Looking to address long term future

[Barry E]

Age: 37
Spouse’s/Partner's age: NA

Annual gross income from employment or profession: Currently €26k per annum although due to stop soonish as hopefully leaving the job and country
Annual gross income of spouse: NA

Monthly take-home pay: About €1900 per month

Type of employment: Private Sector

In general are you:
(a) spending more than you earn, or
(b) saving? Saving. I saved about €1300 per month in 2020

Rough estimate of value of home: No home/mortgage
Amount outstanding on your mortgage:
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? No credit Card
If not, what is the balance on your credit card?

Savings and investments: I have approximately just over €30k in savings. This is scattered in bank accounts in Ireland, Australia and New Zealand as I had work visas in the 2 latter countries. I kept those accounts open as they cost me nothing and pre-covid they offered reasonable interest rates for savings accounts, especially compared to here, alas like the rest of the world they are basically 0% now. The breakdown is about €18k in Irish accounts. About €12k is in NZ account and €2k is in Australian Account. No stocks/bonds etc

Do you have a pension scheme? No

Do you own any investment or other property? No

Ages of children: No children and no intention of having any

Life insurance: None – Have health insurance through current job but that’s obviously stopping soon.

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

So I have always kept money wholly liquid and fortunately I’ve never had debt. When I was able to get 2-3%+ in savings I was fine enough with that rightly or wrongly. As we are now in a world of virtually 0% and possibly negative interest rates. I’m just trying to see is there a more optimal way to manage my finances.

The reason I keep my finances so liquid is that in the past I travelled extensively, back when that was a thing. Whenever I am working I always save as always been fairly frugal. The only time my outgoings is greater than income is when I have no income because of travel. I have twice gone 2 years + without working a day. That naturally eats into savings albeit slower than you might think. (If you are wondering how I afford that working and saving in rich countries while traveling in poor countries is the very rough idea)

This year I am due to move to Canada on a 2 year work visa. I was supposed to move last year but for obvious reason that didn’t happen. I would hope and expect in the first 6 months of this year I will do that (although of course nothing is certain). I don’t expect to stay beyond the 2 years but I wouldn’t 100% rule out I’d try to stay longer.

My biggest concern is I currently have no long term investments like a pension etc. Owing property is not a particular goal of mine and it’s not like that’s a feasible prospect anytime soon in anyway. I don’t think I have the information/knowledge to be going on Robin Hood/ETrade etc and trying to beat the stock market. A ETF seems like it could be the best vehicle but don’t really know first thing about how to access one or what one to look for. Is it a matter of making do with a low interest world until I ‘settle down’ and have some sense of stability?

Any critiques, suggestions welcome.

 

[Brendan Burgess]

Hi Barry

I don't think that where you save is a material issue for you. With €30k at age 37 and no house or pension, it doesn't really matter what you do with that €30k.

The key issue for you is your lifestyle choices. If you choose to build up savings and then run them down while you are travelling, fair enough. The Irish social welfare system will provide you with an income and housing in retirement. In other words, the rest of us will pay for your travels. Why not exploit our stupidity?

If you invest in an ETF, you might get 2% a year instead of 0%. That will make no long term absolute difference.

Brendan

 

[Blackrock1]

no offence Barry but at 37 the time for settling down is now unfortunately, you will be at retirement age in 30 years, whats the plan then? where do you intend to live if you have no pension to pay rent? 0% or 2% on your savings, given that you will be spending those savings travelling is really neither here nor there either.

 

[LS400]

I have twice gone 2 years + without working a day.

Why? That just goes against the grain at your age. So @ 37 and removing 4 working years from that age, crazy in my book, unless you have some trust fund to fall back on. If your average salary has been in the region of €26k, what was the thinking behind doing that, are you expecting a windfall or some kind of inheritance to see you through life, or, as Brendan says, is the generous Irish welfare system on the horizon that would colour your judgment.

I think your just plain daft tbh to only now be asking the question below.

My biggest concern is I currently have no long term investments like a pension etc.

 

[PaddyBloggit]

So what's the plan in Canada?

 

[Barry E]

Hi Barry

I don't think that where you save is a material issue for you. With €30k at age 37 and no house or pension, it doesn't really matter what you do with that €30k.

The key issue for you is your lifestyle choices. If you choose to build up savings and then run them down while you are travelling, fair enough. The Irish social welfare system will provide you with an income and housing in retirement. In other words, the rest of us will pay for your travels. Why not exploit our stupidity?

If you invest in an ETF, you might get 2% a year instead of 0%. That will make no long term absolute difference.

Brendan

Hi Brendan. Thank for the reply.

I have certainly never looked it as exploiting our stupidity but I do see their is an inherent selfishness of having the state pay for education etc and then disappearing and paying taxes in other countries for a prolonged period of time.

So unless I am prepared to knuckle down and keep building up from where I am not much else I can do then.

no offence Barry but at 37 the time for settling down is now unfortunately, you will be at retirement age in 30 years, whats the plan then? where do you intend to live if you have no pension to pay rent? 0% or 2% on your savings, given that you will be spending those savings travelling is really neither here nor there either.

Hi Blackrock1,

Certainly no offence taken. The whole point of this exercise is to hear the home truths if that is what's required.
Simply put there is no grand plan in particular. This is last work visa just by the nature of my age. I guess I had some idea when this is done I'll be 39/40 and at that point just really settle down whether Canada or here but I'll freely admit there is more general thoughts than a plan.

 

[Barry E]

So what's the plan in Canada?

Hi Paddy,

No grand plan. For the previous work visas I used I have always turned up and figured it out which is basically what I will do here. I am fine dealing with the uncertainty of it all. I do have family in Winnipeg and for permanent residency reasons there is something to be said for trying to work in Winnipeg/Manitoba province but again nothing set in stone. Broadly speaking turn up probably travel round for a few weeks, and look to get a job once I choose city/place.

 

[Slippers]

Hi Barry,

To a point I envy your mindset. Occasionally I fantasise about downing tools. The title of your post is "Looking to address long term future". In my opinion you should focus on buying a small property (120k => 150k) within the next 2 years or so.

You indicated that from a take home pay of 1900 you save 1300. That is impressive. It shows a level of focus, and it appears that you have little regard for material possessions. Due to your high saving rate I am assuming that you are living at home, or have managed to rent somewhere well below market rate? If you go to Canada, will work allow you save 1300 after rent, bills, etc are covered?

If not, I would strongly recommend not going to Canada. Get the head down over the next 2 years. Continue to add 1300 per month to your 30,000. Then get a small mortgage and get that small property. Once you have that, you will always have a base to return to. The mortgage will likely be small enough to allow you to work adhoc, and travel. Possibly it may even provide some rental income while travelling?

The security this would provide you should not be underestimated.

 

[elcato]

I have to say I like your attitude and being confident in paying your way as you go is good. But it sounds like you're getting a light bulb moment and you really need to address it by settling down and taking a 10 year view. Start saving a bit more aggressively so that when you finally realize you should do something you will have a platform. Don't worry too much about interest rates but maybe invest in a house as a starting point.

 

[Barry E]

Why? That just goes against the grain at your age. So @ 37 and removing 4 working years from that age, crazy in my book, unless you have some trust fund to fall back on. If your average salary has been in the region of €26k, what was the thinking behind doing that, are you expecting a windfall or some kind of inheritance to see you through life, or, as Brendan says, is the generous Irish welfare system on the horizon that would colour your judgment.

I think your just plain daft tbh to only now be asking the question below.

Hi LS400,

So all of this was over the last 10 years or thereabouts. As for why I did it - I never had the intention both times to not work for 2 years. I worked, I saved, travelled / rinse and repeat. None of it is trust fund related, all of it was paid for myself. I just set out and it kind of just worked out like that.

As for my long term future. I think it's fair that say it's not something I thought fully about. Does that make me daft? You can certainly argue that so I will not quibble with you about that.
I honestly never expected or assumed be 'bailed out' by the state. Sure maybe I could live in Canada for rest of my life.
If nothing else I am trying to address it now.

Thanks for the feedback.

 

[PaddyBloggit]

With the way you view life, I'd say go for it. You seemed to have packed in or you are going to pack in your job here anyway.

By all means, enjoy Canada, but look at it as still an opportunity to build up savings. Don't go mad on the earn, save, stop working, travel and spend savings.

Work out whether you want to spend your life in Canada or Ireland. Will they even let you stay in Canada after the two years.

I reckon you, yourself, have to think more about where you see yourself in the future. Only then can you make definite financial plans for it.

I have to admire your gumption/style though. Look at it this way.... you've enjoyed what the world has to offer thus far.... if you dropped off in the morning, it's not a bad legacy. You only live once and all that...

 

[Barry E]

Hi Barry,

To a point I envy your mindset. Occasionally I fantasise about downing tools. The title of your post is "Looking to address long term future". In my opinion you should focus on buying a small property (120k => 150k) within the next 2 years or so.

You indicated that from a take home pay of 1900 you save 1300. That is impressive. It shows a level of focus, and it appears that you have little regard for material possessions. Due to your high saving rate I am assuming that you are living at home, or have managed to rent somewhere well below market rate? If you go to Canada, will work allow you save 1300 after rent, bills, etc are covered?

If not, I would strongly recommend not going to Canada. Get the head down over the next 2 years. Continue to add 1300 per month to your 30,000. Then get a small mortgage and get that small property. Once you have that, you will always have a base to return to. The mortgage will likely be small enough to allow you to work adhoc, and travel. Possibly it may even provide some rental income while travelling?

The security this would provide you should not be underestimated.

Hey Slippers,

Thank you for that post.

There is a romantic quality to it and I have been very lucky to have done it and visited some cool places. There is negatives though, at least in the way I have approached it, as Brendan and LS400 have pointed out above which I can't deny.

You are right about the below market rate living situation. Living out of a backpack for years does have a way of eliminating any hint of materialism so I do only try to spend on what I think truly matters, experiences, social stuff etc. I would say with Covid this would be unusual to save the 65ish% of income. In a normal year I certainly would have gone out more but still doubt I would gone beyond €9,000/10,000 at most for expenditure so still over 50% which would be about standard for me.

Can I save the equivalent of €1300 per month in Canada? I obviously couldn't say for definite. From what I understand of the living situation in Canada my suspicion is I will not average that after I get a job and naturally there is down period for travel and when looking for job which eats into funds.

That's an interesting idea that I didn't consider. When I said in my OP owning property is not something I care about I meant it in the sense that having a place of my own is not something that I prioritise. As an investment/ vehicle for building wealth/long term finances etc if I felt that was the best option and it was possible I certainly would be open for it.
I can't rule out the decision will be made for me and I don't get in to Canada with Covid and visa situation however I think I will be allowed in. I appreciate you throwing the idea out and something for me to ponder. Hopefully I can avoid sunk cost fallacy when making this decision.

Thanks for the feedback.

 

[michaelm]

Each to their own but your life in retirement could be bleak. I'm hoping, for your sake, that you are an only child and your elderly parents own their own home and will gift it to you at some point.

 

[Barry E]

I have to say I like your attitude and being confident in paying your way as you go is good. But it sounds like you're getting a light bulb moment and you really need to address it by settling down and taking a 10 year view. Start saving a bit more aggressively so that when you finally realize you should do something you will have a platform. Don't worry too much about interest rates but maybe invest in a house as a starting point.

Hi Elcato,

A lightbulb moment is a good way of putting it. I think there is a level of cognitive dissonance about this as I have always felt I am pretty solid when it comes to money, never taking a loan for some nonsense, using a credit card, always paying my way and all that kind of thing. However that gnawing feeling inside of the elephant in the room that is my long term finances goes completely against that. This probably meant I haven't addressed it head on in the way I should have previously.
But can't rewind the clock so got to make the best of it now. Thanks for the advice.

 

[PaddyBloggit]

But can't rewind the clock so got to make the best of it now. Thanks for the advice.

Yes, but look at it this way; you are 37 not 57. It's never too late to start planning for your future. You are still well off retirement age.

But, as I said, you need to get Canada out of your system or fully into it. You can't keep running from one continent to another... someday you'll have to stop. I still think you need to decide on the direction of your life before you can plan for it.

 

[Barry E]

With the way you view life, I'd say go for it. You seemed to have packed in or you are going to pack in your job here anyway.

By all means, enjoy Canada, but look at it as still an opportunity to build up savings. Don't go mad on the earn, save, stop working, travel and spend savings.

Work out whether you want to spend your life in Canada or Ireland. Will they even let you stay in Canada after the two years.

I reckon you, yourself, have to think more about where you see yourself in the future. Only then can you make definite financial plans for it.

I have to admire your gumption/style though. Look at it this way.... you've enjoyed what the world has to offer thus far.... if you dropped off in the morning, it's not a bad legacy. You only live once and all that...

Hey Paddy.

On the job they don't know anything so if I did stay it's like I never had the visa. I am in a state of limbo as I was supposed to arrive last May, flight booked and everything. Since then Canada have been issuing extensions as originally I was supposed to arrive by July. With the vaccine distribution the running assumptions amongst us who are waiting is we will have to enter by June but nothing has certainly been confirmed.

As for will they let me stay. There is pathway to do it as they have a points based system. 1 of reasons Manitoba is attractive is having family adds certain points. Certain things have to go my own way so depending on what job I get and for how long I work it for influences the points.
My running assumption is if I do go I will not get permanent residency whether by choice or because I don't meet the points needed but there is a chance.

Thanks for the compliments. I kinda knew this myself I guess but the replies have help crystallised that my future is not going to be dictated by the ECB raising rates by .5% or whatever. It's what I am willing to do and not do with a dash or lot of luck perhaps.

Thanks for the feedback

 

[Barry E]

Yes, but look at it this way; you are 37 not 57. It's never too late to start planning for your future. You are still well off retirement age.

But, as I said, you need to get Canada out of your system or fully into it. You can't keep running from one continent to another... someday you'll have to stop. I still think you need to decide on the direction of your life before you can plan for it.

Oh yes I wholly agree! All I was saying above is can't improve my situation in the past but as you said starting from today I least have the power to address my future.

 

[Introuble83]

In a world where we focus on building pension pots , overpaying mortgages and accumulating large sums of money to retire at which point we are probably too old to enjoy it I commend your mindset. If you don’t plan on settling down and having kids I’d continue the way you are for as long as possible and enjoy yourself. If you want more sensible advise ignore this and listen to the prudent advise above .

 

[Barry E]

In a world where we focus on building pension pots , overpaying mortgages and accumulating large sums of money to retire at which point we are probably too old to enjoy it I commend your mindset. If you don’t plan on settling down and having kids I’d continue the way you are for as long as possible and enjoy yourself. If you want more sensible advise ignore this and listen to the prudent advise above .

Thanks for that feedback

 

[mtk]

Hi Barry
Using the cost of living arbitrage is good strategy for getting more life for less money.

To what extent is it feasible to keep getting/changing jobs in the future-
- clearly this depends 1)on what you do 2) how much you enjoy it.3) level of ageism in the area as you get older...maybe you will be able work in your 70s?

As I am sure you know they always need english language teachers abroad!

Its worth making sure your work is "on the books" in each country regarding future state pension entitlement .

Not sure given your level of savings and impact a loss might have i would risk much of it in equities etc.

good luck