24 and debt free - what should my next steps be?

GettingStarted7

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Hi all, thankfully came across this forum recently as it's given me a much needed Irish perspective on personal finance vs. the US and UK based sources I had been reading as well. I've read through a few of the threads on here, to I've tried to give as much detail below:

Age: 24
Spouse’s/Partner's age: N/A
Annual gross income from employment or profession: €40,000
Annual gross income of spouse: N/A
Monthly take-home pay: €2400
Type of employment: Permanent in Private Sector
In general are you:
(a) spending more than you earn, or
(b) saving? -
Saving:- After monthly costs - save a minimum of €700 p/m and €500 p/m discretionary saving (e.g. for travel plans, buying Xmas presents, etc.)
Rough estimate of value of home: N/A - Renting in Dublin
Amount outstanding on your mortgage: N/A
What interest rate are you paying? N/A
Do you pay off your full credit card balance each month? Yes, very rarely used.
If not, what is the balance on your credit card? n/a
Savings and investments: €10k in cash, no other investments excluding pension
Do you have a pension scheme? Yes through work (Employee Contribution 6%, Employer Match 12%) - current value €5k
Do you own any investment or other property? No.
Other borrowings – car loans/personal loans etc: None.
Children: None
Life insurance: None

What specific question do you have or what issues are of concern to you?
My main question, in a nutshell, is what is the best thing I can do now with my savings now?
The only main financial goal I have at the moment is to have enough money available for a deposit on a house down the line. Only thing is - this would likely not be until I'm 28 at the earliest (4 years time) and not a purchase I'll necessarily want to make until my 30s as I currently have good mobility in work so will likely go abroad for a while before settling back in Ireland.

However, having this money in a savings account that is earning less interest than the rate of inflation is really quite annoying. Given the time that's available, my current thinking is to keep roughly 4k in cash as an emergency fund, and invest the rest in a medium to high-risk Multi-Asset fund and feed it with regular investments through Irish Life or Zurich (I came across Moneycube who seem like an interesting alternative as well, however, I can't find too much info about them online).

The other factor I'm considering is that I will likely begin a part-time Masters next year. I'm open to taking a loan for this as I would not have any real credit history bar the rare transaction with my credit card, and would be able to pay it back relatively quickly. I'm aware of the importance of credit report and scores in countries like the US for mortgages, but not sure if it would play as significant a role in Ireland.

Any thoughts or wisdom to share is much appreciated!
 
I will likely begin a part-time Masters next year. I'm open to taking a loan for this as I would not have any real credit history

You should not take out a loan while you have the cash to pay for it. You don't need a credit history in Ireland. You will have a clean record when they look you up when you go to buy a house.

Agree with putting your savings in a high risk fund. I would avoid the life companies. The tax is too high and their costs are usually high.

Go for a low cost ETF.

You do not need emergency cash. Invest the €10k. If this emergency happens, then you can cash the ETF.

When you come within two years of buying a house, you should move into cash.

Brendan
 
You should not take out a loan while you have the cash to pay for it. You don't need a credit history in Ireland. You will have a clean record when they look you up when you go to buy a house.

Agree with putting your savings in a high risk fund. I would avoid the life companies. The tax is too high and their costs are usually high.

Go for a low cost ETF.

You do not need emergency cash. Invest the €10k. If this emergency happens, then you can cash the ETF.

When you come within two years of buying a house, you should move into cash.

Brendan

Brendan,
Considering the OP only has a 4yr investment timeline before needing it cashed in for a mortgage deposit, would an EFT not be a high-risk strategy? With such a short time invested, there is a significant risk that the value of the ETF would have fallen, no?
 
There is risk and reward.

Markets may fall and it will take him longer to get the deposit together. Markets may rise and he will get the deposit together quicker.

He says "4 years at the earliest".

My view is that when you have the deposit or when it is within reach, that is the time to switch to cash.

And that would usually be about 2 years before buying.

Brendan
 
KBC has a pretty decent regular savings account, with one lump sum of €10k permitted -

Personally, I think it's unwise to invest in equities with an investment horizon of less than 10 years.

Incidentally, the employer match to your pension looks very generous - you should definitely keep up your contributions.
 
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