Hi fungie,
Without knowing your full financial circumstances, it's hard to answer the query fully. Have a look at the Money Makeover section here on Askaboutmoney and you'll see some of the other information that would be useful to provide to get a more comprehensive answer. For example, it would be useful to know if you have a rainy-day savings fund, if you have future savings needs that will arrive before you retire, e.g. kids' education, trade up the house etc. If you have other short-term debt or credit cards you should probably clear them off first. (My impression of you from your post is that you don't!)
There's also the question to be considered of what your tax position is likely to be when you retire. If your pension is already likely to push you into the high rate of tax in retirement, then the argument is not as strong in favour of continuing to max out your pension contributions, compared with a position where you're paying 40% tax now but will be on 20% in retirement.
If you're looking to buy ETFs or shares, you can do that within the pension if you want. You can set up an AVC PRSA with a provider that facilitates self-directed trading and use the fund to buy your shares and ETFs. In doing so, you don't pay Capital Gains Tax on gains, Income Tax on dividends etc. On the other hand, you can't access such funds until you retire and the eventual proceeds may well be taxed when you draw them out at that time.
Regards,
Liam
www.ferga.com
You should check what the penalty is for paying more than 10%.
It might be a lot less than you think.
Brendan
Hi fungie,
The best approach is as follows in my view:
- Firstly, maximise personal contributions
- Then overpay mortgage (assuming it’s variable or fixed with an option to overpay without penalty)
- If your mortgage is cleared, invest in your own name
Best of luck,
Gordon
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