35 in good position but could it be better?

[Housebuyerqs]

Personal details

Your age: 35
Your spouse's age: 35


Number and age of children: 1 child 1 month old


Income and expenditure
Annual gross income from employment or profession: 67,700
Annual gross income of spouse/partner: 65000

Monthly take-home pay: 7100 (after wife pension and her 250 AVC)


Type of employment – Public Servant. Old pension scheme. Wife Private Sector

In general are you:
(a) spending more than you earn, or
(b) saving?

Saving


Summary of Assets and Liabilities
Family home value: 520,000
Mortgage on family home: 238,000
Net equity: 282,000

Cash:
Defined Contribution pension fund:
Company shares :
Buy to Let Property value: n/a
Buy to let Mortgage: n/a

Total net assets:


Family home mortgage information
Lender: AIB
Interest rate: 2.1%
Type of interest rate: fixed
If fixed, what is the term remaining of the fixed rate? 3 years left on 5 year fixed


Remaining term: 23 Years
Monthly repayment: 1090 and we overpay 300 each month so this payment comes down by a euro or two. Hoping to pay off mortgage a lot sooner than 23 years.

Other borrowings – car loans/personal loans etc

Do you pay off your full credit card balance each month? Yes

Pension information

Value of pension fund: Wife Pension: 60k 5% and company matches with 7.5% and she has AVC 250 per month.

Other savings and investments:

80,000 (2 years @ 3% per year matures Nov 2025)

40,000 ( 1 year @ 2.5% on year matures Nov 2024)

5,000 (revolut instant access savings 2% AER)

4000 Prize Bonds

27000 ( split across three AIB online saver accounts that I increase by 1000 a month till its get to 12K)

Other cash: 35000 current accounts making no interest

Credit Union: 3000

Investments: 1800 in degiro to play around with


Total Cash: 196,000

Other information which might be relevant

Life insurance: We have Mortgage protection


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



We have been meaning to set up a meeting with a financial advisor but said we would give this a go first to flesh out some ideas and maybe get some guidance. As you see from above, we are in a decent position with our mortgage and have plenty of savings stored away. We have our savings spread over too many accounts in my opinion and would like to know how to get it working better for us.


The main upcoming costs we have is obviously our child (and hopefully one or two more in the future). My wife would like to upgrade to a more suitable car in next few months so we are budgeting around 15/20k for that. We also have a bit of work to do in our house and garden and again would budget around 15/20k for this also.

We have both been relatively risk adverse and always saved in the big banks or state savings where there was no risk so have little to no knowledge on any other financial products available. Should we be seeking out these products or perhaps using our savings to heavily pay down our mortgage quicker?

We would also like to save our child benefit as it is paid into us and so is there a ideal way to do this for our child. Do we set their own account up or just use one of ours and transfer it to them later in life? Is their inheritance issues with this?

As a public servant (education) I’m not sure if I should be doing more regards my retirement as I will reach full pension at 40 years service and have 13 years done. Does an AVC make sense in my case? I am also very keen to get some form of salary protection set up but it has been on the long finger.



Thanks in advance for any help and wisdom.

 

[Blackrock1]

Is your wife's pension contributions at the max level with the 250 avc?

Also I'd look at paying down the mortgage with some of the spare cash what's the point in holding so much? Change the car, do the home improvements, keep an emergency fund and use the rest to pay down the debt.

 

[Premos]

I would look at your five year plan on top of these planned expenses. I see that you have a very young baby. Congratulations. Is there a chance that you might want to have more children in the coming years? If so your outgoings will be different, your income might also change as one of you might decide to take some time off/reduce their hours...

 

[conor_mc]

With all due respect, this is rudderless saving. I think you and your partner need to sit down and agree what it is you are saving for so you can allocate appropriately. Eg if saving for private secondary school, you’ve got a 12-18 year time-frame (plus longer if more kids arrive!) so equities are more appropriate than cash, early retirement same deal, upcoming car changes and home upgrades should be deposit/state savings.

The advice here will be to reduce mortgage but at 2.1% and a very manageable repayment, I would actually max out AVC’s from savings first given your mid-range salaries (relative to the 115k max for pension relief, that is). If you move fast, you might even get something in against 2023 tax year.

 

[ClubMan]

We have been meaning to set up a meeting with a financial advisor ...

If you do this then make sure that you deal with an independent financial advisor, possibly on a fee paying rather than commission basis, in order to get truly independent advice and not just a sales pitch for products that suit the intermediary's needs more than yours.

 

[misemoi]

Are you sure that this is your forever home or do you plan to move? It can be hard to imagine a house that fits 2 adults and one baby being too small but think about your eventual ideal family size, visit friends who have families that large and see what comfortable space means to you. It might inform you as to what you might aim for down the line. This will then factor into what you spend on your current home (appreciate 10-15k won't go far these days!) and how much cash to keep for moving/deposit if needed. Or extending where you currently live and when you might need to do that.