# Advice on what to do with extra cash +AVC



## ca$hmoney (5 Jan 2022)

Age:40
Spouse’s/Partner's age:39

Annual gross income from employment or profession:60000
Annual gross income of spouse:60000

Monthly take-home pay-5800E ( I  don't get as much in paycheque as I max out ESPP and another share option scheme)

Type of employment: e.g. Civil Servant, self-employed
I'm private sector multinational, she is Public sector

In general are you:
(a) spending more than you earn, or
(b) saving?
Saving but not being overly anal about it-currently saving about 2K a month total but prob could do more

Rough estimate of value of home- 110-120K based on recent sales around us
Amount outstanding on your mortgage: Zero-paid off last year (8 years early)- its a small house in a rural ish area that suits us to the ground for commute and other nearby amenities


Other borrowings – car loans/personal loans etc- Zero

Do you pay off your full credit card balance each month? don't have a credit card


Savings and investments: Total of 60K in cash-sitting in bank doing nothing, also 12000 in shares-all in my company from schemes-most locked in holding period

Do you have a pension scheme? Yes-mine is defined benefit-not making NY AVCs, spouse is public sector pension

Do you own any investment or other property? No

Ages of children: don't have children-trying again at moment 

Life insurance: none


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

So currently sticking any spare cash into bank account but want to start doing something else with it as feel I am leaving a lot of money on table leaving it sit in bank account earning nothing. Pension is the obvious one and I plan to start sticking it into AVCs but unsure what to go with- we can use mercer at a very low commission through my company (I've been an idiot not doing this past few years but have only really got going career wise in recent years, my 20s and early 30s were financially a car crash to say the least)
I have a choice of Cash Target Lifesyle strategy (default ), ARF lifestyle strategy or annuity target lifestyle strategy- I don't have a clue which would suit
and then can select proportion tt invest in each of below
Equity Fund (world equity index fund)-high risk
Diversified growth fund (broad opportunities fund) high/medium risk
Bond fund (EUR corporate bond AAA/AA fund)-medium risk
Capital preservation fund (cash Fund) (sterling liquidity euro hedged fund)

I am also open to other investment funds but I'm sure I will be told that pension is only game in town due to the tax benefits

Would it be worth engaging with a financial adviser for advice on above? Im pretty sceptical on the Independence of most of them

Currently happy with where we are living but may want to move in 3-4 years (especially if we do have a kid)-for more space so will need to have deposit built for that-prices rising fairly fast here as this is an attractive area lifestyle wise for people looking to escape the city for WFH
Have no interest in investing in property TBH


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## ca$hmoney (6 Feb 2022)

Anyone? Or should I post in pensions thread


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## misemoi (6 Feb 2022)

Are your current savings sufficient for a 20% deposit on your desired home & does your current salary support the required mortgage? Also consider timing....if you are planning kids then you potentially will be bringing in less income while on maternity leave and will have dependents for any application. It might be better to consider a move now while it's just adults to consider (and not just for the mortgage!). If the numbers don't stack up yet I'd concentrate on building the deposit so you need less mortgage.


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## DeeKie (8 Feb 2022)

Max out pensions


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## ca$hmoney (20 Feb 2022)

DeeKie said:


> Max out pensions


Any thoughts on what options of the one listed above are better?


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## Welshman (21 Feb 2022)

ca$hmoney said:


> Any thoughts on what options of the one listed above are better?


No Max out your pensions !! I think you can still use your 2021 allowance.


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## _OkGo_ (22 Feb 2022)

You are not in a bad position despite your own admission of your 20's/30's but I think there is a lot of simple things you can do to get greater clarity on your priorities. 



ca$hmoney said:


> don't have children-trying again at moment


This is your biggest unknown and will decide a lot of what you do over the next 5 years or so. The reality of your situation is that you are an older couple and the odds of having a child are reducing. There are a lot of things you can do to improve this which will all cost money such as a medical treatment, IVF and more. So without getting too personal (I don't expect you to get into any details), you need to sit down with your partner and decide how badly you want it and how much you are willing to spend to make it happen.

Secondly, once you have made the above decision, you need to understand if moving PPR is dependent on having a child or not. If either of you want to move to a bigger property, then you should start planning for it now. How much is your ideal property? You will be second time buyers so will need 20% deposit. Can your existing savings fund this so that you have no need to sell before buying making the move easier?

Your partner/spouse is public service so assuming they will have enough years of service, they will have a decent pension. So the focus should be your pension. In my opinion, your pension should be invested in the all equity (high risk) at your age. You have plenty of time to until retirement to handle the higher risk. Whether you start maxing AVC's now depends on the points above and whether you need funds available for getting pregnant or moving PPR. Maybe a balance to this is to increase your regular contributions by a few % and then each year as you approach October, you can decide whether you will use up the remaining tax free limit for the previous year through lump sum AVCs



ca$hmoney said:


> Monthly take-home pay-5800E ( I don't get as much in paycheque as I max out ESPP and another share option scheme)
> ...
> Saving but not being overly anal about it-currently saving about 2K a month total but prob could do more


You are saving a fairly decent percentage of your income with the 2K and the ESPP/shares. However with no mortgage or rent, having €3.8k of spending each month is a little on the high side but not extravagant . You could probably save a fairly decent chunk of that without suffering any impact to your lifestyle by doing a little financial spring cleaning. Ditch subscriptions that you don't really use, shop around and switch all of your big expenses (utilities, broadband, insurance, phones etc)

This may not seem important now but in 2/3 years time, you may be looking at unpaid maternity leave followed by childcare fees along with a new mortgage (if you move) and the prospect of funding your pension. That will quickly eat up your current 2K/month savings so you will need to find it elsewhere. And that elsewhere is lifestyle. Getting a good handle on your spending now will help with this in the future


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