# What to do with 30K from Rabo - and ? on foreign property.



## vincentv (16 Mar 2018)

Age:* 45*
Spouse’s/Partner's age: *42*

Annual gross income from employment or profession: *84k*
Annual gross income of spouse: *55k*

Monthly take-home pay: *7k combined*

Type of employment: *I'm private sector, spouse public*

In general are you:
(b) *saving : ~5k a year*

Rough estimate of value of home: *350k*
Amount outstanding on your mortgage: *180k*
What interest rate are you paying? *0.5% Tracker, 15 years left*

Other borrowings – car loans/personal loans etc *None*

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

Savings and investments: 
*30k in current account, was in rabo (one of the reasons for this post)
11K 30 day demand deposit account
8K prize bonds
8K US stock market in Ameritrade, technology stocks.*

Do you have a pension scheme? *Yes*, 
*5% company match, 
spouse public not sure of details but expect its good deal.*

Do you own any investment or other property? *No*

Ages of children: *18, 14*

Life insurance: *Both fully covered by employment. *

Questions/Concerns:

*Mortgage is fine, some home improvements needed but nothing major.
My car is 2012 - but fine for me.
Child1 in leaving cert, will have extra accom and tuition fees for next 4 years,
then hopefully child 2 will start so for next 8 years really.

Both my wife and myself are keen golfers, members of golf club costs 2K in 
January before costs of the weekly competitions/outings are added. Members of a gym.
Sky HD for sports.
Could cut back on expenses if needed, but in general we live a good life don't
see the need to cut back. Nice holidays.*

*From reading other posts, seems clear that I need to start AVC's. Will get on that.*

*2 questions:*
*(1) What to do with 30K that I had sitting in Rabo. Have dabbled in the stock market, made 1K from AIB recently but in general want to minimize the risk. Should I just deposit in KBC as they have the best rates?*

*(2) Avid watchers of 'house in the sun' type TV programs. Wife always said that plan to use lump sum from pension to purchase a property in Spain, with plan to semi retire abroad.*
*Very interested in other forum on AAM which lists the extra costs and issues with a foreign investment property - but taking that on board we will still proceed at some stage, lifestyle choice. *
*Should we purchase now - take on the extra loan....Or wait 10 years and buy somewhere then?*
*In the short term management would be an extra hassle, but if we wait maybe? price in 10 years could be prohibitive and we could have had the back broken on the loan at that stage.*


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## Boyd (17 Mar 2018)

Pay down some of the 180K mortgage? Its a tracker I know but even at 0.5% you will struggle to get better return on deposit.

Buying a house abroad in fear of increased prices in 10 years sounds madness to me, especially when you still owe 180K on PPR. Two concurrent mortgages? No thanks!


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## onmywayback (17 Mar 2018)

Hi Op,

For your ages and combined salaries you seem to have a relatively modest net worth.

To only save 5k per anum you must have very high outgoings, adding a foreign holiday home to the mix will only make this worse. If I were in your shoes I'd keep the money for the childrens' education + a rainy day fund.

All the best,
Owen


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## POC (17 Mar 2018)

While I think the last reply was very insulting, I would agree that you should keep the funds accessible, with 8 years of college expenses ahead. Also, college students don’t always do what you expect! There could be extra expenses if either of them repeat a year, go away for Erasmus, or choose a long course such as medicine!


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## onmywayback (17 Mar 2018)

You must have lived a very sheltered life if that crosses your very insulting threshold.


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## Gordon Gekko (18 Mar 2018)

I think that the €30k should be kept in cash as an emergency fund.

Thereafter, you need to do more on the pension front. I would divert at least the €5k that you’re saving into your pension scheme. Because of the tax relief, just over €8k will go in, but I’d actually be looking to do the maximum for your age (25% of €84k).

For what it’s worth, my own plan is to avoid purchasing a holiday home initially and undertake a number of AirBnB type long-term rentals in various parts of the world. I think that owning a place can be quite restrictive, although ultimately we probably will.


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## cremeegg (18 Mar 2018)

With a monthly take home pay of €7,000 and saving €5,000 a year. I think that your first financial task is to understand what you are spending your money on.

You have two children facing into college years, you have ambitions to own a holiday home abroad.

If you want to finance these things, you need to figure out what you are spending your income on. €5,000 a year savings isn't going to get you where you want to be. 

You have to make decisions about your priorities between current spending and future opportunities.


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## vincentv (18 Mar 2018)

Thanks all for the feedback:

I kind-of knew that we are not in a position presently to pursue with a holiday home aboard - but needed confirmation in black and white in front of me.

username123:
>Buying a house abroad in fear of increased prices in 10 years sounds madness to me
Yes agreed, I knew writing that line that it sounded wrong - but I was trying to find some reason. If you know there is big purchase in your future, is there any benefit to get starting early....maybe not.


Onmywayback:
> you seem to have a relatively modest net worth.
No offense taken on my part, but I always thought we were doing OK. I  guess it depends on who you compare against. From reading the other posts on this forum there is certainly some very high net worth people using this site - but the people interested in a askaboutmoney website are the same people that spend a lot of time accruing assets and talking about them. Compared to general public would expect that we are in  a favorable position.

Gordon Gekko:
Constructive feedback, thank you. We are on the same page.

Creemeegg:
Great feedback thanks
>understand what you are spending your money on.
Yes we could certainly be more prudent on our spending.  But I know holidays
will be high percentage spend for us - Florida/New York/Barbados have been recent destinations, expensive for family holidays but great memories with the kids. Have to balance enjoying life and financial planing for future also.


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## onmywayback (18 Mar 2018)

vincentv said:


> Onmywayback:
> > you seem to have a relatively modest net worth.
> No offense taken on my part, but I always thought we were doing OK. I  guess it depends on who you compare against. From reading the other posts on this forum there is certainly some very high net worth people using this site - but the people interested in a askaboutmoney website are the same people that spend a lot of time accruing assets and talking about them. Compared to general public would expect that we are in  a favorable position.



Hi Vincentv,

Networth perception is subjective of course and different people will prioritize different things.
Compared to the general public you are probably doing relatively ok but your net monthly income is probably far higher than the people you are comparing yourself against.

You are in the good position of having the ability to cut back on spending though if you want to change course. At almost 7k per month you must have allot of fat that could be cut relatively pain free without living on rice and beans. If you reprioratised your spending you could certainly afford a second property at some time in the future. There are allot of pitfalls with holiday homes though, people often end up stuck going to the same place while ignoring everything else the world has to offer in an attempt to get the value out of their property.

All the best,
Owen


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## goingforgold (19 Mar 2018)

vincentv said:


> Onmywayback:
> > you seem to have a relatively modest net worth.
> No offense taken on my part, but I always thought we were doing OK. I  guess it depends on who you compare against. From reading the other posts on this forum there is certainly some very high net worth people using this site - but the people interested in a askaboutmoney website are the same people that spend a lot of time accruing assets and talking about them. Compared to general public would expect that we are in  a favorable position.





V interesting topic and one I have been thinking about lately, especially in relation to the high net worth of the majority of people who seem to post on money makeover section lately. Age and income obviously matter. But there are other factors also, ie mainly inheritance. If 'onmywayback' for instance hadn't inherited v valuable land then his net worth would be much much lower than what it is. He also lives far more frugally than 99% of population. And that's the other point really, there is so much more to life than money, and unfortunately most don't realise that until it's too late...there's no hitch on a hearse![/QUOTE]


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## vincentv (19 Mar 2018)

Thanks again for feedback Onmywayback/Owen - agree with your comments.

I agree goingforgold, our inheritance=0. It could be a new heading in the template questions. 

When a pension adviser visited the office before, I asked for a graph - yaxis value of fund, x axis age of person....some kind of guide to see where you are at. They didn't have one!, but I would be interested in seeing something similar for net worth. 45 years old, what net worth should you expect, what is average - otherwise its difficult to gauge how you are doing.


Have a plan of action: 
Start AVC's - thinking about 5% of salary.
Keep spending diary, review in 6 months to see spending profile
Keep 30K available for college fees and general emergency fund - I'm going to open KBC deposit account.
Keep watching 'A house in the sun', but not doing any house purchasing for some time


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## Gordon Gekko (19 Mar 2018)

5% of salary isn’t anywhere near what you should be contributing to your pension. That needs to be prioritised.


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## vincentv (20 Mar 2018)

Gordon Gekko - what is enough?...how long is a piece of string?!
I already contribute 4.2K (350 monthly to my pension), company match - so that's 8.4K going in.
If I go 10% - 700 euro off my pay check every month, it sounds like a bit of a hit. I know tax saving, straight away its value doubles, but when I retire I won't have direct access to it will have buy an Annuity.
Anyway - I guess the answer is put in as much as you can.

I don't have all the details of my wife pension, but I think its 1.5X final salary lump sum and 0.5X final salary per year. Hopefully we are still talking at that stage!


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## Gordon Gekko (20 Mar 2018)

vincentv said:


> Gordon Gekko - what is enough?...how long is a piece of string?!
> I already contribute 4.2K (350 monthly to my pension), company match - so that's 8.4K going in.
> If I go 10% - 700 euro off my pay check every month, it sounds like a bit of a hit. I know tax saving, straight away its value doubles, but when I retire I won't have direct access to it will have buy an Annuity



You won’t have to buy an annuity.

Based on the current level of contribution, making the assumption that you’ve €50k in there already (I’m not sure that you gave a current value), and assuming an average growth rate of 4.5% (post fees), you’ll have a fund of circa €380k. That would deliver a lump sum of €95k and pension income of €11,400 a year from your ARF/AMRF. Assuming you’re entitled to the State Pension of circa €12,000, that’s total pension income of circa €23,400 a year, or approximately 28% of your current income level. It also ignores inflation.

I would contend that your current level of contribution is woefully inadequate. Yes, we can only contribute what we can afford to contribute, but for most people that requires sacrifice.


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## gnf_ireland (20 Mar 2018)

Gordon Gekko said:


> I think that the €30k should be kept in cash as an emergency fund.


Absolutely agree - you should keep a rainy day fund of between 3-6 months expenses in cases of emergency. Put this into a short term notice account to remove temptation to spend it or even if on demand, move it to a different account where you specifically have to request it to access it.



vincentv said:


> Yes we could certainly be more prudent on our spending. But I know holidays will be high percentage spend for us - Florida/New York/Barbados have been recent destinations, expensive for family holidays but great memories with the kids. Have to balance enjoying life and financial planing for future also


We absolutely love holidays as well and we want to have some amazing experiences with our kids (much younger than yours I will add). However there is a balance between spending widely and sensibly. Your take home is roughly 7k a month, your mortgage is roughly 1k, leaving 6k a month for spending. You save roughly 500/month - leaving 5.5k a month spending money. In perspective this is 66000 euro per annum AFTER childcare and mortgage. I think this is quite high, and while I understand you wish to live a life as well, I genuinely think you should review this. Not only is it going to potentially create issues for you in the future, especially around retirement when incomes will fall considerably, but also may have a negative impact on your children and create an expectation of a standard of living which they may not be able to afford themselves.
I am all for living, but there are limits to this. Experiences do not have to be 5 star to be memorable - most of my best travel experiences were things than happened a long the way rather than the luxury of the accommodation I stayed in.
I also think those type of 'experience' holidays are best done once every 2 years and let the kids get involved in the decision process of where to go and the detailed planning of them. This is part of the fun of the experience and allows the excitement to build up. We are definitely planning some big experience holidays with the kids as they grow older, but not every year either... 



goingforgold said:


> V interesting topic and one I have been thinking about lately, especially in relation to the high net worth of the majority of people who seem to post on money makeover section lately.


Yes agree 100% here. There appears to be a larger number of higher earners (not necessary high net worth) people posting in the money makeover thread recently. I find this topic very interesting as I would fall into this bracket and interesting to see how others live and the reality behind the closed door. I think the main issue is simply boom time 'lifestyle inflation' and the effects this has on the savings levels of higher earners. I think it was easily in the recession times as major displays of wealth were not expected, whereas now they have become the standard again (from what I can see). 



Gordon Gekko said:


> For what it’s worth, my own plan is to avoid purchasing a holiday home initially and undertake a number of AirBnB type long-term rentals in various parts of the world. I think that owning a place can be quite restrictive, although ultimately we probably will.


This is something we have debated considerably over the years. Our kids are nearly 6 and 4, and have left that somewhere in the sun would have been of interest to us while they were young. We decided against it and will do different experiences with them until they are 'off the books' so to speak, and who knows what we will do when we get closer to retirement. It may be an option then depending, but we would need to be comfortable we would get decent use out of it before we would commit to something like this.
As the OP is slightly older, but kids are much older, there may be merit in considering it for say 8-10 years time. However to make this a reality, they would need to adjust spending patterns accordingly to ensure there is a minimal mortgage on any such venture. I think they are perfectly suited to get solid use out of somewhere, given the families ages.

Agree 100% re restrictive and longer term AirBnB type rentals in parts of the world definitely sounds like a solid plan when we all become more time rich... There is also a balance between that and moving somewhere closer to retirement. Who knows what the likes of Dublin will be like then 



vincentv said:


> Gordon Gekko - what is enough?...how long is a piece of string?!
> I already contribute 4.2K (350 monthly to my pension), company match - so that's 8.4K going in.
> If I go 10% - 700 euro off my pay check every month, it sounds like a bit of a hit. I know tax saving, straight away its value doubles, but when I retire I won't have direct access to it will have buy an Annuity.
> Anyway - I guess the answer is put in as much as you can.


Firstly, you wont have to purchase an Annuity - there are other options available and likely to be more options available by the time you retire.

How much is enough - well enough to fund the lifestyle you expect in retirement. Lets say this is 50k a year before tax. Your wife is likely to fund half of this, leaving another 25k to be funded. If you wait until you can draw down the old age pension, this may give you 12k a year depending on what form exists at the time. However, this is likely to be somewhere between 68 and 70 years old. Are you planning to work until then? Is it practical?
_*someone who works in the industry can correct the numbers below, as they are just a high level guide figure only*_
A 25k a year pension is likely to require around a 650k pension pot.
You have roughly 20 years to retirement, and likely to live 20 years after retirement. Putting in 350+490=840 a month is likely to give you in the region of just shy 1k a month in retirement (assuming the 350 is the contribution figure and not the net figure). 
Every 50 euro a month (net) you can spare now is likely to give you around 100 euro a month extra in retirement, when factoring in tax relief and compounding over the term.
Personally, I would be looking to get as close to the 20-25% mark as possible given you have disposable income at the moment (if you choose to use it for that purpose)


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## gnf_ireland (20 Mar 2018)

Gordon Gekko said:


> assuming an average growth rate of 4.5% (post fees)


Is this not a pretty aggressive average growth rate over 20 years?



Gordon Gekko said:


> Assuming you’re entitled to the State Pension of circa €12,000


This will not kick in until OP is 68, and maybe later depending on what changes are made in the meantime to the State Pension



Gordon Gekko said:


> approximately 28% of your current income level


28% may not be that bad, but really does depend on the OP's expectations in retirement, and the lifestyle they wish to enjoy. It may also depends on the target age of retirement, and the OP's relative health in retirement.
Assuming the OP's partner is on a 50% and OP is on a 28%, this is an average of 39%, and I imagine this is not bad overall given the whole pension funding crises. But the point is the OP could considerably better fund their pension without a major impact on their lifestyle - if they choose to do so..


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## Gordon Gekko (20 Mar 2018)

Respectfully, I would contend that a poster who is spending a lot during his/her working life is more likely to have a higher income requirement in retirement.

I worry for the wellbeing of people who are used to having money but who aren’t saving for their retirement.


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## gnf_ireland (20 Mar 2018)

Gordon Gekko said:


> Respectfully, I would contend that a poster who is spending a lot during his/her working life is more likely to have a higher income requirement in retirement.
> I worry for the wellbeing of people who are used to having money but who aren’t saving for their retirement.





gnf_ireland said:


> but really does depend on the OP's expectations in retirement, and the lifestyle they wish to enjoy



Absolutely agree with you @Gordon Gekko  and I did qualify my statement by stating* it depends on the expectation in retirement and the lifestyle they wish to enjoy.* But yes, someone with very high spending patterns/lifestyle is likely to require a higher pension than someone who enjoys a more frugal lifestyle. People normally don't change spending patterns dramatically unless they are forced to. I would also contend that its unlikely the OP would have the option of dramatically downsizing to release equity, unless they were planning to move to the countryside.

I absolutely agree that there is a major issue arising from people who are used to having money and are not saving for their retirement. This is going to be a major shock to a large portion of people. Whatever about those who cannot afford to save for their retirement, those who can should seriously review this once they reach their 40's.


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## vincentv (20 Mar 2018)

gnf_ireland and Gordon Gekko, excellent advice with quantitative data, cannot argue against your logic - will start AVC's with as high a percentage as is feasible.

I may have given an impression that I'm a total free spender, that is not the case. And I have imparted a value for money nature on our children. They know in some regards we are lucky, oldest child has a Saturday/Summer job and has a good understanding of the importance of being sensible with money. gnf_ireland we are totally on the same page with respect to 'experience' holidays , best done once every 2 years, planning etc. all totally agree.

I made mistake in my initial overview - over estimated how much take home pay my spouse gets, lot of reductions, checked pay slip - More like 6.4K take home pay, but all points made above are still valid.

On pension value - I have been making contributions and company matching contributions since I started working - my pension pot is 140K (didn't know value until I checked this morning). So more than Gordon guessed but 4.5% growth rate may be ambitious, and when you add inflation I need to increase this fund alright.


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## gnf_ireland (20 Mar 2018)

vincentv said:


> I made mistake in my initial overview - over estimated how much take home pay my spouse gets, lot of reductions, checked pay slip - More like 6.4K take home pay,


No better reason to do a clear household budget so you clearly understand what is coming and going. You cannot manage anything, and make it work for you, unless you clearly understand it



vincentv said:


> my pension pot is 140K (didn't know value until I checked this morning)


Do you know your AMC and contribution rates? Can you get any better deal on the market? Do you know how your fund selection has performed over the years? Do you know your risk profile? What percentage is in equities etc? All of these should be reviewed and considered. This is going to be key to any financial strategy in the future. Remember, you can draw down a lump sum when you retire and that could potentially purchase you the property abroad !!! You dont need to sit watching your pension fund every week, but once every 2-3 years to review its performance is no harm.

Good luck with it all !!


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## Alistair (20 Mar 2018)

Hi Vincentv,
My wife and I purchased a holiday home about 12 years ago.  While not particularly cheap to run, it has been the best lifestyle investment we have made.  Thanks to Ryanair mainly, it has been possible to "nip" down for long weekends off season and to enjoy multiple visits over the hotter summer months. 

Very important to get to know the area before purchasing as you will probably retain the property for 5 years + at a minimum.
Kids and their needs are also a significant factor when purchasing. While adults may be happy to laze and potter about on a regular basis, kids / young adults will get bored and will want to be able to get to the beach or local entertainment area under their own steam.
If you plan to rent out the property in order to have it contribute towards its upkeep, then you will need a reliable English speaking locally based property manager as well as an accountant as you will have to perform a local tax return annually as well as an Irish one net of any locally paid taxes.  A foreign property needs to be lived in and used for all kinds of maintenance reasons, so I would recommend you factor in part rental into any decision making.  We have also considered rental income as a contribution to local tax obligations and maintenance fund which has worked out well for us. 

Our experience of the French property market is that prices are extremely stable and do not tend to fluctuate.  Therefore it would be extremely unwise to consider capital growth in the future based on foreign property prices today. While there are many cheap properties to purchase (in France at least), if choosing to rent out a property to short term holiday makers, then you will need to ensure you purchase in a reasonably well known town or beach resort.  Holiday homes purchase for little money that are based in remote hamlets or small villages will be far more difficult to rent.

While the affordability of a foreign holiday home was most definitely a factor for us, the economics fade into the background when you are heading for the ferry or arrive at the car rental desk.  The freedom and flexibility offered as well as "knowing" the area you are going to (restaurants / bars etc) without having to spend the 1st week or 2 acquainting yourself with a new resort is very rewarding. 

Additionally, we find that we can use house swap websites to exchange 2 weeks in our holiday home for two weeks elsewhere and although we've only done this a couple of times, it has worked out great.


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## vincentv (20 Mar 2018)

Very interesting Alistair.

12 years ago when you made purchase - were you mortgage/debt free? Did you get a new mortgage to buy the foreign home?
Was the cost a hit in the early years? How did you make final decision on which property?

I'm more interested in the lifestyle factor, that as an investment opportunity. As our family get older, they will not want to holiday with us anymore - but if with their own friends or later with their own families they may take the opportunity to holiday with us if we had a base. 
Also mentioned golf earlier, played this weekend and nearly got frost bite!! - warmer climate much more appealing. When you holiday diff places every year golf not really on the agenda, takes too much time if only away for 2 weeks, and expensive for green fees. If semi resident would have the possibility to join local club, much more feasible and economical.

Anyway, I need to knock down my own mortgage first and top up pension plan...will address this again in future.


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## Alistair (20 Mar 2018)

To answer your question, no we were not debt or mortgage free.  I was 36 years old, my wife 32. We were about half way through the mortgage on our PPR.  Instead of trading up to what we perceived to be a more desirable house here, we decided to have a holiday home that was easily accessible (< 5 hours drive from ferry ports and < 1.5 hours by plane), not too touristy or commercial (we are the only Irish people in our coastal town with about 3,000 inhabitants) and decent weather for 6 months of the year.  Golf is not popular in the region we are in so I can't comment on that aspect.

Irish high street banks will not lend against any asset (including property) that is held in a different legal jurisdiction.  The bank will want recourse against the security against which you are borrowing, so one would have to remortgage against an Irish based asset which is what we did.  So in our case we just extended the term of our loan and kept the repayments pretty much the same.

The are a couple of things to watch for if purchasing property in mainland Europe that are different to purchasing in Ireland or the UK.  Firstly, if purchasing through a real estate agent abroad, the purchaser pays the agent's fee.  In Ireland the seller pays this seller's fee.  In France certainly, this is an additional cost to watch out for... you need to ascertain if the window sticker prices states "FAI" which means the sticker price includes the agents fee.  Additionally, there is a "stamp duty" equivalent due to the Notaire (conveyance solicitor equivalent) which is an additional cost not typically included in a real estate window sticker price (unless purchasing directly from a Notaire's office)... sorry if that's complicated to follow, but just ensure you are fully aware of all the costs involved.  Many people prefer to purchase direct from the seller as it removes the agent's fee (roughly 6-9%).

To furnish the property, we just rented a van, drove to IKEA one Saturday morning and got busy assembling.  

For us, it was a lifestyle purchase which I think has paid enormous dividend providing release from a demanding job.  A pension is only of benefit if one survives to draw it.  If you want any more detail please feel free to private message me as I am not sure this is the right thread for this particular topic.


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## gnf_ireland (20 Mar 2018)

Alistair said:


> For us, it was a lifestyle purchase which I think has paid enormous dividend providing release from a demanding job.


Is it selfish to ask for this discussion to have its own thread, as I am sure lots (including myself) would be interested in it !


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## RedOnion (20 Mar 2018)

gnf_ireland said:


> Is it selfish to ask for this discussion to have its own thread, as I am sure lots (including myself) would be interested in it !


Especially if we can all find out where this town is with no other Irish people so we can all flock there!....


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## Alistair (21 Mar 2018)

Your post gave me a good laugh this morning RedOnion !

I would be more than happy to share our experience of purchasing and owning a holiday home in France if there are any questions... i'll keep an eye out for a new thread, should one be created.


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## gnf_ireland (22 Mar 2018)

Created the thread if anyone is interested ... 



Alistair said:


> I would be more than happy to share our experience of purchasing and owning a holiday home in France if there are any questions... i'll keep an eye out for a new thread, should one be created.



https://www.askaboutmoney.com/threads/foreign-property-purchase-as-lifestyle-investment.207702/


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## vincentv (22 Mar 2018)

gnf_ireland - you beat me too it, like you I'm was not sure what forum: - 

please see new Thread -
*Overseas Travel,Holidays,Hotels & Airlines*
feedback-from-owners-of-foreign-holiday-property

Our questions were similar, on the same page!  - but yours is more detailed...I'll delete my thread.


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## gnf_ireland (22 Mar 2018)

@vincentv  might be worth keeping both alive for a short while and see which gets more traffic... we can merge them in the future if we need to


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