# Early 30's, no pension but savings



## Celtic08 (29 Oct 2008)

Hi,
I am in my early 30s. I have now come to a stage that I need to start using my money properly. I am confused what to do.. if to invest or save or pensions etc..
Here is my profile
Monthly net salary approx: €3500
expenses: Mortgage- €1300 a month ( i get €800 rent off lodger, so mortgage cost me €500)
Monthly Bills approx- €600 
credit card: €4000 ( will clear this in next 2 months)

Savings: approx €10-12000

I have no current savings or pension setup.

Could anybody suggest how best I could work with my money from now? investments? savings? property?

I suppose I would like to be in a position to retire at 60

Should I speak with an financial advisor?


Thanks for any help


----------



## CGorman (29 Oct 2008)

*Re: Help I need a maker*

Out of interest, why is this marked as a key post?

Anyways...

*Key Points*

1) Yes you should speak to an independent FA ASAP as you are well into your working life and yet have no pension. This should be your top priority along with clearing the credit card as pensions are very well tax incentivised.

2) Clear the credit card now, why wait 2 months? You have the cash in savings, so clear it now... its costing about €35 - €65 in interest _every_ month.

3) You have savings of €8k - €10k (after clearing your CC); what sort of interest are you getting on this? Unless its 5%+, then theres another thing to do straight away that'll make a difference whilst thinking about what the long term goal is. Every month on deposit at 5%+ should yield €40 - €50 in interest.

4) You have €2.4k in cashflow after the mortgage and bills each month... this gives you a good amount to play with. Obviously you don't save all of this as you surely have other expenses, but i'm sure a reasonable amount could be saved. You could set up a €1k a month savings scheme at 7%+ interest. This would be a step in the right direction.

5) What else you do will depend on your appetite for risk and your discussions with a FA. I'd imagine putting your lump savings on deposit at 5%+ and accumulating additional savings at 7%+  along with contributing to a pension whould be among your safer options. You could of course decide to invest in equities, property etc...

*A little note on investing: *

Whether you consider property, equities or some other asset class consider the following:

> Will the expected return comfortably exceed 5% (if not, then deposit is a better option)
> Will the asset class make my life uncomfortable (owning a buy to let can be stressful and would require plenty of time and effort)
> Does the difference between the expected return and the secure 5% return justify the risk (you might believe equities will rise by 10%, is this extra 5% return worth the risk of possibly losing money?)
> Can you afford to lose money and how much (if you really can't afford to lose the money, then don't invest in something that can lose money!)
> Will the investment have unplesent tax implications (check how it effects your tax bill)
> What happens if you suddenly need the money? (how liquid is the investment)

*What I'd Do*

If I were you (I'm not however), i'd aim for something like the following...

Net salary: €3,500pm
Mortgage: €1,300pm
Rent: €730_ (I have reduced to reflect one empty month per year... we're in recession after all!)_
Monthly Bills: €600
_Balance: €2330_

Living: €400 _(I don't know what you have in monthly bills? does it include nights out, holidays etc.???)_
Save: €1,000 _(direct debit saved into a 7% regular saver account)_
Pension: €500+ _(only a rough guess at the amount you should be paying, could be more/less)_
Residual: €430

I'd keep the residual amount in my current account for emergencies and transfer every now and then any excess over €3k from the current account to the 5% deposit account.

So with the above...

Pension: Putting €500pm away
Saver: Putting €1,000pm away at 7%
Lump Sum: Have €10k at 5% and adding money to it as current account grows above 3k

I'd then probably consider investing some of the lump sum money; perhaps I'd put 5-6k into equities or perhaps i'd wait for the lump sum to grow to €20k - €30k and buy an investment property. As I said, this is the portion that you have to speak to an FA about and which is ultimately up to your risk appetite.


----------



## DrMoriarty (29 Oct 2008)

*Re: Help I need a makeover*

Welcome to AAM, Celtic08. I've edited your title; please read the .
You might also find The Askaboutmoney Guide to Savings and Investments to be a useful starting point.


----------



## GetMoving (30 Oct 2008)

*Re: Help I need a makeover*

If you haven't started a pension already, there is a good case to be made for starting a personal pension/PRSA or joining your company scheme. You might consider contributing more than €500 per month - why not €1000 pm, especially given that this will equate to €580 of your net pay?

The QFA should be able to give you more of an idea. 

The key thing to remember is to diversify as much as possible in any of your investments, so that you don't take a disproportionately high hit on any of them if things go south.

GM


----------



## yellowellie (31 Oct 2008)

*Re: Help I need a makeover*

Even though I'm not the OP, I just want to say thanks to the people who replied.  Very helpful!


----------

