Hi folks,
We are currently heavily overpaying mortgage (~ 1900 euro overpayment per month). Currently ~54000 euro outstanding mortgage balance, so due to clear it by end of 2025.
My question is regarding the best investment strategy after clearing the mortgage (quick summary of our situation: we have no other non mortgage debts, I am 36yo, married, single earner 90k per annum, wife full time mum, and we have 20k emergency fund in cash, I have 93k in occupational pension and am currently maxing age related tax relief pension contributions, 26k pounds in UK occupational pension, paying voluntary contributions for Uk state pension, wife has negligible amount in PRSA).
So I am trying to decide between 2 investment strategies once we have paid off the mortgage.
1) Overfund my occupational pension beyond age related tax relief amount.
-main advantage is the additional funding would grow tax free which could get my pension value up to ~800k by age 50 based on ~3% per annum real return (then take 200k lumpsum tax free). For me ~800k is the ideal pension size for providing enough for retirement but minimising tax (after taking 200k lump sum, 4% per annum of 600k is 24k which won't attract much income tax)
-main disadvantages are the pension can't be accessed until age 50 ( I am currently 36) and I won't get tax relief unless I work beyond age 50 and claim the tax relief retrospectively (I think Marc Westlake mentioned this in an earlier thread).
2) Invest outside pension (in say Zurich Dynamic Fund which would attract Deemed Disposal/Exit Tax at 41%).
-main advantage is that I would be building up a substantial fund outside my pension (~200k by age 50), but should also have a lower but still substantial pension fund of ~550k by age 50. So all my eggs would not be in one (pension) basket.
-main disadvantage is the Deemed Disposal/Exit Tax at 41%.
What do peoole think? Strategy 1 or 2?
Turing
We are currently heavily overpaying mortgage (~ 1900 euro overpayment per month). Currently ~54000 euro outstanding mortgage balance, so due to clear it by end of 2025.
My question is regarding the best investment strategy after clearing the mortgage (quick summary of our situation: we have no other non mortgage debts, I am 36yo, married, single earner 90k per annum, wife full time mum, and we have 20k emergency fund in cash, I have 93k in occupational pension and am currently maxing age related tax relief pension contributions, 26k pounds in UK occupational pension, paying voluntary contributions for Uk state pension, wife has negligible amount in PRSA).
So I am trying to decide between 2 investment strategies once we have paid off the mortgage.
1) Overfund my occupational pension beyond age related tax relief amount.
-main advantage is the additional funding would grow tax free which could get my pension value up to ~800k by age 50 based on ~3% per annum real return (then take 200k lumpsum tax free). For me ~800k is the ideal pension size for providing enough for retirement but minimising tax (after taking 200k lump sum, 4% per annum of 600k is 24k which won't attract much income tax)
-main disadvantages are the pension can't be accessed until age 50 ( I am currently 36) and I won't get tax relief unless I work beyond age 50 and claim the tax relief retrospectively (I think Marc Westlake mentioned this in an earlier thread).
2) Invest outside pension (in say Zurich Dynamic Fund which would attract Deemed Disposal/Exit Tax at 41%).
-main advantage is that I would be building up a substantial fund outside my pension (~200k by age 50), but should also have a lower but still substantial pension fund of ~550k by age 50. So all my eggs would not be in one (pension) basket.
-main disadvantage is the Deemed Disposal/Exit Tax at 41%.
What do peoole think? Strategy 1 or 2?
Turing