# 30 years old no pension



## Ste2016 (13 Jan 2016)

Hello,

So I am 30 years old with no pension. Have around 70,000 and should have 100,000 to 110,000 by the end of year. My plan is that:

I am starting a pension this month. My company will pay in 5% and I'll pay 5% in myself.should I add more?
Was going to invest 25,000 through a financial company (yet to be determined)
Another 25,000 into an post prize funds as it is easy to access, might win something and no real interest in the bank
Leaving me with 20,000 in the bank for emergency

Any advice or recommendations? I am just good at saving but not sure what to do with it. Also any good books I could purchase regarding investing?


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## Gordon Gekko (13 Jan 2016)

What's your income?


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## Ste2016 (13 Jan 2016)

Gordon Gekko said:


> What's your income?



Hi,

Currently 75,000.


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## Brendan Burgess (13 Jan 2016)

The best, most tax-efficient, most flexible, form of investing is to own your own home. So forget about pensions as you tie up your money and won't be able to access it when you need it. 

When you have bought your home and reduced your mortgage to a very comfortable level, you can then think about pensions. 

The exception is where your employer matches your contribution.  If your employer matches your contribution, you should contribute up to the limit. 

Even if you think that you won't be buying a home in the medium term, do not tie up your money. Plans change.

Brendan


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## Steven Barrett (13 Jan 2016)

Brendan Burgess said:


> The best, most tax-efficient, most flexible, form of investing is to own your own home. So forget about pensions as you tie up your money and won't be able to access it when you need it.
> 
> When you have bought your home and reduced your mortgage to a very comfortable level, you can then think about pensions.
> 
> ...



And putting your money into a geared property is Brendan? What happens then when he needs to access some of the tax free cash he has accumulated through equity in his home? sell a portion of it? I understand what you are saying regarding it being tax efficient but I think it is incredibly inflexible and unrealistic. 

Ste, start the company scheme immediately. Your employer is offering to give you an additional €3,750 a year, take it. 

Then have a think about what you want. What are your short, medium and long term goals and get your money working for you. 

Steven 
www.bluewaterfp.ie


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## Ste2016 (15 Jan 2016)

Thanks for the advice Breadan & Steven

Yes Steven I will be starting pension scheme this month and decide to contribute 10% myself as I currently have the available funds.

My goals would be planing to buy a personal  house in around 3 to 4 years from now. I have always like the idea of owning some investment property as I think it a good source of income once payed off and I retire.

I'm just don't feel that I am doing the best with my funds that are now sitting in a bank barley making any interest.


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## Gordon Gekko (15 Jan 2016)

The tax free nature of a gain on your home is attractive, but the problem is that it's illiquid and in order to access its value, you have to move.

The major attraction of a pension is having tax free growth compounding over a very long period. By deferring your contributions, you give up that advantage. Personally, I take the view that every year I don't contribute €23,000, I'm giving up a significant multiple of that at retirement.


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## Boyd (15 Jan 2016)

Seems very odd advice from Brendan? There seems to be a number of opinions on this site regarding mortgage approach. It sounds like Brendan is suggesting not to save or invest a penny anywhere until you've bought house and paid most of it. Does this not have an "all eggs in one basket feel"? I don't think I'd like to plough 100%of savings and potential pension investment into mortgage and find after 20 years you have nothing but the house. Am I missing something here?


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## Gerry Canning (15 Jan 2016)

ste2016.
Congratulations ,you are doing very well.

1. You will have 15% towards pension.
2. You have a lot of free funds.
3. You are a consistent saver.

House.
We all need a place to live, if you are likely to stay in same geographic area it makes sense to buy a house , you will have no issue getting mortgage or affor, ding repayments. I would be inclined to go for it now.
If you are likely to move within the next decade a house is a bother to sell. 

Investment property.
Maybe, but too many have been caught so tread cautiously.


Pension.
You can readily afford 10% so increase that to max tax efficiency (not sure of rates), you can always reduce it if times got tough. 

Find a good Broker to advise you.


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## Steven Barrett (15 Jan 2016)

Ste2016 said:


> Thanks for the advice Breadan & Steven
> 
> Yes Steven I will be starting pension scheme this month and decide to contribute 10% myself as I currently have the available funds.
> 
> ...




Ste

If you plan to buy somewhere, make sure you have a nice big deposit to get you started, so you don't have massive monthly repayments. With such a short term to when you want to buy, you should just leave this money on deposit. If the markets tank before you want to buy, it could put you back a few years, you take on more debt or you get a smaller house.

Have some spare cash for emergencies. How much depends on how employable you are, what kind of redundancy package you'd get if laid off etc. 

Invest the rest. Put it in a diversified portfolio of assets and let the markets do their thing. Prices will go up and they will go down. That's what's happens. Over the long term you will make money. 

Steven
www.bluewaterfp.ie


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## oysterman (15 Jan 2016)

username123 said:


> Seems very odd...Brendan is suggesting not to save or invest a penny anywhere until you've bought house and paid most of it. Does this not have an "all eggs in one basket feel"?


Brendan always takes a bit of flak when he runs this line. A couple of thoughts:

_Investment spread_: a clinching argument against Brendan's "house first, then pension" strategy. Or is it? is it not the case that residential property is a bellwether for exactly the same investment trends that drive standard pension funds. I'd love to see some actuarial analysis of this. Are ordinary pension funds really hedging against the things that drive residential property values downwards? It seems counter-intuitive but this is a case where diversification may simply be buying into more of the same risk.
So, Brendan's right.

_Tax efficiency_: investing in residential property is really only tax efficient for the private investor in respect of their PPR - the exemption from CGT is potentially hugely advantageous. However, that incentivizes tying up too much capital in a property beyond that which you need/want; that investment is providing no income stream and you are overly reliant on a valuation at one point in time, on the sale. I'm sceptical about how many people actually release significant equity by downsizing in retirement to benefit from the CGT exemption; anecdotally it looks like all too many people end up burdened by a house far too big for their retirement needs and that it's their heirs who benefit from the lifetime of capital growth, but without the CGT exemption.
So, Brendan's wrong...

Why is everything so damn complicated?


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## Boyd (15 Jan 2016)

Seems very strange to me,  as most other money commentators suggest starting pension ASAP. Waiting until youre 50 to start pension because all your money is tied up in mortgage sounds like bad idea to me


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## so-crates (15 Jan 2016)

username123 said:


> Waiting until youre 50 to start pension because all your money is tied up in mortgage sounds like bad idea to me


I don't think he is suggesting waiting until you've paid the mortgage off 



Brendan Burgess said:


> When you have bought your home *and reduced your mortgage to a very comfortable level*, you can then think about pensions.



I wouldn't 100% agree myself (for me, pension started in my 20s since there was a work DC scheme with matched contributions, purchased a home after that)


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## Jim2007 (15 Jan 2016)

username123 said:


> Seems very strange to me,  as most other money commentators suggest starting pension ASAP. Waiting until youre 50 to start pension because all your money is tied up in mortgage sounds like bad idea to me



That is because it is!  The objective is to maximise wealth, so why would you choose a high risk, low yield asset as the main building block and borrow to do it!  All a cross the country there are people who's financial future has been ruined by committing their all to property and yet the mantra continues.


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## Gordon Gekko (15 Jan 2016)

My understanding is that someone's mortgage should be no more than 33% of their after tax income.

For most people, there should be scope to save and contribute to a pension whilst paying their mortgage.

Like an earlier poster, my experience (both personal and professional) is of elderly couples who never cash in their homes, so PPR relief never ends up applying in a massive way.


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## fixer (1 Feb 2016)

Brendan is correct in advising you to own your own home but dont pump too much into it as a mortgage is one
of the cheapest loans you will ever get, money makes money and that is the only thing you need to know, the bank will take your money and make money with it!!! beat them too it!!


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