# Help with savings plan per month



## OnLooker (16 Aug 2007)

Hi,

I am on €45k a year, just turned 27 & would like some advice on how to maximise the money I am saving. I currently save €1500 a month broken down into the following:

€1250 into Northern Rock
€250 into Credit Union

I also started contributing to my pension last month (€200 working out at €106 cost). I only started it now because the company I left were really bad with all that stuff.  

I already have €10k in Rabo, €16k in NR & €4.5k in the credit union. 

My idea behind the credit union saving is that its good to have a savings record with them with it comes to cheap loans for cars, home improvements etc....

I also have a house with my sister. One of us will eventually end up buying each other out so the money going into Rabo & NR is for still eventuality (either me buying her out or more buying my own place).

Any idea's would be very helpful.


----------



## Firefly (16 Aug 2007)

Congrads on saving 1,500pm. Personally, I would increase my pension contributions to the maximum tax-deductable level.


----------



## moondance (16 Aug 2007)

What is your net monthly income? If you're paying a mortgage maybe increase payments as much as you can to save on interest.


----------



## OnLooker (16 Aug 2007)

moondance said:


> What is your net monthly income? If you're paying a mortgage maybe increase payments as much as you can to save on interest.



We have the house rented out for the last 4 years. I come out with €2670 after my pension & travelsaver expenses.

To be honest, I am looking down the road about 2/3 years. I want to buy my sister out or if she buys me out, I want to buy a house myself.

What is the maximum tax-deductable level for the pension?

Thanks


----------



## moondance (16 Aug 2007)

What about buying a place for yourself to live in then and leave the rental property as it is if it's paying for itself?


----------



## OnLooker (16 Aug 2007)

moondance said:


> What about buying a place for yourself to live in then and leave the rental property as it is if it's paying for itself?



The rental property pays for itself but I didn't the bank would give me a great mortgage in the current climate.


----------



## ClubMan (16 Aug 2007)

OnLooker said:


> What is the maximum tax-deductable level for the pension?


See here:

Pensions



> *Tax relief on contributions
> 
> * You may get tax relief on contributions to approved personal pension arrangements. This relief is more generous as you get older.
> Age Amount which qualifies for tax relief
> ...


You can also backdate contributions against last year's earnings if applicable:

October 31 - what does it mean for PAYE worker?

Also - if this is a "standalone" personal pension/_PRSA _with contributions not made via payroll but from net income then make sure to claim back _PRSI_:

Claiming PRSI relief on standalone PRSA contribution


----------



## OnLooker (16 Aug 2007)

I don't really want to tie up a vast amount of my money in a pension yet as I know I will have to buy again in the future.


----------



## Brendan Burgess (16 Aug 2007)

Hi OnLooker

I don't think that you should be contributing to a pension at all. But this is discussed at length in thisthread. 
If you are not planning to buy out your sister for a few years, you should invest your savings in a stockmarket linked fund e.g. Quinn Life. There is some risk that it might fall in value over the next three years, but more often that not, it will rise in value well in excess of what you can get on deposit. 

If you don't want to do that, then put your money into the best deposit account going. I don't think that you will need a savings record with the Credit Union. It depends on which one you are with, but most are no longer as cheap as the banks. It's easy to get bank loans these days. 

If you have a mortgage, I don't think that you should pay it off. In fact, you should switch to interest only, so that you get maximum tax relief on your interest payments. Effectively, you are getting to borrow money at around 3% after tax and you can probably get a better after tax return on that by investing in a stockmarket fund.

Brendan


----------



## KalEl (16 Aug 2007)

OnLooker said:


> We have the house rented out for the last 4 years. I come out with €2670 after my pension & travelsaver expenses.
> 
> To be honest, I am looking down the road about 2/3 years. I want to buy my sister out or if she buys me out, I want to buy a house myself.
> 
> ...


 
Are you fully tax compliant in relation to this property...i.e. did you pay stamp duty as appropriate, are you paying income tax etc?
Good work with the savings by the way!


----------



## OnLooker (16 Aug 2007)

KalEl said:


> Are you fully tax compliant in relation to this property...i.e. did you pay stamp duty as appropriate, are you paying income tax etc?
> Good work with the savings by the way!



Yeah, I am fully compliant. All registered with the PRTB.

I plan to buy in the next 3/4 years. The half share in the current gives me a bit of time to work with. I will €40k in savings by the end of this year & plan to keep saving €1500 a month.


----------



## nelly (16 Aug 2007)

just a word to say at 27 you are doing quite well - better than a lot of folks infact so don't feel like you must save so much or contribute to a pension. if i were you i would only be putting money in the pension if your employer was also contributing. I found myself that i only bothered with the penion when i had my house (in your case you are waiting until you are buying a house in its entirity) as i was saving for the deposit and not for a future years away. 
just make sure that along with your house, €40k etc that you have and enjoy a life in the next 3/4 years. You only live once and all that.


----------



## OnLooker (17 Aug 2007)

nelly said:


> just a word to say at 27 you are doing quite well - better than a lot of folks infact so don't feel like you must save so much or contribute to a pension. if i were you i would only be putting money in the pension if your employer was also contributing. I found myself that i only bothered with the penion when i had my house (in your case you are waiting until you are buying a house in its entirity) as i was saving for the deposit and not for a future years away.
> just make sure that along with your house, €40k etc that you have and enjoy a life in the next 3/4 years. You only live once and all that.



I live quite comfortably on my income at present. Alot of the things I do don't cost alot like GAA etc & I get away on 3 Holidays a year.

I just want to make sure my money is working in the best possible way.


----------



## capall (17 Aug 2007)

It is an absolute no brainer that you should be puting the max 15% into a pension fund now,even if you have to cut back on your other savings
For you this will be paying 675 and you will be getting tax relief of 277 and your investment gains will be growing tax free.

There is never a right time to start a pension but unless you are in the public sector or are going to end up in a very high paying job you have to start a pension as early as you can.
If you are earning 60-70k and you are in your 40's and you are starting a pension it is too late to build up a good size fund


----------



## OnLooker (17 Aug 2007)

capall said:


> It is an absolute no brainer that you should be puting the max 15% into a pension fund now,even if you have to cut back on your other savings
> For you this will be paying 675 and you will be getting tax relief of 277 and your investment gains will be growing tax free.
> 
> There is never a right time to start a pension but unless you are in the public sector or are going to end up in a very high paying job you have to start a pension as early as you can.
> If you are earning 60-70k and you are in your 40's and you are starting a pension it is too late to build up a good size fund



My company contributes 5% of salary!! Does this cut my 15% down to 10%??


----------



## capall (17 Aug 2007)

The 15% is the max you can invest at the moment and get a tax break on.
How much your employer puts in doesn't affect it


----------



## Jaid79 (18 Aug 2007)

OnLooker said:


> My company contributes 5% of salary!! Does this cut my 15% down to 10%??


 
What is the max the company can contribute? 

Well done Onlooker with your savings.

Jaid


----------



## OnLooker (19 Aug 2007)

Jaid79 said:


> What is the max the company can contribute?
> 
> Well done Onlooker with your savings.
> 
> Jaid



€2250 which is 5% of salary


----------



## Jaid79 (19 Aug 2007)

OnLooker said:


> €2250 which is 5% of salary


 
So Onlookers total contrabution would be 9,000E or 20% of his salary?

Jaid


----------



## South (20 Aug 2007)

The company can put in an amount such that the overall benefit is within revenue maximum limits - there is no set % for the maximum company contribution...it's an actuarial calculation based on a person's age, sex, salary, current fund, retirement age etc...


----------

