# Turned 50, I'd like to know if I'm on a sensible financial path



## Orpheus (12 Sep 2021)

Age: *50*
Spouse’s/Partner's age: *44*

Annual gross income from employment or profession: *120,000*
Annual gross income of spouse: *15,000*

Monthly take-home pay: *6,800*

Type of employment: e.g. Civil Servant, self-employed: *Self employed*

In general are you:
(a) spending more than you earn, or
(b) saving? *Saving about €4,000 per month*

Rough estimate of value of home: *€550,000*
Amount outstanding on your mortgage: *€0*
What interest rate are you paying?* N/A*

Other borrowings – car loans/personal loans etc *€0*

Do you pay off your full credit card balance each month? *No credit card*
If not, what is the balance on your credit card?

Savings and investments:

*Cash €450,000 (mostly due to a recent sale of a site)*
*Shares (diversified portfolio): €110,000*

Do you have a pension scheme?

*Yes, current worth is €325,000. I neglected this for some years but have contributed €25k p.a. for the past few years and will continue to give the maximum possible (€30k p.a. now that I have reached 50).*
*My wife has no private pension and only works part time. She has not yet reached 10 years (520 PRSI payments) but should do so in about 3-4 years.*

Do you own any investment or other property?
*Yes, another site worth €150,000 (not to be confused with the recent sale of the site mentioned above)*

Ages of children: *None (yet, but possible still - a case of better late than never?)*

Life insurance: *None


What specific question do you have or what issues are of concern to you?*
Firstly we consider ourselves quite fortunate and are aware that we are in a reasonably comfortable position. We never take that for granted.

What would advise to do with €450k cash as it is obviously not earning anything sitting in the bank?

I was considering investing €100k of this in shares (diversified) to bring the total invested in shares to €210,000.

Additionally - as I come from a semi-rural background - I was considering investing in some agricultural land if I came across a reasonable opportunity, not to farm myself but just to hold as an investment, possibly renting it out for a nominal fee. This would be just a diversification strategy. I have had an investment property before and was lucky enough to get out on break even terms so I would be reluctant to consider rental properties again. I would consider €150-200k for a land purchase.

My pension valuation at the moment might be considered slightly below average but I intend to keep maxing out the contributions for the next several years.

I would like to have a balanced portfolio of assets if possible (shares, pension, land and just enough cash to live on) and would like to retire at 65 or earlier if possible.

Do you see any failings in my strategy or have any advice as to what I should change?


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## time to plan (12 Sep 2021)

Are you a self employed sole trader or a proprietary director of a Ltd company? If the latter your company can contribute multiples more into your  pension.

The term self-employed is used loosely hence the question.


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## NoRegretsCoyote (12 Sep 2021)

Orpheus said:


> *My wife has no private pension and only works part time. She has not yet reached 10 years (520 PRSI payments) but should do so in about 3-4 years.*


Unusual that a 44 year old with no kids would have only 6-7 years of PRSI contributions. Did she ever work abroad? This could help getting her a state pension.

I don't see a huge advantage to direct share purchases as you will pay tax on any gains. Better to put it into equities via your pension fund to take advantage of tax-free gains.

As a general piece of advice don't be afraid of making pension contributions above tax-relieved levels (for your wife as well). Better than keeping it on deposit over the long run.

Otherwise you are in a very good financial position so it is about making the best use of it to provide for you and your wife over the next few decades.


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## Brendan Burgess (12 Sep 2021)

NoRegretsCoyote said:


> As a general piece of advice don't be afraid of making pension contributions above tax-relieved levels (for your wife as well).



I doubt that this could be right. 
They are going to be paying tax at the top rate in retirement. 
So they will end up putting money into an investment which they get no tax relief for yet they will pay tax at the top rate when they get the money back as pension.

And they will not be allowed to access the money.
And there could easily be a tax change which affects them negatively.

Brendan


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## Brendan Burgess (12 Sep 2021)

As you say, you are in a good position.

Maxing your pension contributions is the right idea. 

Putting the rest in a diverse portfolio of shares is probably the right strategy.

Not sure about buying farmland.  You would be tying up a good bit of your money in an illiquid asset and it could cause hassle managing it. 

Brendan


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## Orpheus (12 Sep 2021)

Hi all, thanks for the quick replies - I wasn't expecting that!

I work as a contractor so I am a director of a limited company - hopefully this clarifies that query but I can provide more details if required.

My wife is not from Ireland but has been living here for about 10 years now.

Buying farmland was just a (mad)idea I had, I'm beginning to wonder about it myself as buying/selling does seem to be a very slow process. After some recent enquiries I've noticed some land being on sale for 2 years or more. So I think you might be right.

Good to hear than we are generally following a decent strategy so far. Any further advice is welcomed.


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## NoRegretsCoyote (12 Sep 2021)

Brendan Burgess said:


> So they will end up putting money into an investment which they get no tax relief for yet they will pay tax at the top rate when they get the money back as pension.


Yes but they will get the advantage of tax-free capital gains that you won't get if you buy a basket of equities.

Also on current trajectory this couple will not be paying the top rate on much pension income.



Orpheus said:


> My wife is not from Ireland but has been living here for about 10 years now.


If she worked elsewhere in the EU or UK she can use those contributions to boost Irish state pension eligibility, although it might not be worth combining. There are other (mainly western) countries where there is mutual recognition of contributions too. It's worth looking into this carefully.


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## time to plan (12 Sep 2021)

Your company can contribute enormous amounts to your pension. More than your salary if I remember correctly and a large lump sum. I have set up an SSAP via Independent Trustees Company and I suggest you look into it. Your company should maximise pension contributions even if you need to live off your savings to an extent.


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## Brendan Burgess (12 Sep 2021)

NoRegretsCoyote said:


> Yes but they will get the advantage of tax-free capital gains that you won't get if you buy a basket of equities.



Could you do the calculations and start a separate thread with them. 

Brendan


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## Orpheus (12 Sep 2021)

My wife is from Asia and has never worked in Europe (apart from Ireland) so unfortunately that would rule out any EU/UK eligibility but I would hope that still won't matter once she works enough years in Ireland to qualify for the state pension (based on current rules at least)?

I've never heard of an SSAP so I will look into that - it sounds interesting. Thanks.


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## time to plan (12 Sep 2021)

Brendan Burgess said:


> Could you do the calculations and start a separate thread with them.
> 
> Brendan


Orpheus is a proprietary director so the normal contribution limits don’t apply. So it’s largely a moot point in this particular case.


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## Brendan Burgess (12 Sep 2021)

Agreed. But why don't you do a separate thread showing your calculations how someone can benefit from non tax-relieved contributions?


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## Gordon Gekko (13 Sep 2021)

Orpheus said:


> My wife is from Asia and has never worked in Europe (apart from Ireland) so unfortunately that would rule out any EU/UK eligibility but I would hope that still won't matter once she works enough years in Ireland to qualify for the state pension (based on current rules at least)?
> 
> I've never heard of an SSAP so I will look into that - it sounds interesting. Thanks.


On that basis, she’s non-Irish domiciled so you could invest in her name and earn tax-free returns, subject to the returns remaining offshore.

You’re massively overweight cash though.

My sense is that you should keep around €50k in cash for emergencies and invest the rest of your surplus cash in an all-equity portfolio, subject to you being comfortable with its volatility.


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## Orpheus (13 Sep 2021)

Many thanks for all the replies, I'll arrange to reinvest the excess cash as soon as possible and will also look into the SSAP and off-shore options.


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## Ceist Beag (13 Sep 2021)

Just throwing it out there as I haven't seen any other posts suggestion same. You have over €1.5m between assets and savings and you have no dependents. Personally if I were in your position I would be looking to enjoy some of that a bit more now - not thinking about when I retire at 65. I think your ratio of saving to spending is weighted a bit too much towards saving. On other threads there has been good advice around figuring out how much you will need to live on once you retire. Have you done such an exercise as it might be worth doing that to see just how much you need to put aside for later and how much you can enjoy now.


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## Orpheus (13 Sep 2021)

Thats a fair point Ceist Beag, pre-Covid I tried to spend a month each year travelling abroad and I hope to get the chance to do it again, probably in 2022. A fair balance between enjoying life but with an eye on the future would be appropriate since if/when I reach 65 I might have very different and less ambitious goals!


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