What to do now that I am mortgage free?

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confused87

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Just turned 37, mortgage free with couple of years. Have all the outside of house now finished so no more big bills. I am currently maxing out my avcs for my age and have over 100k in dc pot alongside DB care pension pot at current rates would give me 55k a year including state pension. I tend to buy everything with cash, cars etc as don't like loans and the interest but i am not sure if this is correct approach to life. Have no kids yet but planning to in next year or 2 all going well. Have approx 100 k sitting in the bank doing nothing as i am fully invested with my avcs so dont want buy more stocks and have salary of approx 160k a year at the moment.
Should i think about getting into property or just keep the cash in bank and use as i need? Is there any guaranteed schemes that i can put into for say 5 years with no access for guaranteed return as inflation eating away at savings?
Thanks for any advice
 
At age 37 you should be fully invested in the stockmarket.

It is the least risky long-term.
It is the simplest.
It's the most flexible.
And likely to give the best returns.

You should not borrow to invest in property.
  • You are already invested in property through your home
  • Interest rates are high
  • Borrowing magnifies the risk
  • Public policy is very anti-landlord

If you build up savings of €300k or €400k you could consider investing in property. But why would you take on that hassle and risk? As you are earning €170k you presumably are busy. And if have kids, you will be busier.
 
Not actually that busy being honest and now all house stuff is done less so. I work shift so im off 3 days most week. Essentially maybe keep 50k in current account and rest in stock market say follow my pensions top 10holdings, mostly tech as im in riskiest fund with Zurich passive global equity unhedged. I Wasn't that keen on stocks as already putting 20k a year through avcs.
No decent saving options or guaranteed return options after 5-10 years? Or would an etf following the s&p 500 be easiest and least risky.
 
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Heard this a few times, but you really shouldn’t consider more stocks as not being diversified. Just think about how diversified a passive global equities fund actually is - adding a single property in Ireland worth a few hundred grand is far, far more concentrating.

Also 50k in your current account, why? With no mortgage you could probably survive on jobseekers! You don’t need any more than 15-20k in cash in my opinion, and obviously it should be on deposit at least and not wasting away in your current account.
 
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Just reading more about etfs, 41% tax on gains is massive but still better then leaving inflation eat away in my current account. Is there any easy way in Ireland to buy a etf that tracks the s&p500 or an investment fund like JPM. I want something easy to manage and easy to put in money monthly maybe 20k a year, and doesn't rely on me picking individual stocks. I still like the security of having some sort of decent bank account hence the 50k figure.
 
If you buy a property with a loan, you might well need to keep money rotting away in a bank account.

But if you buy shares, you don't need cash in a bank account. If some disaster happens, you can sell the shares.

If you have a pension fund heavily invested in stocks, then you can buy one or two stocks directly and remain well diversified.

For example, you have €100k in equities through your pension. You have a valuable defined benefit pension fund - let's say it's worth €200k. You have a house, probably worth €600k. You have €100k cash.

You do not need to buy 100 stocks with the €100k cash. Consider the diversification of your total wealth of €1m.
So if you buy two blue chip stocks at €50k each and one of them collapses the following day, you would be losing only 5% of your total wealth. Not nice, but not a disaster.

So buy two stocks. Then when you have saved up another €50k buy a third stock, etc.
 
At a minimum, you should move a good chunk of your after-tax savings to a decent fixed-term deposit. Leaving €100k in a current account earning nothing is unwise.

Are you married? If so, is your spouse maximising their pension contributions?

Also, are there any improvements you could make to your home to make it more energy efficient?
 
Sarenco said:
At a minimum, you should move a good chunk of your after-tax savings to a decent fixed-term deposit. Leaving €100k in a current account earning nothing is unwise.

Are you married? If so, is your spouse maximising their pension contributions?

Also, are there any improvements you could make to your home to make it more energy efficient?
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Not married yet, but but partner is contributing to her own DC pension. No house has solar panels and UFH with heat pump so all good there.
 
Brendan Burgess said:
If you buy a property with a loan, you might well need to keep money rotting away in a bank account.

But if you buy shares, you don't need cash in a bank account. If some disaster happens, you can sell the shares.

If you have a pension fund heavily invested in stocks, then you can buy one or two stocks directly and remain well diversified.

For example, you have €100k in equities through your pension. You have a valuable defined benefit pension fund - let's say it's worth €200k. You have a house, probably worth €600k. You have €100k cash.

You do not need to buy 100 stocks with the €100k cash. Consider the diversification of your total wealth of €1m.
So if you buy two blue chip stocks at €50k each and one of them collapses the following day, you would be losing only 5% of your total wealth. Not nice, but not a disaster.

So buy two stocks. Then when you have saved up another €50k buy a third stock, etc.
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I Wouldn't be confident enough to pick 2 stocks and just invest in them, i would be constantly checking them and it isn't worth the worry. I would like to find some fund that tracks the major indices that is easy to manage and easy to put in money monthly on top of maybe initial investment of 50k. Is there anything like that in Ireland?
 
Some index tracking ETFs and unit linked funds do what you're talking about but the charges and taxation are much worse compared to direct equity investments. @Brendan Burgess has already explained why direct equity investment might be a better idea in this case. If you're worried about investing in one or two shares then maybe consider large diversified conglomerates like Berkshire Hathaway and similar companies. For example, if you invest in BH then this is the sort of thing that you get:

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Berkshire Hathaway Asset Allocation: What’s Inside a Share of BRK.B?

Whether you are a Berkshire Hathaway shareholder or just curious about what Warren Buffett’s “masterpiece” looks like today, here is an interesting graphic from Sherwood News. Ess…
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Other comparable conglomerate companies would offer similar asset allocation diversification.
 
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Any bank investment funds here that is mostly equities? I Was meant to meet investment manager last year in aib but had to cancel and never rescheduled. Really not comfortable buying just a couple if stocks.
 
I wonder actually if your best option might be to front-load pension AVC’s and then claim the tax relief in future years when costs are a little higher (ie when kids arrive!) and you may want/need to reduce contributions. Given your high income and low outgoings it should be safe enough to tie this money up in a pension wrapper, especially if you don’t intend to reduce your available rainy day cash below 50k.
 
confused87 said:
Any bank investment funds here that is mostly equities? I Was meant to meet investment manager last year in aib but had to cancel and never rescheduled. Really not comfortable buying just a couple if stocks.
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There are lots of unit linked, UCITS and similar funds that invest in equities or track market indices. The charges and taxation are much more onerous compared to direct shareholdings though.

An AIB "investment manager" is almost certainly only going to push AIB's own products. If you want independent investment advice then talk to an independent advisor.
 
If it were me I'd open an account with Trade Republic or similar and put the money into a Vanguard accumulating ETF.

VUAA would be what I'd look at. It's essentially VOO (US) and tracks the top 500 companies on the S&P500.
 
Persia said:
If it were me I'd open an account with Trade Republic or similar and put the money into a Vanguard accumulating ETF.

VUAA would be what I'd look at. It's essentially VOO (US) and tracks the top 500 companies on the S&P500.
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That sounds exactly like what i want. Would davy stockbroker do anything similar? Is the tax on ETF essentially 41% on any gains?
 
ClubMan said:
There are lots of unit linked, UCITS and similar funds that invest in equities or track market indices. The charges and taxation are much more onerous compared to direct shareholdings though.

An AIB "investment manager" is almost certainly only going to push AIB's own products. If you want independent investment advice then talk to an independent advisor.
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Do you mean onerous as in i have work to do and how much more severe are the tax implications, is it 41% vs 33 cgt essentially?
 
You don't need Davys to buy this. It would cost too much to go through them

Set up an account with Trade Republic or Lightyear or similar. Transaction cost on ETFs.with lightyear are virtually zero. Ÿou can download the app.

Annual management fee is 0.07% with no hidden extras.

Yes 41% on gains, this is being reviewed by finance minister but don't hold your breath.

Do your own research maybe a worldwide ETF would suit better.
 
Persia said:
You don't need Davys to buy this. It would cost too much to go through them

Set up an account with Trade Republic or Lightyear or similar. Transaction cost on ETFs.with lightyear are virtually zero. Ÿou can download the app.

Annual management fee is 0.07% with no hidden extras.

Yes 41% on gains, this is being reviewed by finance minister but don't hold your breath.

Do your own research maybe a worldwide ETF would suit better.
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Cheers, think i will do that, reckon i will just do a vanguard ETF tracking s&p as familiar with us stocks, is the VUAA essentially that?. Can you setup monthly amounts to go directly into the ETF then?
 
VUAA is accumulating meaning the dividends are reinvested, much cleaner.
No idea about set up of recurring monthly amounts but can be done manually, only takes a few mins.
 
Relevant for OP but also interested myself. How would people feel about having a few hundred k in an online brokerage?

I know they do ‘custody’ accounts where technically your assets are separately held in your name but wonder how that would actually pay out in practice.

Setting up multiple accounts across multiple brokerages would be an admin headache
 
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