40, single, buy a house / what to do with savings

Tony40

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Age: 40
Spouse’s/Partner's age: n/a

Annual gross income from employment or profession: 40k
Annual gross income of spouse: n/a

Monthly take-home pay
Approx 2,400 pm (based on 35k)
I take a fixed monthly salary from the company based on 35k pa, and at the end of the year, depending on how the year has been, generally top this up by 5k (40k pa = 2,600 pm).
Trying to increase this so salary can rise to 45k

Type of employment:
Director Ltd company (sole employee)

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


Saving

Rough estimate of value of home: n/a
Amount outstanding on your mortgage: n/a
What interest rate are you paying? n/a

Rent (1-bed in Dublin city centre) & Utility bills = approx 1,000 pm

Other borrowings – car loans/personal loans etc
None

Do you pay off your full credit card balance each month? Yes
If not, what is the balance on your credit card? n/a

Savings and investments:
75k on deposit, as follows;
50k (maxed out ) in PTSB Online Regular Saver, 0.9%
15k (maxed out ) in Ulster Bank Special Interest Deposit, 0.85%
5k in PTSB 21day notice, currently adding to this monthly, 500 - 1k per month, 0.4%
5k in 10year State Savings Bond, issue 6, 16% total return, in Year 1, matures 2030 (treating it as part of emergency fund, ie break open this piggy bank as last resort)

Other: Small amount in Shares, approx 5k

Do you have a pension scheme?
PRSA, current value 25k
Began in 2006, paused monthly contributions from 2009 (recession), have made some one-off contributions since then
I partly didn't recommence making monthly contributions as having money accessible outside the pension was more important for a future house purchase


Do you own any investment or other property?
No.

Ages of children: n/a
I might have children, I'm male so it doesn't fully depend on me, but it is not something that drives future decisions, yet.

Life insurance: None

Health insurance: None

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

I've looked at these moneymakers over the years and found them very interesting with helpful impartial advice.
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I have always been a saver, and have been saving towards a house purchase, but currently questioning what is possible and what I should be doing with my money.

1. I was in a long term relationship that ended last year, we had plans to buy a house together which would have been possible with our joint income
Now, as a single person, how can I plan to buy a house in Dublin? Is this idea still possible?

Possible Mortgage of €140-160k (40-45k x 3.5) + 60k Savings = €200-220k Purchase Price

I have the skills to work on a second-hand house needing refurbishment (this would be my preference), which might lower the purchase price but probably not to a level that seems do-able in Dublin at current prices, a bank will still want to see money to fund the renovation


2. In the future I see myself in a relationship, however how connected is house purchase to this?


3. Should I be contributing money into my PRSA? or continue to save all money outside the pension?


4. While continuing to save towards house purchase, should I be putting some of my savings into other investments, funds, ETF etc so they get a better return?


5. Should I just continue to rent (in a very nice place) and save alongside this for the next 10years, detaching my self from homeownership?


Long term goal = have own place to live in Dublin, and have a place to live in the countryside with some land, and part rent one or both of them which could provide some pension income.
 
1. I was in a long term relationship that ended last year, we had plans to buy a house together which would have been possible with our joint income
Now, as a single person, how can I plan to buy a house in Dublin? Is this idea still possible?

Possible Mortgage of €140-160k (40-45k x 3.5) + 60k Savings = €200-220k Purchase Price

I have the skills to work on a second-hand house needing refurbishment (this would be my preference), which might lower the purchase price but probably not to a level that seems do-able in Dublin at current prices, a bank will still want to see money to fund the renovation

2. In the future I see myself in a relationship, however how connected is house purchase to this?

This will not buy you much of a house in Dublin. For a single person a better bet is probably an apartment. It's also easier to sell or or let out if your personal circumstances change and you have a family.

3. Should I be contributing money into my PRSA? or continue to save all money outside the pension?

Yes. The advice on AAM is invariably to take advantage of tax benefit of pension at least to some extent. If you are boosting your income toward 45k you would get advantage of more tax relief.

4. While continuing to save towards house purchase, should I be putting some of my savings into other investments, funds, ETF etc so they get a better return?

Return on savings is indeed less than zero at the moment with inflation. For a saver with a short-term horizon (you) an ETF has a lot of expected volatility though. Also tax on gains and fees along the way. So I would avoid. Some of your wealth should indeed be going into equities, but only over the long run via a pension and with the tax advantages there.

5. Should I just continue to rent (in a very nice place) and save alongside this for the next 10years, detaching my self from homeownership?

It's not the worst idea. You are unusual in spending 40% of your income on rent+utlities and managing to save, fair play! At the same time it's wise to aim for retirement with a mortgage-free place to live, and you only have 25 years.
 
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