# What to do with savings?



## BoscoTalking (17 Apr 2019)

Age: 40  Spouse’s/Partner's age: 40
Annual gross income from employment or profession: 60,000
Annual gross income of spouse:30,000
Monthly take-home pay 3000 & 1600
Type of employment: e.g. _Private sector & Public Servant,_
_In general we are saving. _
Rough estimate of value of home - €320k
Amount outstanding on your mortgage: €140k 2% tracker ans we overpay by 200pm
Other borrowings – none. 
credit card cleared every month 
Savings and investments:_Work related shares 80k & >50k cash in deposit account earning nothing. 2000e in An Post 5 year bonds maturning in 2 years when olderst child starts secondary. _
Do you have a pension scheme? _work matched to 8% so paying in 16% circa 130k in there now, other half has none_. 
Do you own any investment or other property? _none_
Ages of children: _10 & 7, no childcare costs thank goodness. income of childrens allowance saved each month into regular bank account. _
Life insurance: _Mortgage protection only for both of us and work will pay out some if I die. _
*
What specific question do you have or what issues are of concern to you? *
What do do with the 50k to make it work more with low risk? 
We both run decent cars and kids are low maintenance now but I suppose that can change in the future so I would like to keep some cash in reserve though not 50k. 
Layoffs are possible in the next few years as company looks like it is relocating out of Ireland in which case the partners lower salary would kick in as sole earner.


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## Sarenco (17 Apr 2019)

I think if I was in your shoes, I would use €25k to pay down the mortgage and keep the remaining €25k on deposit.

I also think you need to look at materially increasing your pension contributions.


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## messyleo (17 Apr 2019)

I take it your partner is the public servant judging from your point re layoffs - your spouse then does have a pension surely as my understanding is it is mandatory in the public service.


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## Gordon Gekko (17 Apr 2019)

I would:

- Stop overpaying your mortgage

- Keep €27,600 in cash (i.e. 6 months’ worth of income)

- Use your excess cash to maximise your pension AVCs for 2018 (before 31 October) and for 2019.

- Maximise your AVCs on a monthly basis thereafter.

- Ensure that the pension monies are in a 100% equity strategy.

- Only then use any surplus to overpay on the mortgage


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## lledlledlled (19 Apr 2019)

Gordon Gekko said:


> I would:
> 
> - Stop overpaying your mortgage
> 
> ...



Would this be your advice for most people or is it just specific to the OP's circumstances?
I thought the consensus amongst the main posters on AAM was that mortgage should be overpaid,  rather than focusing on AVC's, unless you are approaching retirement?
I'm ploughing any spare cash I get into overpayments and it's a real struggle some months. Employer pays 10% into pension,  I pay 5%, but zero AVC's.


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## Gordon Gekko (19 Apr 2019)

It would be my advice to most people.

With AVCs, it’s a case of “use it or lose it”. Using 2019 as an example, the ability to contribute €23,000 for a 35 year old falls away on 1 November 2020. Yes, he or she could instead use the net circa €14k to pay down their mortgage but then they arrive at a point down the road with a substandard pension fund and no ability to backfund it.


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## gimp (19 Apr 2019)

In general it is better to pay down a mortgage....But......you have a tracker paying only 2% on it..... that is money for nothing really. Put more in a pension and save on tax and get long term benefits built up now when you need it. That money will work for you over the next 25 years . Do not overpay a Tracker would be my advice. All you have to do is make more  than 2% on your pension and you have beaten any investment in paying down the tracker. Plus you have a tax benefit in making pension contributions on top. Maybe look into getting income protection insurance.


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## 4Winds (19 Apr 2019)

Gordon Gekko said:


> It would be my advice to most people.
> 
> With AVCs, it’s a case of “use it or lose it”. Using 2019 as an example, the ability to contribute €23,000 for a 35 year old falls away on 1 November 2020. Yes, he or she could instead use the net circa €14k to pay down their mortgage but then they arrive at a point down the road with a substandard pension fund and no ability to backfund it.



What will happen 1 November 2020?


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## Gordon Gekko (20 Apr 2019)

4Winds said:


> What will happen 1 November 2020?



The ability to contribute €23,000 in respect of 2019 falls away forever.


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## Sarenco (20 Apr 2019)

lledlledlled said:


> I thought the consensus amongst the main posters on AAM was that mortgage should be overpaid,  rather than focusing on AVC's, unless you are approaching retirement?


I don't think that's the consensus view around here.

In general, I think it makes sense to prioritise maximising tax-relieved pension contributions over paying down a mortgage ahead of schedule.  That's partly due to the "use it or lose it" nature of pension relief.

However, the OP here is concerned about a possible layoff in the coming years, which I think changes things.


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## BoscoTalking (8 Jun 2019)

Thanks everyone, I have maxed the AVC's with the money i was overpaying the mortgage, and will look into accepting the voluntary redundancy package which is surfacing now,


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