# No mortgage - what to do with cash?



## BoscoTalking (25 Feb 2022)

Ages:42
Children: 12, 11
Income and expenditure 75k & 46k corporate & public service respectively 
Monthly take-home pay (2600+2000 pm) (low now as pensions are maxed at source) & childrens' allowance.
Borrowings, none. We save. 
Life assurance in place no income protection outside of my job,
Do you own any investment or other property? No

Family home worth €400k with no mortgage - paid off last year. Started buying PO Bonds more regularly after that but there is little interest so have stopped at 40k.
Savings; Cash of €80k,               PO 10 year bonds;  40k 
Pension irish life :   €480k corporate (6%matched by employer )
 Shares: €200k 



*What specific question do you have or what issues are of concern to you?*

We can save now about 1,500 - 2,000euro pm now that our mortgage is cleared.
Reading back we are not complete scrooges - we do go on a 2 week holiday every year and avail of Ryanair city breaks with the kids maybe every 4 / 5 months that they love, and outside of that are pretty minimalist. Kids enjoy sports and go to public school and will do so in secondary school which is in walking distance. We run 2 cars but don't have to.

We want to invest the cash in something with a reasonable return, I'm not inclined to go into BTL or sending away for gold to stash under my floorboard so what else is there apart from the PO bonds? Any ideas on what would be good to get into?


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## Brendan Burgess (25 Feb 2022)

Two options to consider. 

1) Trade up to a more expensive house.  The benefit you get from this is tax-free.  Any increase in value is free of CGT. But you won't be able to access it. 

2) Invest in equities. It should provide the best long-term return.  You can access part or all of it when you need it. It's pretty much hassle-free.  

Although you should not time the markets, the current situation with cheap money via QE could mean that the stock market is way overvalued. However, you can handle the risk.

Brendan


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## bmount (25 Feb 2022)

Hi @Brendan Burgess and @BoscoTalking have you seen whats happening in Ukraine ?


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## Sarenco (25 Feb 2022)

How is your pension invested?

Given your age and circumstances, my suggestion would be to allocate 100% of your pension savings to the cheapest global equities index fund you can find and to keep your after-tax savings on deposit or in (tax-free) State Savings Certificates.

When you say you have €200k in equities (presumably outside your pension fund), is that a diversified equity fund, a portfolio of individual stocks or a single stock related to your employer?

Is there any scope for the spouse that is working in the public sector to make AVCs or to purchase notional service?

Finally, could you invest in your home to make it more energy efficient?


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## ClubMan (26 Feb 2022)

I would also be looking at beefing up the pension of there's spare cash.


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## Welshman (26 Feb 2022)

bmount said:


> Hi @Brendan Burgess and @BoscoTalking have you seen whats happening in Ukraine ?



Stop watching RTE and BBC who want to keep as in constant fear. We just had COVID-19 and now its a possible world war 3.


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## BoscoTalking (26 Feb 2022)

Sarenco said:


> How is your pension invested?
> 
> Given your age and circumstances, my suggestion would be to allocate 100% of your pension savings to the cheapest global equities index fund you can find and to keep your after-tax savings on deposit or in (tax-free) State Savings Certificates.
> 
> ...



House is insulated fully,  we are not going to move although I see your point @Brendan Burgess.  Isn't it crazy that the upsizing option is the most logical option in this time in Irelands housing crisis. Thanks i had not thought of it. 
Pension with Irish Life employer pension and looks like the pot is increasing properly. I moved AON to IL with current employer and it seems to be doing well enough - you would expect a dip with a war on but i guess i'm not retiring soon. 
Mix of company shares - I'm happy to release them when the need arises, but so far there is no need so im happy to hold as they are 3 Big Tech. 
Spouse went into Public service very late after staying at home with kids, so is maxing out the AVC's options but we know that pension won't be much more than state. 
@bmount I am following Ukraine with dismay, and the world keeps turning.


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## Brendan Burgess (26 Feb 2022)

BoscoTalking said:


> Mix of company shares - I'm happy to release them when the need arises, but so far there is no need so im happy to hold as they are 3 Big Tech.





BoscoTalking said:


> Shares: €200k



I missed the note that you have shares already.

If you have shares in your employer, you should sell them as soon as you are allowed to do so.  This is key to diversification that your source of income and your wealth is not dependent on one company.

You have about €1.2 m in assets.
In my opinion, you should not have more than 10% or €120k in any one share.  
However, I am in a minority on this, and many others will say that you should have a much more diversified portfolio and not more than 5% in any one share.  So a maximum of €60k.
They would even go further and say 5% of your investable assets which are about €300k which would make it €15k in any one share, but that is way too conservative in my opinion.

You should also make sure not to be too concentrated in one sector e.g. Big Tech

Brendan


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## BoscoTalking (26 Feb 2022)

Brendan Burgess said:


> If you have shares in your employer, you should sell them as soon as you are allowed to do so.


And do what with the cash tho?


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## Brendan Burgess (26 Feb 2022)

BoscoTalking said:


> And do what with the cash tho?





Brendan Burgess said:


> Two options to consider.
> 
> 1) Trade up to a more expensive house. The benefit you get from this is tax-free. Any increase in value is free of CGT. But you won't be able to access it.
> 
> 2) Invest in equities. It should provide the best long-term return. You can access part or all of it when you need it. It's pretty much hassle-free.



So instead of having €100k in your employer's company, sell them and buy shares in 5 companies which are not in the tech sector. 

Brendan


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## BoscoTalking (26 Feb 2022)

Brendan Burgess said:


> So instead of having €100k in your employer's company, sell them and buy shares in 5 companies which are not in the tech sector.
> 
> Brendan


Gotcha thanks.


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## ClubMan (26 Feb 2022)

BoscoTalking said:


> Pension with Irish Life employer pension and looks like the pot is increasing properly.


But you don't seem to be maximising contributions up to your age related tax relief limit? If you have spare cash and no debts then beefing up the pension is often the next recommended thing to address.


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## BoscoTalking (26 Feb 2022)

ClubMan said:


> But you don't seem to be maximising contributions up to your age related tax relief limit? If you have spare cash and no debts then beefing up the pension is often the next recommended thing to address.


we are putting 25% into pensions plus employers contribution.


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## NoRegretsCoyote (26 Feb 2022)

Brendan Burgess said:


> You have about €1.2 m in assets.


This is the main point. @BoscoTalking  's outgoings are very low vis-à-vis his wealth and income.

There are things that you can spend money on that will bring you pleasure - start doing them!


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## Brendan Burgess (26 Feb 2022)

NoRegretsCoyote said:


> There are things that you can spend money on that will bring you pleasure



But can you not also get pleasure from things that don't cost much money?


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## Bluefin (26 Feb 2022)

Even something such as hiking which is essential free costs money


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## NoRegretsCoyote (26 Feb 2022)

Brendan Burgess said:


> But can you not also get pleasure from things that don't cost much money?


Of course! It's good to prioritise things that don't cost much.

I just don't think the OP realises how wealthy he is given age and income. In his shoes I would spend on things that make me happier. If not then keep saving!


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## Peanuts20 (1 Mar 2022)

Spend some of it would be the obvious answer to the question   . Given your kids age, the holiday of a lifetime springs to mind, especially if you can take some paid parental leave or even unpaid leave for a summer.

Might be worth thinking about college costs as well. I'd not rush into a BTL right now but depending on where your kids go to college, it might be an idea to then buy a house (whereever they are) for them to both live in if away from home and rent out the other rooms to fellow students. I know you might be left with a far from perfect student house at the end of it but you'd avoid paying them paying rent to some other landlord.


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## misemoi (1 Mar 2022)

Your kids seem at the perfect age to do a big trip....do you have the possibility of working remotely for some time in a different country? Or relatives abroad? I feel like teenage years get consumed with exams and some years may not work of one of your kids has state exams and then your other the next so maybe now is that time to do that, especially as it sounds like you enjoy travel. Maybe look into woofing or some kind of volunteering, using parental leave before it expires if it's possible.


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## tomdublin (3 Mar 2022)

BoscoTalking said:


> Isn't it crazy that the upsizing option is the most logical option in this time in Irelands housing crisis.


That is crazy indeed and it shows just how dysfunctional several aspects of our economic system have become.  This includes the housing market as well as the mismatch between rampant inflation and zero returns on savings, the latter undermining the very foundations of a stable, well-managed capitalist system which should never privilege property speculators over those who work and save.


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## DublinHead54 (4 Mar 2022)

Brendan Burgess said:


> I missed the note that you have shares already.
> 
> If you have shares in your employer, you should sell them as soon as you are allowed to do so.  This is key to diversification that your source of income and your wealth is not dependent on one company.



Whilst I don't 100% agree with this, it might be a good time to crystallise paper losses to offset future gains?

Tech companies give out shares as part of their standard packages, so Op will continue to accrue annually in his career I assume. 

Tech stocks have taken a hammering of 15-30% in the last quarter there is a fair chance if you sold some stocks it might be a paper loss? (First in first out). These losses could be carried forward against future gains right?


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## Bobalin (8 Jun 2022)

Buy some extra income protection? just to top up whatever it is you would get from your employer should you or your spouse become unable to work.  Speaking as someone who recently had to avail of it . . . .however read the T&Cs of corpoate policy carefully as benefit is capped.


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