Money Makeover - All advice welcome on my current financial standing.

[mimes]

Personal details

Age: 40
Spouse's age: 41
Number and age of children: 3 kids (7/4/2)


Income and expenditure
Annual gross income from employment or profession: 90k
Annual gross income of spouse/partner: 40k

Household monthly take-home pay: 6530

Type of employment – PAYE Workers
Employer type: Private companies


Summary of Assets and Liabilities
Family home value: 750k
Mortgage on family home: 187k (13.5 years left)



Net equity: 563k

Cash: 42k

20k of this in Trade Republic account

22k across two personal accounts


Defined Contribution pension fund:



Total monthly payment contribution for me – 1353. (Company match pension payment + AVC monthly of 670) – AVC only recently added.

Spouse has no pension in current role.


Company shares : N/A
Buy to Let Property value: N/A
Buy to let Mortgage: N/A

Family home mortgage information
Lender AIB
Interest rate: Green 2.1%
Type of interest rate: Fixed
Remaining Term: 13.5 Years

Monthly repayment: 1340

Other borrowings – car loans/personal loans etc

No loans

Pension information

Value of pension fund(s):



Total: 107870



Wife has one old pension – unknown exact values but assumed to be small

Buy to let properties – N/A

Other savings and investments:



Equities: 4.5k invested in stock

Whiskey: ~10k portfolio

Other information which might be relevant

Life insurance: Cover in place provided by employer. Wife has no cover.

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



I am looking to get a second opinion and any advice on here around my current financial standings and anything we could do better.



I have recently upped my pension to the recommended % for my age. I’m a little conscious my spouse has no current pension plan in place, but I am hoping my extra contributions accommodate for this over time.



My wife plans to change roles in the future when the children are in school so it’s hoped she starts a pension in this new role.



This aside, the cash we have available is mainly a rainy-day fund and for child education in the future. I am wondering if I can better invest this cash today and not have this sitting around.



I was thinking of keeping the 20k in TR, 5k in cash and invest the rest in ETF’s/stock and/or opening a small side business for additional income..



In terms of desires, I’d love to invest in some sort of Holiday property whilst the children are young however I am not sure if it would be best financial practice to use savings to pay (or partially pay) for this or to look at a bank loan.


Any thoughts or opinions welcome.

Thanks in advance.

 

[Premos]

I don't think a holiday property is a good investment in general. And while not knowing your monthly savings, I don't think it is a luxury that you can afford currently. 25k seem too me a good rainy day fund. It leaves very little for another property (even as a deposit)
As you have small children, I would consider life insurance for your wife.
In terms of education funds, it will really depends on your location and what your children will do. If they live at home, the needs will be greatly reduced.

 

[michaelm]

Life assurance for your wife is a must. She should also start a pension ASAP. Methinks foreign property would be a misadventure. I would put the equities, whiskey & some of the cash off the mortgage. I'd aim to clear the mortgage before the oldest child might start college.

 

[Sarenco]

Your pension looks a little light for your age and salary level.

You could (and, IMO, should) be getting tax relief on pension contributions of 25% of your salary, regardless of any employer match.

At a household level, you should concentrate on your own contributions, which will be relieved @40%, whereas your wife would only get relief @20%.

As an aside, the proposed auto-enrollment scheme should work in your wife’s favour.

I think you should forget about the holiday home idea - you can’t really afford it.

I would also forget about the small, after-tax investments - they aren’t going to meaningfully move the dial.

If you do find yourself in the happy position that you are building after-tax savings, having maximised your pension contributions, just throw it at your mortgage.

Finally, in your circumstances I think it’s critical that you have appropriate income protection insurance in place.

Hope that helps.

 

[Fortune]

Life assurance for your wife is a must. She should also start a pension ASAP. Methinks foreign property would be a misadventure. I would put the equities, whiskey & some of the cash off the mortgage. I'd aim to clear the mortgage before the oldest child might start college.

I would expect the whiskey to be quite illiquid, and of uncertain value.

 

[Clamball]

With €560K equity in your house, I think you have demonstrated great saving ability, probably over the last 10 years, so if you can do the same with a holiday home why not.

I would be encouraging your wife to have her own pension, who knows what the future holds and she should ensure she looks after her own financial future as well.

Paying 25% of your salary into a pension that you can access in 25 years time is a lot of your salary, if you are tight on day to day costs. You and your wife may prefer to use some of that money to buy a second home, and enjoy the next 10-15 years there with the kids. Or you might prefer to push on and build a large pension pot, and ease off for when the kids need to be funded through college, it very much depends on your priorities in life, now and for the future.

 

[Bronte]

A holiday home works for some people not others. I’ve rarely seen anyone make money on them. Having said that a sibling has one in France which they nearly fully own now. But they used it every year. So it was a form of saving as they now own the asset. I couldn’t stand being tied to one place. It’s part of a grouping so the lettings, maintenance, upkeep are managed. Because there are a lot of French in this one, it’s worked smoothly apart from one disaster with the syndicat and the French system sorted it out. I’ve a dread of trying to deal with anything in the likes of Bulgaria or Turkey. Even Spain has had its issues. I’ve not seen the cost of foreign holiday homes make a whit of difference to the annual family holiday.

Have you one clue about a location?

Wife needs life insurance. You’ve money in too many pots. Increasing pension to get top rate tax relief is the way to go. As long as you all still have a comfortable life. When your wife starts a new job her pension needs to be supported.

 

[mimes]

Thanks for all the advice here. Some very useful items to action so much appreciated.

We will look into Life assurance for sure and my wife already has plans to start a pension with the auto-enrolment scheme. (2025)

On the pension contributions of 25%, I am not sure if I can spare 25% of my salary but will review how much I can spare.

Equities and Whiskey have been good short term earnings for me over the last few years hence my holding of these.

I guess in the long run, clearing the mortgage might have more realistic gains in the long run.

I do like the idea of having some extra cash available to try accumulate wealth however I guess I need to weigh up the time and effort taken by these endevours versus simply paying off mortgage interest. I might sell some Whiskey and pay of the mortgage in the short term.

As for college, we reside in Dublin and my hope would be that the kids go to college here when that day arrives.

I think for now, the holiday home might need to stay on hold.

Thanks again and any further inputs are welcome.