in BOI savings)

Do you have a pension scheme? 
We both have Defined Benefit pension from previous employer. I have 11 years service, she has 8 years. Once we left our previous employer we left the pensions where they are.

    Do you own any investment or other property? No

    Ages of children: None

    Life insurance: Life and Critical Illness with Eagle Star


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## MichaelDes (3 Oct 2007)

CadetStimpy said:


> Hello,
> 
> I've been lurking here for years (great site btw), but this is my first time posting.


 
Complete profile given. The €47k will not do much to kill the mortgage. I'd invest for ten years then the principal should completely knock off the mortgage. Have to consider lifestyle changes in the future, children etc are costly. I hope self employment works out.

I would consider a Far East tracker for 25% of the monies with 25% held in safety (for a rainy day) 25% in EFT commodities and the other 25% in something split between Brendan Investments (maybe €5) and the balance in other equity classes such as Europe etc. Stick with trackers as they are low on management charges. Some fund manager in Barclays got £27million on Paddies Day (Bonus time in the City) for managing a fund, which is outrageous. Overall have a basket of investments to spread the risks and rewards.


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## z109 (3 Oct 2007)

How about doing a bit of all of them.

Work out how much of your spouses salary is needed to cover your living expenses (including mortgage). If you need to reduce the mortgage a bit to cover all expenses on one salary then use your cash/cash in some shares to do that. That way you will be free to make career choices without having to worry about the bills.

As your contractor income may be a bit up and down, it's probably a good idea to keep some cash on hand in a high rate deposit (Rabo or somewhere like that - see the "best buys" section) to cope with the unexpected.

I would say that you should be setting up a PRSA. Others will argue that you should be paying off your mortgage first. I suppose it really comes down to what worries you most about the future (somewhere to live or retirement income). Both are long-term security investments. I suppose as a rule of thumb, if you are paying top rate tax, paying into a PRSA becomes financially attractive because of the tax breaks, otherwise it is less so.

Best of luck with the career change.


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## CadetStimpy (5 Oct 2007)

Hi,
Many thanks for the replies - sound advice all round. I'm a firm believer in putting my eggs in a few different baskets, and given the uncertainty about my future career, I'll definitely keep some cash in the likes of Rabo.


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## bugsbunny (10 Oct 2007)

Hi there,
Would put 5k into mortgage and get LTV<50% rate for your home,
it is presently about 0.15% bellow tracker rate with AIB. Other banks may even get you a better deal. Get your house valued now, some EA's will do 
it free, things are tight now! You will only save about 300 euros but rather
you have it than the bank. 
PS when you are applying for it ask the bank why they never told you about it
and wait for the silence!
Good luck


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## bugsbunny (10 Oct 2007)

PS Here is the link to work out your rates

[broken link removed]


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## thomsk (12 Oct 2007)

I would put €12k in rabodirect savings a/c, and the rest into QL funds...€10k in europe, €10k in emerging markets,  €10k in latin america, and €5k in china.
you can take all of this out at anytime - if you get nervy. But I would be tempted to leave them be and look at a return of c. 15% or more in a year's time (net)...then think again?
Past performance and all that though.....this is my opinion only-as to what I would do !


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## ClubMan (12 Oct 2007)

thomsk said:


> I would put €12k in rabodirect savings a/c


_Rabo _pays 5% on amounts up to €10K and 3.75% on the excess balance over €10K. In this case that means 5% on €10K and 3.75% on €2K plus any interest earned in the meantime.

If you want the best deposit rate on a €12K lump sum then you probably want to put it in _First Active eSavings _which pays 5.22% gross _CAR _on sums up to €15K and 4.33% on the full amount if that limit is exceeded.

On the other hand I suspect that moving money in/out of a _Rabo _account may be easier than a _FA_ account but check the long running thread on the latter account for the latest.

If you want to further maximise deposit interest then you could couple such high rate lump sum accounts with one or more of the c. 7% regular saver accounts on offer (_EBS _seem to have fewest restrictions and maybe the best rate guarantee but check the terms & conditions to be sure).

Check the _Financial Best Buys_ forum for more on best deposit rates on offer. Also double check that cash deposits for some or all of your money is appropriate in the first place.


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## CadetStimpy (2 Nov 2007)

bugsbunny said:


> Hi there,
> Would put 5k into mortgage and get LTV<50% rate for your home,
> it is presently about 0.15% bellow tracker rate with AIB. Other banks may even get you a better deal. Get your house valued now, some EA's will do
> it free, things are tight now! You will only save about 300 euros but rather
> ...



Hadn't checked this thread for a while, but thanks for the tip bugs, I'm going to definitely check out getting the <50% LTV option on the AIB Tracker.

Cheers!


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## CadetStimpy (2 Nov 2007)

ClubMan said:


> _Rabo _pays 5% on amounts up to €10K and 3.75% on the excess balance over €10K. In this case that means 5% on €10K and 3.75% on €2K plus any interest earned in the meantime.
> 
> If you want the best deposit rate on a €12K lump sum then you probably want to put it in _First Active eSavings _which pays 5.22% gross _CAR _on sums up to €15K and 4.33% on the full amount if that limit is exceeded.
> 
> ...



cheers ClubMan and thomsk, as it happens I've applied for the FirstActive account, just getting round to giving them the ID info they need to open the account.


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