Brendan Burgess
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Yes, but with a lot less spam!
Trying to scramble a retirement together
- Thread starter speedtomyside
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Yes, but with a lot less spam!
speedtomyside
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Thanks to the recent posters. Those are the kind of reasonable, balanced suggestions I was hoping for! I would like to hang on to Bitcoin - i feel it will appreciate more than 4% per annum - but the pension is a priority too. At least the ball is finally rolling on that. Something to think and talk about over Christmas I guess...
+1 on sell a portion and put into AVCs and/or reduce PPR - especially if at 4% or higher rate on your mortgage.
I hold crypto but single digit portfolio %s, having 40% would be too risky for my appetite. And its not just the valuation risk, exchanges are hacked and crypto wallets are lost.
I hold crypto but single digit portfolio %s, having 40% would be too risky for my appetite. And its not just the valuation risk, exchanges are hacked and crypto wallets are lost.
Leaving aside the BTC stuff for a moment and going back to your original questions on penions
How is your €80k income split? I'm presuming your spouse is a state employee if she has a future DB pension. If you are jointly assessed you shouldn't be paying tax at 40% income tax so you will be saving 20% IT on your contributions.
If you have set this PRSA up by yourself, what are the fees? This may be an unpopular opinion but if you were only getting a 95% contribtion rate and AMC of >1%, I'm not so sure about the value this represents for you. With the IT saving, you are contributing €80 and €93-95 goes into the pension. And you will be paying some level of tax on drawdown eventually.
I don't think that represents enough value to lock away the money and lose access to the capital. That's not to say you shouldn't plan for your pension but that may mean accumualting more outside the pension wrapper or boosting your spouses DB pension with AVC's if that is possible. Even the AE pension (which I know little about) would probably be more beneficial to you than a private PRSA
Leaving aside the specific BTC elements of the argument, you need to at least acknowledge that you are taking fairly huge gamble with this holding. Putting that amount of your wealth into a single asset/investment/bet is generally not wise. All of you arguments to defend your position are gamblers fallacy
If you want to take that risk then that is fine but at least acknowledge it. BTC has nothing to do with your own risky financial bet, it is just the medium through which you are taking risk
I think you mentioned your eldest is ~13 so you may be looking at 3rd level costs in the next 5-6 years. Being mortgage free now will go a long way to facilitating the extra costs when they are
How is your €80k income split? I'm presuming your spouse is a state employee if she has a future DB pension. If you are jointly assessed you shouldn't be paying tax at 40% income tax so you will be saving 20% IT on your contributions.
If you have set this PRSA up by yourself, what are the fees? This may be an unpopular opinion but if you were only getting a 95% contribtion rate and AMC of >1%, I'm not so sure about the value this represents for you. With the IT saving, you are contributing €80 and €93-95 goes into the pension. And you will be paying some level of tax on drawdown eventually.
I don't think that represents enough value to lock away the money and lose access to the capital. That's not to say you shouldn't plan for your pension but that may mean accumualting more outside the pension wrapper or boosting your spouses DB pension with AVC's if that is possible. Even the AE pension (which I know little about) would probably be more beneficial to you than a private PRSA
Leaving aside the specific BTC elements of the argument, you need to at least acknowledge that you are taking fairly huge gamble with this holding. Putting that amount of your wealth into a single asset/investment/bet is generally not wise. All of you arguments to defend your position are gamblers fallacy
No it is not, you literally have ~€52k net of CGT.
Hindsight is wonderful, I can pick any asset or sports event and say 'if only I put €xx into it". Equally if it tanks and doesn't recover you will be kicking yourself
No your loss is not limited to €15k. For accounting reasons you would carry a €15k loss for CGT but right now you could cash this in and have €52k net of CGT. That is real money that you have right now but you choose not to take it off the table. You may have started with €15k but your current bet is €52k. If your cash position was €150k today, would you put €50k into a single investment?
I don't care whether you hold BTC or not but the insecurity here is mainly yours. It's been pointed out that you hold too much wealth in one thing which also happens to be very volatile. You've dragged up the belief and faith arguments in BTC to justify your position. If this was a €70k holding in any other single share you would get the very same response.
If you want to take that risk then that is fine but at least acknowledge it. BTC has nothing to do with your own risky financial bet, it is just the medium through which you are taking risk
You have approximately €160k in cash, ETF's and BTC (net), You could be mortgage free tomorrow with €50k leftover. This frees up €800 per month for whatever pension vehicle you choose. That is not a bad place to be for your age and income.
I think you mentioned your eldest is ~13 so you may be looking at 3rd level costs in the next 5-6 years. Being mortgage free now will go a long way to facilitating the extra costs when they are
Well, advice regarding speculative bubbles hasn't really changed in 22 years.this place is like something from 2002?
speedtomyside
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I meant the site itself but the founder says it’s anti-spam measures.
It can hardly be called a bubble when it keeps bursting and reforming itself over 15 years surely.
To the poster with the lengthy response above, thanks. Paying off the mortgage seems a bit excessive as it’s unlikely we’ll save €80000 in the next 5 years to replace the college fund (even that mightn’t be enough for 2 kids). Being debt free would be nice but it is serviceable.
There’s a lot to unpack in your post,appreciate the advice. I’m visiting my mother at the moment, I’ll get back to your points later!
Dr Strangelove
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You don’t need a “college fund”,
You simply need to be able to fund your kids through college and having a lower debt to service helps here.
People often suffer from the mental bias of putting their wealth into separate mental or physical accounts and not realising that it’s all part of a big pot.
You are particularly prone to this and it will cost you in the long term.
speedtomyside
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I guess. The mortgage has always been ‘background noise’, not really thought about, but paying interest when you don’t have to is a bit daft when that money could be going into Bitcoin (or something else
)speedtomyside
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The trick - if you can call it a trick, it's obvious - is to buy hard in those bear markets. Setup an auto-buy and buy some every week. Most people fomo in around the top and then sell at the first steep drop as they think 'This must be it. It's finally going to zero!". I'm not sure it will be as volatile going forward though. The four year cycle is predictable now but it's hard to pick an exit point. I should have sold at $108k (my bitcoin was worth €77k) but at the time that wasn't my mindset, now I want to be sensible it's roughly $94k and my bitcoin is €68.5k ...that's the way it goes.:max_bytes(150000):strip_icc()/bitcoins-price-history-Final3-56d81947a532495ea0b0c3b41e880a8a.png)
I've nothing to say on bitcoin except that I remember feeling that I'd missed the boat when it was at about 1% of its current value about 10 years ago.
BTW the vertical scale is logarithmic which makes the rises and falls look an order of magnitude smaller.
(Edit ~8 hours later, my holdings are back up to €71.9k…you get used to the ground always shifting beneath you.)
Much as I am emotionally attached to my Bitcoin, after considering the views of this forum I am probably going to sell a chunk of the Bitcoin to pay down the mortgage and when the first 'tranche' of state savings matures (60k+interest) in a couple of years using that to pay the balance. Or should I just take out the €60k and pay it now without interest? I think the interest was 5% on the bond, cant seem to find out how much we get back exactly and whether it works out at more than the interest we'll pay on the mortgage.
I'll probably follow the advice of the person who said to keep 10k of Bitcoin. It's enough to benefit from loco upside but not enough to topple my retirement if goes down and doesn't recover.
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Dr Strangelove
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It depends a bit on the interest rate differential. I wouldn’t pay a mortgage at 3.7% but keep savings at 1.7%.
But if it’s 3.0% DIRT free on savings you’re not losing much by holding on and it’s basically insurance against an unexpected life events.
Finally - and I’m signing out for Xmas soon - you and spouse should both consider some level of income protection against serious illness if it’s not provided by your employer. Your household would be in big financial trouble if one of you was unable to work permanently. You get tax relief (although not much) on income protection premiums. €20 a month each would buy a fair bit of cover - prices have come down a good bit since 2022 with rising interest rates.
speedtomyside
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Thanks, she does have income protection alright! I'm self-employed so I've been walking the tightrope for years.
I'll need to find out more on the SS. I think the first batch was 5% and the second was 3%.
Dr Strangelove
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I disagree. I think he’s a creature of a totally different ecosystem and has never been exposed to good arguments as to why his crypto holdings are too large for his circumstances.
Seriously there is a whole world of podcasts and people on X who talk about crypto all day long. Most of the OP’s arguments come from there.
OP doesn't seem to know that the same arguements would be made against any large percentage of their net worth being invested in one asset. Doesn't matter if it's shares in Amazon, Nvidia, Apple, a house in Listowel, gold, tulip bulbs or tinned food and bullets.
Dr Strangelove
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True but crypto is uniquely volatile and generates no income.
In money makeovers I am consistently surprised how much I see of it as a % of pretty modest wealth
A house in Listowel might drop 60% in value but will always have a rent >€0.
Me too @Dr Strangelove . Reading back through this thread, the OP regurgitates all the usual Bitcoin arguments in great detail and at the same time does not know how much his mortgage is or how much interest he is getting on his State Savings.
I've had discussions with several people I work with. Normal, rational, intelligent people who are definitely suffering from confirmation-bias when they talk about crypto. I am amazed how many people in their 30s or 40s are invested in crypto currencies, some for the long term, some day-trading.
That's not to say that I think crypto will crash, or not. I don't know either way.
What I do know, is that if the OP's crypto expectations come to pass, he will have more than enough for retirement. If it does not, it will put a major hole in his plans. It's a very volatile position.
I could put on a blindfold and cross the road 15 times and not get run over. Just because something worked on the past, doesn't mean it will in the future. You need to look at the circumstances as well.
So my only advice to the OP is to learn about finance. Not just about one subsection of a niche area. Learn about sequence of returns risk, about diminishing marginal utility, and diversification for example.
To be fair to the OP, he does seem to accept the risk of having a big chunk of his wealth in a single very volatile investment. He has been smart enough not to go all in on Bitcoin and he is even talking about reducing his Bitcoin exposure to ~10k. Mind you - the suggestion to wait until his state savings mature in a couple of years smacks of a gambler wanting just one last bet.
So I don't mean to have a go at the OP as much as the approach in general
However, there was just one comment from the OP that I think was bit of a strawman argument.
I don't like strawman arguments. People with a good argument don't need to resort to strawman arguments.
speedtomyside
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Noted!
I’ll freely admit I’m a financial dunce, I’ve never really thought about it too much beyond
1. Saving for a deposit
2. Saving for kids education
After that money in, money out.
In fairness there was an antagonistic edge to a lot of the ‘advice’ I was being given about Bitcoin from people who also admit they don’t have much grasp of the subject beyond parroting stuff about tulips, intrinsic value and going to zero.
As alluded to by Dr. Strangelove (I think it was) we’re talking at each other from inside two separate bubbles I think
I’ve never been a gambler. Im ‘overinvested’ in BTC because I’ve just watched the numbers go up on the screen over the span of 7 years. We’ve also saved €45k in that time while feeding 3 mouths (plus two cats
) so it’s not like I’m that reckless really. My pension was always my blind spot though and I do appreciate the help being given regarding that and the mortgage.I think a poster misunderstood there earlier, I intend to pay approx 50k off the mortgage in January - if Bitcoin holds its value enough - and then pay it off fully with the state savings in due course.
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A volatile bubble and a stable bubble, as it were.We’re talking at each other from inside two separate bubbles I think