Younginvestor93
Registered User
- Messages
- 130
Thank you Sarenco for your constructive feedback. I will keep saving as much as I can for the house and get help from family and maybe also a small mortgage if I need it depending on the house price.You will struggle to raise a mortgage of more than €133k on your current income so €400k seems an unrealistic budget (unless you are expecting further financial assistance from your family).
I still think you should forget about pensions for the time being. Concentrate on boosting your income and buying your first home.
And brace yourself for a large increase in your expenses. I remember being shocked at the price of things like washing powder when I first moved out of home!
You will struggle to raise a mortgage of more than €133k on your current income so €400k seems an unrealistic budget (unless you are expecting further financial assistance from your family).
I still think you should forget about pensions for the time being. Concentrate on boosting your income and buying your first home.
And brace yourself for a large increase in your expenses. I remember being shocked at the price of things like washing powder when I first moved out of home!
Well, again, I think you should forget about pensions until (1) you have bought your first home; and (2) you have a higher income (so you can get tax relief on contributions @40%).I still need to sort out my pension
Is that because any money I have now is better spent on lowering the potential amount I will need from the banks on a mortgage rather than in my pension?Well, again, I think you should forget about pensions until (1) you have bought your first home; and (2) you have a higher income (so you can get tax relief on contributions @40%).
However, if you are determined to start a pension straight away then you should contact a good broker (some are regular contributors to this forum) who can talk you through the various charging structures.
Bear in mind that pension contracts with the lowest AMCs will invariably have lower allocation rates and/or fixed policy admin fees.
Live at home with parents, and never put your hand in your pocket. For anything.
Groceries. Utilities. First car. Insurance. Mobile phones. Health expenses...
I've seen people like this really struggling with basic skills when they move out.
I still think you should forget about pensions for the time being. Concentrate on boosting your income and buying your first home.
And brace yourself for a large increase in your expenses
You are self employed with low income.
For a self employed person with aspirations to spend up to 400k on a home in the next year or 2, it's a low income.It's not a low income. OP has a gross of €38k at 27. Median annual earnings for 25-29 year olds are €31k.
While it is great for the OP to have wealthy parents, you have not really saved €200k.
My parents are not wealthy. I have managed to save from a young age by not wasting money on unnecessary expenses.
You may have earned a lot of it by working (and credit to you for that) but your family has completely subsidized your lifestyle. Do you even know how much they spend on you? Are you buying clothes, eating out, paying for subscriptions, holidaying at their expense?
I am lucky to never have paid rent but I pay everything else.
I still think you are asking all of the wrong questions. If you take out a mortgage of €100k and continue to contribute 15% of your salary, you will have very little leftover at the end of each month when you are living on your own
Your priorities are all wrong & you need to refocus
- Create a budget of what your lifestyle currently costs. You need to know this before you buy a house or even consider how much of a mortgage you can afford. If your lifestyle costs more than you earn then you will not survive on your own. This is a good idea, thanks I will implement a budget.
- You are self employed with low income. You are exposed to more risks than most if you lose your job. You don't see these risks now because you live at home with no expenses. You need to consider income protection and retaining an emergency fund for this scenario. As others have mentioned, I don't think your income justifies the risks of self employment for you so you should really consider finding a permanent job if can, preferably with employer pension contributions. I don't think my income is low and my job is secure plus I love what I do. I would do it for 25k a year every day of the week.
- You need to genuinely research property prices and the associated costs of buying, furnishing and decorating a home. You can't just randomly pluck €400k as your figure. I have researched but I will note that there are always additional costs.
- Forget about pensions until you understand your expenses and you are comfortable living on your own. You are debating what 0.1-0.2% fees will do to your pension when you lack a basic grasp of your own expenditure. I know I will max the pension no problem every year until I am 60. I want to optimize it so I don't leak thousands every year on expenses because I did not get the best deal.
- Forget entirely about investing for at least 5-10 years. As soon as I get the house sorted, my pension maxed, then I will focus on investing my after tax income to build my wealth further.
- And finally, try paying your own way for a year before moving out. Pay rent, pay for bills, pay for groceries, pay for everything. If your parents are going to gift you money to buy a home anyway then at least you will have some sense of what your lifestyle costs. I think this may be a good idea, paying rent to my parents as banks like to see this also for a mortgage to prove I can handle repayments.
The OP has said their income won't increase, so they'll quickly become a low earner relative to the median for their age. (Their salary has also changed between different threads).
It's not a low income. OP has a gross of €38k at 27. Median annual earnings for 25-29 year olds are €31k. I wouldn't call OP's income "high" either, as self employment has a premium due to greater risk of unemployment.
For a self employed person with aspirations to spend up to 400k on a home in the next year or 2, it's a low income.
I do agree with this though and have said as much in the pastI look at statistics though because there is a high-income bias on AAM, and that can affect the advice that's given.
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