# Need advice on what to do with money



## Molly2015 (18 May 2015)

Age: 42
Spouse’s/Partner's age: 46

Annual gross income from employment or profession: stay at home parent
Annual gross income of spouse:60000

Monthly take-home pay 3900

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

In general are you:
(a) spending more than you earn, or
(b) saving?
We put €100 a week into an account towards a new car. Allocate €180 per week for regular bills and pay them as they arrive e.g. health insurance/ esb etc We seem to just go through the rest of the money. 

   Rough estimate of value of home 140000
Amount outstanding on your mortgage: nil
*What interest rate are you paying? *

Other borrowings – car loans/personal loans etc none

Do you pay off your full credit card balance each month? yes
If not, what is the balance on your credit card? 

Savings and investments:

rabo 27000    demand online .75% int
perm tsb 23000     demand online .10% int
perm tsb 49000     online instant access .85%
perm tsb 5600      online regular saver 1.75%
perm tsb 7400      21 day regular saver 1.5% (kids account)
perm tsb 14900           21 day regular saver 1.5% (kids account)


Do you have a pension scheme? 
cif pension scheme. pays €100 avc per week.

   Do you own any investment or other property? no

Ages of children: 8 /5

   Life insurance: none


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

Need advice please on what is best to do with our savings. Thank you!
*


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## Boyd (19 May 2015)

Firstly, well done on the savings, looks very impressive on paper.

 I would suggest you take a look at the following "Best Buys" thread: http://www.askaboutmoney.com/threads/savings-best-buys.90481/

It deals with best buys for fixed term, regular and instant access savings. 

You dont mention anything about investing so I'm guessing you are happy to stay in cash (i.e. deposit accounts). From looking at your deposit split, you don't seem to have any structure e.g. E49K in an instant access deposit account, E27K in another and E23K in another. Basically you have E99K in demand accounts, which is beyond crazy - why would you need E99K on demand?!! 

Also, your regular savers at 1.75% are terrible, KBC pay a 3%, while NationWide UK Ireland have a 15 month account for 4%. All info is in bests buys above. You and your spouse can open individual ones too.

You need to decide what money you need access to (emergency fund in instant access accounts), what lump sum money you may need in medium term (lump sum in 1 or more fixed term accounts for 1 or two years), and what money you can save day-to-day (regular saver at highest rate of interest).


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## Molly2015 (19 May 2015)

username123 said:


> Firstly, well done on the savings, looks very impressive on paper.
> 
> I would suggest you take a look at the following "Best Buys" thread: http://www.askaboutmoney.com/threads/savings-best-buys.90481/
> 
> ...


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## Boyd (19 May 2015)

?? thats just my post again?!


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## Molly2015 (19 May 2015)

Thanks a million. We haven't been tuned in to where this money has been sitting at all, it was only last night I saw the interest rates and realised we needed to sort it out. Think it was the thoughts of opening up new accounts etc but I will get organised now. Hard to decide what money to tie up in a fixed term account. What figure would you suggest for emergency fund? Would it be a good idea to increase pension AVC. Thanks again.


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## so-crates (19 May 2015)

From a tax and pension perspective, you have not given any indication about the amount of pension savings you have or what your regular contributions are. Are you taking full advantage of tax efficient pension contributions? I am guessing not at the moment.


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## Boyd (19 May 2015)

Regarding an emergency fund, the general consensus is having 3-6 months living expenses (including rent/mortgage) available in demand accounts should you be laid off etc. So based on E3900 net pay, I would guess somewhere between E10K and E15K for an emergency fund.

After that, really there is no reason to have lumps of cash sitting in demand accounts. If you take the E15K from E99K, thats E84K. How likely is it you will need E84K in the next couple of years? You indicate you have no mortgage outstanding, so I dont see what huge purchase would be on the horizon that requires such a large fallback amount. Hence, I would suggest putting some or all of the E84K into the 3 year NTMA saving scheme (DIRT free).


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## Sarenco (19 May 2015)

I agree that 3 and 4 year savings bonds (available through An Post) are a good home for medium term savings. 

I would suggest dividing the €99k along the following lines:

First €20k in Rabo Direct On Demand Savings (1.5% APR, less DIRT and PRSI);
Second €20k in Rabo Direct 30 day Notice Account (1.5% APR, less DIRT and PRSI);
Third €20k in 3 year Savings Bonds (0.83% APR - tax free); and
The balance in 4 year Savings Bonds (0.99% APR - tax free).
You should definitely be maximising all pension contributions - €15,000 of an €60,000 income can be contributed before tax to a pension when in your 40s.  Given your healthy cash balances, I would suggest that the majority (if not all) of these pension contributions should be invested in equity funds.

Best of luck.


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## Molly2015 (19 May 2015)

Thank you all so much. You are all a great help. Honestly we have had our heads stuck in the sand regarding the savings & the pension! After allocating the money for the bills / car every week, we have just been spending the rest and do not give any thought to the different saving accounts etc.

Regarding the pension, my husband is with the Construction Workers Pension Scheme. I think this is the only pension scheme he can be part of. At 31/12/2014 the value of the account was €61k, avc value was €34k. For 2014 the employer contribution was €1592, employee €1061 and avcs paid €2850. I have increased the avcs to €100 per week lately.

on the p21 for 2014 €5241 was charged at 41%, can I send in an avc cheque for this amount to CWPS, will this entitle my husband to a refund of 41% of this amount? Good idea or no? Will I increase his weekly AVC's further for 2015 or wait until year end?

I have just reduced the amount in the rabo account to 19500 which means for now at least we are on a rate of 1.75%. The only trouble is I know have the difference sitting in my current account!!

So I need to organise the NTMA savings scheme & the other Rabo 30 day account.

The two 21 day notice PTSB accounts with the €7400 & the €14900 are for the kids, we have just put away whatever gifts / childrens allowance over the years into these accounts. I would prefer to keep these separate and continue to lodge the childrens allowance every month to these accounts. Any suggestions for this? KBC or Nationwide UK Ireland? Can I have two accounts or can I have them in our separate names with their names as reference?

Thanks again, I know we are a disaster!!! We do realise we are in a fortunate situation in that we don't owe anybody any money but we do need to get sorted!!


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## Boyd (19 May 2015)

Kbc and nationwide uk have best regular Saver interest rate.  Don't waste this on children's allowance (as I assume mo n they amount is fairly small). Instead ensure you deposit the max allowed for these per month, 1k, in order to get most interest. Put children's money in some other account then. You can open both kbc and nationwide simultaneously, as can your husband.


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## Sarenco (19 May 2015)

Molly2015 said:


> Thank you all so much. You are all a great help. Honestly we have had our heads stuck in the sand regarding the savings & the pension! After allocating the money for the bills / car every week, we have just been spending the rest and do not give any thought to the different saving accounts etc.
> 
> Regarding the pension, my husband is with the Construction Workers Pension Scheme. I think this is the only pension scheme he can be part of. At 31/12/2014 the value of the account was €61k, avc value was €34k. For 2014 the employer contribution was €1592, employee €1061 and avcs paid €2850. I have increased the avcs to €100 per week lately.
> 
> ...



Hi Molly

First off, you are very far from a disaster!  No debt, nearly €100k in cash savings and nearly €100k in retirement savings while still in your 40s - you put the rest of us to shame!

On the pension front, the CWPS has an excellent reputation so that's certainly a plus.  The general rule is that time in the market is more important than timing the market so there's no particular reason to wait until year-end to increase AVCs.  

If I'm reading your figures correctly, it looks to me like your husband has scope to contribute about €11,000 more per annum by way of AVCs (to bring his contributions up to €15,000 per annum in total).  The generally accepted view is that pension contributions should be restricted to an amount that would otherwise be subject to income tax at the higher rate.  However, in your husband's case I think you could make a good argument that he should contribute the maximum amount possible. The administrators at the CWPS should be able to give you a good steer on the appropriate weekly contributions but make sure the AVCs are invested primarily in equity funds given your ages and level of cash savings.

On a point of detail, I'm pretty sure the rate on the Rabo On Demand Account is now 1.5% (rather than 1.75%) on amounts up to €20k.  

The rates on the two PTSB 21 day notice accounts are fine - I'd leave them where they are if you would prefer to keep them separate from your other savings.

Best of luck.


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## Fella (19 May 2015)

Don't forget to spend some money on yourself too and enjoy life , I had a look at the state savings ,interest rates are so low now everywhere it's depressing I can't find the urgency to move bank account for tiny percentages here and there , personally I'd rather the cash to hand rather than lock it away for 3 years in NTMA , I'm thinking of the oppurtunity cost in locking it away small chance I see a good deal in the next 3 years land / property a business maybe that's just me though , great advice sarenco you really know your stuff , quick question if you don't mind ( sorry for hijacking thread )

An AVC or pension contribution is only good because you get tax relief , is this correct? I work part time so pay a tiny amount of tax 30 a week maybe so an AVC is no use to me ? I'm better off or equally as well just investing in equities for my own future ?


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## Sarenco (19 May 2015)

username123 said:


> Kbc and nationwide uk have best regular Saver interest rate.  Don't waste this on children's allowance (as I assume mo n they amount is fairly small). Instead ensure you deposit the max allowed for these per month, 1k, in order to get most interest. Put children's money in some other account then. You can open both kbc and nationwide simultaneously, as can your husband.



You are of course correct but I find it very difficult to get excited about regular saver accounts.  

What's the difference, after DIRT, over, say, 12 months between putting €1,000 in a Nationwide UK regular saver account and a PTSB regular saver account?  It's probably less than €100 - every little help and all that but is it really a sufficient saving to justify the time and hassle involved with opening and operating a new account?


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## Steven Barrett (19 May 2015)

Molly2015 said:


> Life insurance: none



Hi Molly

I wouldn't worry about your money just going every week. You're a family of 4, with 2 young kids. You take money out on a Saturday morning and by lunchtime, it's gone!

One thing that struck me is there is no catastrophe planning there. What if something happened to either of you? The Widow's pension with 2 kids is €1,000 a month. Is that enough? If your husband couldn't work he'd get c. €10,000 in disability. 

On your cash deposits, there are lots of things you can do with it. But what do you want your money to do for you? Do you just want it to grow into more money or is there something in particular that you want to spend it on. For example, is the kid's accounts for college? Will leaving the money on deposit earn enough for you to be able to pay for them to go to college without having to put your hand into your own pocket when they are 18? 

Steven
www.bluewaterfp.ie


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## Boyd (19 May 2015)

Sarenco said:


> You are of course correct but I find it very difficult to get excited about regular saver accounts.
> 
> What's the difference, after DIRT, over, say, 12 months between putting €1,000 in a Nationwide UK regular saver account and a PTSB regular saver account?  It's probably less than €100 - every little help and all that but is it really a sufficient saving to justify the time and hassle involved with opening and operating a new account?



Well in my opinion there's no point people complaining about poor deposit rates if they aren't maximising what's available. Minimal hassle IMHO to setup new account and after that it's just a direct debit, zero hassle.


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## Sarenco (19 May 2015)

Fella said:


> Don't forget to spend some money on yourself too and enjoy life , I had a look at the state savings ,interest rates are so low now everywhere it's depressing I can't find the urgency to move bank account for tiny percentages here and there , personally I'd rather the cash to hand rather than lock it away for 3 years in NTMA , I'm thinking of the oppurtunity cost in locking it away small chance I see a good deal in the next 3 years land / property a business maybe that's just me though , great advice sarenco you really know your stuff , quick question if you don't mind ( sorry for hijacking thread )
> 
> An AVC or pension contribution is only good because you get tax relief , is this correct? I work part time so pay a tiny amount of tax 30 a week maybe so an AVC is no use to me ? I'm better off or equally as well just investing in equities for my own future ?



Hi Fella

I'm sure Molly won't mind you pitching in.

First off, you are obviously right that it is important to strike the right balance between living well today and keeping an eye on the future.  Everybody is different and there is no "right" answer as to where you should draw the line.  Look at Warren Buffett - he has a net worth of around $70 billion but still lives in the same house that he bought in 1957 for $31,500!

Pensions are really nothing more than a tax efficent vehicle for retirement saving.  There are essentially three elements to the tax benefits: (a) one the way in the contributions are relieved of income tax; (b) while invested, all interest, dividends and capital gains on the invested assets are tax free; and (c) on exit, 25% of the "pot" (subject to a ceiling) can be drawn down tax-free and the balance can be drawn down gradually, subject to income tax rate at that time (which could well be zero, depending on the amount drawn down every year and your age at that time).

For most people it really only makes sense to contribute amounts to a pension that would otherwise be subject to income tax at the higher rate.  However, Molly's husband is relatively young so the fact that the income and gains can roll-up tax free within the pension "wrapper" is potentially a real benefit.  Also, he has ample cash savings so it seems to me that he has capacity to increase his equity exposure and has plenty tax-deferred space in which to do it.

It's difficult to comment on your own case without more detail in relation to your age and general circumstances but I hope that helps.

Best of luck.


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## Sarenco (19 May 2015)

username123 said:


> Well in my opinion there's no point people complaining about poor deposit rates if they aren't maximising what's available. Minimal hassle IMHO to setup new account and after that it's just a direct debit, zero hassle.



Point taken and I certainly agree with the general approach of maximising whatever is available.  I guess I'm just lazy!

On a (slightly) more serious note, it often strikes me that people complain unnecessarily about today's low deposit rates.  It is pretty easy to achieve a rate of around 1.5% (before tax) at the moment on a relatively modest sum with minimal effort. The last time I checked the yoy inflation rate (CPI) was -0.7% so the current real interest rate on cash is actually quite a bit higher than the average rate of 0.8% on cash over the last 115 years (as per the latest Barclay's Equity Gilt Study).


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## Fella (19 May 2015)

Thanks very much for your detailed reply Sarenco , some points there about pensions I had no idea about , i'll hopefully post up here my own situation soon and pick the great brains on this site. Thanks again .

Ps I also complain about the rates , it's not so much the rates but the fact that the government have DIRT so high when deposit interest is so low thats very annoying and almost sinful


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## Sarenco (19 May 2015)

Fella said:


> Thanks very much for your detailed reply Sarenco , some points there about pensions I had no idea about , i'll hopefully post up here my own situation soon and pick the great brains on this site. Thanks again .
> 
> Ps I also complain about the rates , it's not so much the rates but the fact that the government have DIRT so high when deposit interest is so low thats very annoying and almost sinful



I couldn't agree more with you about DIRT rates.  The current rate is simply larcenous, particularly for people, like yourself, that do not pay income tax at the higher rate.  I often wish that people would pressurise their politicians about this issue - it's totally unjust.


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## Molly2015 (19 May 2015)

Thanks again everyone for all your replies, it has been really helpful. So will I send off the AVC cheque to CWPS for the €5000 for the moment and then fill in whatever revenue form it is to reclaim the tax for 2014. Maybe for now I will increase the 2015 AVC to €150 / €200 to be deducted each week and see what way the p21 looks like at the end of the year.

At the moment we are not saving any money bar the children's allowance, new car money of €100 per week and putting approximately €180 per week aside for bills. The rest we just spend on day to day stuff, weekends away, dinner out, kids activities etc. We do enjoy life, don't get carried away watching money. The savings we had probably built up when both of us were working but right now we generally don't use them or contribute to them. We are planning a couple of big holidays in the next while which will probably use up a little chunk of the money.

The children's accounts would be left for college or whatever they plan on doing. Hopefully there would be enough and if not we can just use some of our savings. We don't have any plans or interest in investing in property / moving house etc. I suppose the savings are just there as a 'just in case' fund.

We don't have any life cover etc, CWPS do have a policy where if you die before retirement the dependants receive €100,000 and also they have a sick pay scheme included which pays €38.11 per day for 50 working days if my husband is ill on top of whatever social welfare payment. Hopefully neither of us will pop our clogs or get sick though!!!

I will sort out applying for a couple of the accounts suggested this week. Thanks again!


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## Sarenco (19 May 2015)

SBarrett said:


> Hi Molly
> 
> I wouldn't worry about your money just going every week. You're a family of 4, with 2 young kids. You take money out on a Saturday morning and by lunchtime, it's gone!
> 
> ...



Hi Steven

While I certainly agree that managing catastrophe risk is an important part of financial planning, in Molly's case I really don't think taking that out expensive life cover or income protection insurance is necessary for the following reasons:

They own their home outright and are not carrying any debt;
They have significant savings relative to their household income;
I'm pretty sure the CWPS pension scheme carries a fairly generous disability benefit; and
In a worst case scenario, social welfare would be available and Molly is young enough to enter the workforce at some level.
I also don't think it is necessary to invest their savings aggressively to meet the children's possible education expenses.  Given the age of the children, there can be no realistic assumption that an equity based investment would beat a simple deposit account or savings bonds (after taxes and expenses) over the relevant timeframe.

I'm sure you would dispute most, if not all, of the above !


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## Steven Barrett (20 May 2015)

Hi Sarenco

You're right, I do dispute most of what you said . The reasons I would dispute your life cover:


Her husbands take home pay is about €40,000 a year. Even deducting the Widow's pension, her savings would last her about 4/5 years before it is gone.
The CWPS disability scheme is €38.11 a day for a maximum of 50 days.
If you died in the morning, would you be happy to know that your family would live out the rest of their days on welfare?

Who said investing aggressively? You don't have to go all out and invest 100% in equities. There are elements between cash and 100% stocks. While there are no guarantees with investing, there is a pretty high chance that you will beat deposits over 12+ years. Leaving on deposit will eat into the real value of the money. While inflation is low at the moment, deposit rates are usually lower than inflation.

...just flicked over to page 1 and saw Molly's replies. There's a few "hopefully's in her reply; hopefully the kids savings is enough, hopefully we don't get sick, hopefully we nothing happens to us. 


Steven
www.bluewaterfp.ie


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## Boyd (20 May 2015)

Molly2015 said:


> At the moment we are not saving any money bar the children's allowance, new car money of €100 per week and putting approximately €180 per week aside for bills. The rest we just spend on day to day stuff, weekends away, dinner out, kids activities etc. We do enjoy life, don't get carried away watching money. The savings we had probably built up when both of us were working but right now we generally don't use them or contribute to them. We are planning a couple of big holidays in the next while which will probably use up a little chunk of the money.



I would say you should look at this. On a monthly take home pay of E3900 I would expect to be able to save something more monthly to increase your nest egg, as you are saying you basically aren't contributing to them any more. Not saving anything on E3900 a month seems like alot of cash is being squandered somewhere as after bills/car saving you have E2780 (E3900 - E1120). With no mortgage or rent to pay, you are frittering away E2780 on dinner out, weekends away etc. This seems like a black hole. I think you should look into where this is going, and endeavour to save at least E500 a month to your long term savings accounts. Take it using direct debit immediately you get paid, and I guarantee after a month of adjustment you wont even notice it gone.

Alternatively, saving E100 quid weekly for a new car seems like a fools errand i.e. if you mean a brand new car then guessing a minimum of E15K, you will be over three years saving for it. Why not up that aggressively, buy the car more quickly and then redirect the car cash into long term savings.


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## thedaddyman (20 May 2015)

First port of call in any financial review should be your tax affairs, is everything in order, are you claiming for all tax deducatable expenses (meds etc), is there an opportunity to get any kind of a rebate.?

Secondly, I would urge you to look at your life assurance position and walk through the impact if one or both of you were killed. Sadly it does happen and make sure your kids are taken care off

Also you should have a will made, it just makes things easier (sorry if all of that was a bit morbid)


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## Molly2015 (20 May 2015)

Thanks again everyone. This is a bit of a wake up call really when I look at everything in writing. I just went back over the last 16 payslips....my husband nearly always has a couple of hours overtime etc and the average net wage was €973 per week. I just take out the €180 and €100 out of this so what we have been doing with the almost €700 per week is a bit scary!! Need to get a bit more tuned into this!!! The €180 covers all expenses like car ins/tax/bupa/tv licence/prop tax/heating oil/broadband etc.

Good idea to just set up a direct debit to savings account every week, if its not there we can't spend it!

The car money...it is not saving for a new car really. We had to use €23k from the savings a while back for a car so I just thought I would set up an account and put €100 a week into it and when we do need to change the car again in 4 or 5 years time the money will be there. That is the account with the €5615 in it.

My husband has a company van and his diesel etc is paid for so we only have the running costs of one car. God knows where we are spending money!! Reality check needed! At least if I increase the AVC, it is gone when the wages come in so we won't miss it.

We claim medical expenses etc every year. Have will made, basic one that just leaves all to the kids. Not sure about paying money into life assurance policy every month.

Thanks again!!


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## so-crates (20 May 2015)

If you want to find what you are spending on, start spending diaries, both of you. Record everything for a week and then review. You'll be surprised at what adds up!


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## MarcoTigre (28 Jul 2015)

Hi Molly,
Just reading your post today.
First of all well done with the saving. Something you could evaluate is a sort of family based social landing.
example:
- banks are giving you 1.5%
- may be someone from your family is borrowing money somewhere at 14% to 23%
you could land the money to them at 5%. You will make more money, they will pay less interest.

Just an idea. I am myself E6000 below zero circa, recovering fast, and if I get to the point to have a good amount of cash on the side, I would look into lowering what my family members pay to banks. Ok I admit may be this is really an Italian job.

Good luck with your investments and well done again 
M.


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## Bronte (28 Jul 2015)

Molly2015 said:


> God knows where we are spending money!! Reality check needed! At least if I increase the AVC, it is gone when the wages come in so we won't miss it.
> 
> . Have will made, basic one that just leaves all to the kids. Not sure about paying money into life assurance policy every month.


 
You need a spending diary.

And you *absolutely* need to look into life assurance, on both of you.  You have two young children and only one earner.  This is more of a priority than anything else you've been suggested on here.  And you should have it sorted out this week !

What do you mean a basic will, did you use a solicitor and did you not appoint guardians?


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## Sarenco (28 Jul 2015)

Bronte

There is already life assurance in place through the CWPS scheme. 

Whether or not the CWPS scheme provides sufficient coverage is a matter of judgement but I would point out that Molly's family have no debts and substantial cash savings.


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