# How much do you need to feel safe?



## Proteus2006 (6 Dec 2006)

I have a very simple question. How much do you need in today's Ireland to feel well off?

I have 40,000 in savings.
I have a mortgage of 200,000 on a property that is probably worth around 300,000.
My income varies but I usually save around 200 a week.
I am 31, single and have no pension or other investments.

How am I doing? Am I rich? Comfortable? Average? Or should I feel insecure?

I would really appreciate any feedback on this.
Thanks,
Proteus


----------



## wheeler (6 Dec 2006)

Well done. It sounds like you are in a good position. 

Would you consider starting a pension now? Just curious? 

And if not why not?


----------



## Proteus2006 (6 Dec 2006)

Thanks for your reply. Yes, starting a pension is the next thing on my agenda. But what I'm really curious about is: how safe should I feel? I see so much conspicuous spending around me these days that I just don't know where I rank on the scale.
As you may gather, I am very cautious by nature. But I don't want to let that caution stopping me from spending more if that's what I should be doing.
That's why I'd be interested to hear from others: how much do you keep in your bank account and how much do you allow yourself to spend? How much do you need stashed away before you can feel truly confident about the future?


----------



## homeowner (6 Dec 2006)

Proteus2006 said:


> I have a very simple question. How much do you need in today's Ireland to feel well off?
> 
> I have 40,000 in savings.
> I have a mortgage of 200,000 on a property that is probably worth around 300,000.
> ...



I think you are doing really well.  If your 40K savings is not earning you much in interest why not use some of it to reduce your mortgage payments.


----------



## wheeler (6 Dec 2006)

I wouldn't be the best person to answer as I am cautious too.

But I agree - when you see what is going on around you then you start to ask questions about your own spending habits and what you are doing right/wrong. But I think that you are better off not thinking about what other people are doing.

There are so many factors - 

1) Credit card debt
2) In essence the bank owns everything they have
3) Inheritance fortunes
4) Lotto fortunes
5) Right place, right time fortunes

As my father would say: "I have enough to do minding my own business without having to mind anybody elses'

But I do appreciate what you are trying to find out - a little reassurance that your financial ways are on the straight and narrow and that it's not a case of everyone else knowing something you don't!


----------



## Proteus2006 (6 Dec 2006)

You're right - it's earning me very little interest and I really should make better use of it.
But my problem is, having a lot of money in the bank gives me a nice, warm, fuzzy feeling and I start to feel very insecure if the balance goes down.
At the moment, my plan is to keep saving until I get a balance of 100,000 (which will probably take another five years) and only then start relaxing and spending.
Am I being ridiculously cautious? How big a balance would you need before you started to feel really safe?


----------



## Proteus2006 (6 Dec 2006)

Whelanfiona - yes, you've hit the nail on the head. I find that today you can ask people absolutely anything except how much they earn and how much they have in the bank. Even with your best friends, it's just too embarrassing.
That's why I'm posting here, under the cover of anonymity...


----------



## liteweight (6 Dec 2006)

I think you're comfortable at the moment. I hope you have your savings in Northern Rock and are drip feeding it into a regular saver at 6%!

In general, you need to have a rainy day fund. Some people like to have anything from 6 months to 12 months expenses 'just in case'. Personally, I'd try to pay down the mortgage once the rainy day fund was in situ. Then I'd look at a pension. I doubt there are too many people your age, and in your position, i.e. house purchased already, with 40k in the bank.


----------



## Proteus2006 (6 Dec 2006)

Thanks Liteweight. What worries me is, I know things look ok on paper, but if I did anything like get married or trade up to a bigger property, all those savings could be wiped out at a stroke. That's why I don't see how anyone with less than 100,000 in the bank can feel truly secure. Or am I completely out of touch with reality?


----------



## liteweight (6 Dec 2006)

It's impossible to get into the level of someone else's subjectivity. But in my level of subjectivity, I think that if you had 100k, it still wouldn't be enough. For example, if you lose your job or can't work for whatever reason, you still have to pay the mortgage, bills etc. which will eat a large hole in your 100k over a year. However if you do your best to pay down this mortgage, while maintaining a rainy day fund, you're better off if hard times hit.

It's very easy to want to have more and more, but really there's no one answer to 'how much is enough'. If you just keep all your spare cash in a deposit account it will be eroded by inflation. Better to diversify, you have property and a deposit account, how about investments? After that 'safe' is a state of mind.


----------



## LexLuthor (6 Dec 2006)

I don't think i'm alone in the view that the point is not to 'stash' money away to make you feel secure that you have enough - you will probably never achieve this - but rather to learn how to invest in assets that will increase your wealth for you.
This requires that you begin to release some of your cautious nature but also that you take the time to learn how to invest well (you're first investment should be a few good books). 
I think you will find that this approach is much more rewarding and the calculated risks you will take as you progress, ironically, will ultimately give you the security you desire.


----------



## Buddyboy (6 Dec 2006)

I want to give a long reply to this, but it's late and I've had  a long day travelling. Maybe tomorrow. But in the meantime

I was talking to one of my friends yesterday, discussing the post I have on this forum (in great Financial debates) and he asked me a question

How much money did Enzo Ferarri leave when he died?

Answer....
.
.
.
.
All of it!

Goodnight.


----------



## hattrick_12a (7 Dec 2006)

Excuse me while I just take this interesting topic somewhere else. What are you trying to feel secure from? 

You seem to have an income constantly coming in which will look after you.  Altough it might vary, 200 a week seems a lot to be saving a week, or your salary must be very good.    

You seem to be able to afford to pay the mortgage, but some would say that you pay less in your savings and more on you loan, but then again that is another arguement altogether, and is more a personnel choice really which I have discussed on here before. 

So all in all you seem in pretty good shape and I would see my self alot like you but  may I ask what is the plan for the rainy day fund if that day never comes. 

Sorry for the derailment but am I making any sense here? Should one enjoy oneself? I am not saying you are not. But maybe you should enjoy yourself some more. 

I mean to me 40,000 seems like a big rainy day fund. It might help me understand your suituation more if you said more about what you planned to do with it. In 5 years 100,000 can do alot, but would you spend some of it and then save some more again before it reached another level? 

Sorry again, but hopefully I asked some useful questions for the topic to maybe develop some more.

Thanks.


----------



## Carpenter (7 Dec 2006)

€40000 sitting in a low interest savings account, being eroded by inflation seems like a waste of your hard earned savings.  Why not invest in yourself?  Go back to education, improve your qualifications and career prospects, invest in a small business opportunity??  I would think your position, for your age, is comfortable.  You have no commitments other than your mortgage, why not put some of your savings to work.


----------



## Winnie (7 Dec 2006)

Proteus2006 said:


> That's why I don't see how anyone with less than 100,000 in the bank can feel truly secure. Or am I completely out of touch with reality?


 
in a word yes!  

It is not really money in the bank that would make me feel secure.  I guess I would feel most secure if I had no debt - that way if anything happens, you lose your job, want to go travelling etc then you have no financial committments except general living expenses which could be paid by any low paying job that  you could easily pick up.  

So my first choice would be to reduce mortgage.


----------



## annR (7 Dec 2006)

I would also be cautious and feeling secure would definitely be more important to me then having fun as i would find it hard to relax with worry hanging over me.  However I feel I can spend on myself a bit, if I have at least made plans to be secure and feel I am on the right path.

It is definitely important to invest in yourself.  Never forget that time anad health are the most precious things we all have.  Do not let opportunities pass you by because you don't want to disturb your nest egg.  What age will you be when you have E100 saved up?  Where will you be in your life and will it be too late to do other things?  Are there things you could do while continuing to save a certain amount?    Who will you be?  Someone with 100k saved up or someone who done things they wanted to do?  

I also often ask myself these questions and find it difficult not to compare myself with others.  However it's pointless because people have different definitions of success.  Besides, there will always be someone with more money.  It's particuarly important nowadays to decide your own goals and do things on your own terms.

Myself and my fiancee have just bought a house for a mad amount and will be getting married next year.  It's hard to tell what's ahead and what we're letting ourselves in for.  I do know that there is no way I could settle down now in the commuter belt, if I hadn't had a damn good time and lived my life to the max around the world in my 20s.  I have it behind me and it's worth a lot.


----------



## exile (7 Dec 2006)

Proteus2006 said:


> At the moment, my plan is to keep saving until I get a balance of 100,000 (which will probably take another five years) and only then start relaxing and spending.
> Am I being ridiculously cautious? How big a balance would you need before you started to feel really safe?



Hi Proteus,

I used to think like this too, i.e. I used to believe I would reach some magic point where I would feel I could start living.  But you never reach that point.

In five years, if you have 100,000 in the bank, you'll feel exactly the same.   You won't relax and start spending.  You could wipe out 100K by trading-up just as easily as you could wipe out 40K.  Plus you'll be five years older and things will likely be more expensive.

Plan your saving/investing with timescales in mind, and not just amounts.


----------



## Danmo (7 Dec 2006)

Proteus2006 said:


> How big a balance would you need before you started to feel really safe?


 
How much *is *enough? Do you have nothing else to worry about?
You sound like you are doing OK to me


----------



## Proteus2006 (7 Dec 2006)

Thanks for all the interesting comments. There seems to be a consensus that it's wrong to save so much and that we deserve to live a litle. But here's what I don't get:

We all want to retire around the age of 65, right?

Assuming we have around 15 years of life left, need AT LEAST 30,000 a year to have a decent standard of living and have a state pension of 10,000, you need a lump sum of AT LEAST 300,000 to last you for the rest of your life.
And that's 300,000 in cash, since I'm also assuming that we want to retain ownership of our houses.

To have 300,000 in cash by the age of 65, you need to save roughly 200 every week of your working life (after you've bought your house, which will persumably leave you cash-poor).

I know these calculations are a bit crude, but I think the basic point is valid. How can you feel save until you have a huge amount of cash in the bank?

Or am I missing something?


----------



## annR (7 Dec 2006)

I can see where you're coming from but I think people tend to think of it more in terms of various long term investments, and of course their pension rather than having one big lump sum to tide you over.
This is long term savings so you would be losing money if it was sitting in a deposit account.

To be honest I haven't yet been able o work out how much of a pension I will need / will end up with.  Work in progress I guess.  I find all the media on the subject quite frustrating.  It doesn't help you actually figure out how much you will need.  I guess E30k p.a. isn't a bad starting point.


----------



## exile (7 Dec 2006)

Proteus2006 said:


> To have 300,000 in cash by the age of 65, you need to save roughly 200 every week of your working life (after you've bought your house, which will persumably leave you cash-poor).
> 
> I know these calculations are a bit crude, but I think the basic point is valid. How can you feel save until you have a huge amount of cash in the bank?
> 
> Or am I missing something?



Yes - private pensions.  Recommend you research them without delay.


----------



## Irishchappie (7 Dec 2006)

Im in a similar position to yourself and I'm 31 too.

Have a mortgage on a month on a property which is worth approx 3 times what I borrowed on it, a nice few quid in the bank and aiming to have a nice amount of savings soon, have no major debts, loans or credit card bills and no car payments.

All in all, I have a simple enough life, no major needs and tend to keep it that way while enjoying myself.

However, one thing I made sure of from early on when I started working was to have a pension. I now have a fairly decent one and its all done through a company pension scheme so very little costs for me and the company is contributing a large portion of what goes into the pension scheme in an annual basis. I would you start one asap.

As nice as it is to have a nice lump sum in the bank, I dont see it really giving me a decent return so I plan on investing some of my savings, what exactly Im going to invest it in remains to be seen, but I think while a nest egg to cover those rainy days is great, do you really need €100k sitting in the bank?

My advice, start a pension asap and look at investing some of your nest egg to give you a better return.. Another option would be to divert say half of your monthly savings each month towards your mortgage, imaging what an extra 5k a year towards it would do to your mortgage???

I.C


----------



## Proteus2006 (7 Dec 2006)

Thanks IC, interesting stuff. However, by the sounds of it you're in a different league to me - your net worth must be the best part of half a million, whereas mine is only around 140,000. Of course, that would have seemed like a fortune to me just a few years ago, but your prespective changes, doesn't it?

Perhaps I should re-phrase my original question. At the age of 31, how much does your net worth need to be to qualify you as reasonably well-off?


----------



## Irishchappie (7 Dec 2006)

> However, by the sounds of it you're in a different league to me


 
No not really, my place is down the country where I'm from. I wouldnt be in half as good a shape if I was buying in Dublin.




> Perhaps I should re-phrase my original question. At the age of 31, how much does your net worth need to be to qualify you as reasonably well-off?


 
Well a survery by an english newspaper last year reckons that to live a lifestyle of a millionaire you would need a minimum of Stg£3.8million in the bank. 
Must be a fairly conservative lifestyle if you ask me.  

Seriously though, different people would have different ideas on what being well off means. 

Personally I would class it as having a good lifestyle in that you have a family 2 or 3 kids yet can still go out with friends regularly, holiday at least twice and year, drive a fairly decent car or 2 and change them every 3-4 years, own your own home without being mortgaged to the eyeballs and still have a few quid in savings at the end of it all.

But like I said, I have a fairly simple life and simple needs. Expensive taste, but simple needs (if thats possible!!!)  

By the sounds of it, you're really in good shape now for your age and things can only get better if you keep going as you are.

Dont forget to enjoy yourself in between all this planning and saving, see a bit of the world etc. Dont be more proof of the saying:

*"Youth is wasted on the young"*

I.C


----------



## Marion (7 Dec 2006)

> Expensive taste, but simple needs (if thats possible!!!)




_I have the simplest tastes. I am always satisfied with the best._ Oscar Wilde

It seems you have something in common with Oscar. 

Marion


----------



## Irishchappie (8 Dec 2006)

Marion said:


> _I have the simplest tastes. I am always satisfied with the best._ Oscar Wilde
> 
> It seems you have something in common with Oscar.
> 
> Marion


 
Ohhh I feel so privileged


----------



## derryman (8 Dec 2006)

Persius

you really need to start a pension assuming that you pay higher rate tax and assuming 1% charges on a PRSA - the 48% tax relief you get on day on will allow you to hit your notional 300k target in half the time - read the pensions thread for more detailed analysis of the pensions tax break


----------



## pinkie123 (8 Dec 2006)

Irishchappie said:


> Im in a similar position to yourself and I'm 31 too.
> 
> Have a mortgage which costs me €600 a month on a property which is worth approx 3 times what I borrowed on it, a nice few quid in the bank and aiming to have it up around the €100k mark soon, hopefully within the next 2 years, have no major debts, loans or credit card bills and no car payments.
> 
> I.C


 
are u married ha ha you would be a good catch


----------



## Irishchappie (8 Dec 2006)

pinkie123 said:


> are u married ha ha you would be a good catch


 
Free and single and plan on staying that way for the forseeable future.. but thanks for the compliment..


----------



## Billo (8 Dec 2006)

"How am I doing? Am I rich? Comfortable? Average? Or should I feel insecure?"

Your health will be be your wealth going forward. Just a thought.

Rgds
Billo


----------



## ClubMan (8 Dec 2006)

Good idea. How much can I sell a kidney for these days?


----------



## Marion (8 Dec 2006)

> are u married ha ha you would be a good catch





> but thanks for the compliment..


Irishchappie ...I don't think she was merely complimentary . Pinkie 123 is fairly decisive. Btw,  AAM has a PM sysem. 

Marion


----------



## Irishchappie (11 Dec 2006)

> ...I don't think she was merely complimentary . Pinkie 123 is fairly decisive.


ok, now Im scared  



> ...Btw, AAM has a PM sysem.


 
Ssshhhh.. dont be encouraging her..  



> Your health will be be your wealth going forward. Just a thought.


 
Have to agree with you there billo.. all the money in the world is no good to you if you dont have your health!!


----------



## dublinsense (11 Dec 2006)

In my opinion being "secure" is more than net worth and savings. The following is just opinion.

There should be a mix of Savings, Investments, Income Insurance, Health Insurance, Life assurance & Pensions in your security plan. As Tony Robbins suggests divide your investments into security, growth and high growth (or dream bucket as he calls it); these should be divided into percentages that suit your current life ambitions. Have enough in your savings to survive 6 - 12 months if your income suddenly stops, consider leaving this in something like a Rabo Account to combat inflation.

Insurance & Assurance arent fun, but they will give you plenty of security and pension contributions means money that otherwise would go to the tax man helps you to have security in your old age.

Having the diverse plan is far more secure than just a cash rainy day fund.


----------



## Irishchappie (12 Dec 2006)

dublinsense said:


> In my opinion being "secure" is more than net worth and savings. The following is just opinion.
> 
> There should be a mix of Savings, Investments, Income Insurance, Health Insurance, Life assurance & Pensions in your
> security plan. As Tony Robbins suggests divide your investments into security, growth and high growth (or dream bucket
> ...


 
Just going back on what you said there dublinsense.. I would be of the same opinion as yourself when it comes to most of those

- Life and health insurance are a must for both you and your family.

- Pensions are also becoming a necessity with the cost of living today, if you want to maintain any sort of decent liftstyle after 
you retire. And as Dublinsense said, it avoids handing over that extra hard earned cash to the taxman.

- Savings and investments do also help for those rainy day scenarios and do allow you to get the little luxury items in life without 
borrowing for them. It also works out well in later life.

- I wouldnt class income protection as a necessity personally but it is a good thing for peace of mind.

I think you do need a definite plan and stick to it. This time 5 years ago I was in a completely different place when it came to 
finances, up to my eyes in debt, well what a person in their mid 20s would class as that. Didnt have a mortgage to worry about 
but my debt was about the equivalent of 80% of my annual income. 

It took a serious kick up the behind to get me to take my head out of the sand and see where I was going.

Being secure is a state of mind as well as a state of finances. If you're not happy with your lifestyle and are constantly moving 
the proverbial goal posts then no matter how you have invested or saved, you'll never be happy. There is nothing wrong with 
wanting and getting more, but do it at your pace and not at the pace of the "Jones" across the road.

I.C


----------



## HotdogsFolks (18 Dec 2006)

You're 31. I think you should loosen up and enjoy yourself more.

You can always earn more money, but you can never take back the time you've lost by being overly cautious.

When you're an old man, lying in the hospital dying, would you rather feel "secure" knowing you have a couple of hundred thousand in the bank, or would you rather feel happy, know you lived your life to the full?

Your insecurity is holding you back. You will regret wasting your life saving money!


----------



## Purple (18 Dec 2006)

Irishchappie said:


> Personally I would class it as having a good lifestyle in that you have a family 2 or 3 kids yet can still go out with friends regularly, holiday at least twice and year, drive a fairly decent car or 2 and change them every 3-4 years, own your own home without being mortgaged to the eyeballs and still have a few quid in savings at the end of it all.


Jasus, I'd need €500'000 a year for that...and I thought I was doing OK


----------



## Irishchappie (19 Dec 2006)

Purple said:


> Jasus, I'd need €500'000 a year for that...and I thought I was doing OK


 
Ah now, how do you figure that out??????

I never said anything about not having a mortgage or not having car finance. These are part of everyday life. The holidays dont have to be over the top. 

I would consider a fairly decent car would be a decent size family saloon, doesnt necessarily have to be a top of the range marque.. 

I know my parents managed it and my father earned no where near €500k a year, no even a fraction of it.. Its all very reachable but again, I suppose it depends on your lifestyle..

I.C


----------



## Guest109 (19 Dec 2006)

Proteus2006 said:


> I have a very simple question. How much do you need in today's Ireland to feel well off?
> 
> I have 40,000 in savings.
> I have a mortgage of 200,000 on a property that is probably worth around 300,000.
> ...


 
i would say you are very well fixed indeed well done ,the 200 euro savings per week i would be inclined to use that to help pay off your mortgage,
im sure not many 31 year olds are in as good a situation as you are at the moment


----------



## mell61 (19 Dec 2006)

I do think you're doing well, but I'd say you need to go with the pension from now on.... assuming you're on the higher rate of tax you are almost doubling the amount you save, but just deferring its accessability for about 30 years ;-)

Congrats on it, but time to start diversifying, get some investments going.... why leave it in Shares in Irish Banks when you could buy some of their shares and reap the rewards of the low rates they offer borrowers, instead of being hit by it!

I think having a specific sum in mind is the wrong idea, consider instead how many months you can cover.  Do you really need 10-15-20 months in the back or would you feels ok with 6 months in the bank and the rest in shares?


----------



## Purple (20 Dec 2006)

Irishchappie said:


> Ah now, how do you figure that out??????


I'm mortgaged to the eyeballs


----------



## Irishchappie (20 Dec 2006)

Purple said:


> I'm mortgaged to the eyeballs


 
Ahhhhhhh gotcha


----------

