What to do with 1500 per month

Yes I do admit I neglected the pension but it's only since I started browsing this site that I realized that pension investing was the way to go . I sold a house a few years ago, thats why I have the large amount of cash but it also gets added to every month even after maxing my pension
 
I’m approaching a similar stage too, late 40s PAYE, maxing pension (c800k equities), in final 6mths of paying off mortgage which I’ve agressively paid down so I’ll have c2k a month to re-deploy with a hope to down gear on work in 5 yrs so I won’t have that level of disposable income after that. Same conundrum on where to put extra 24k pa over next few years?
 
Sarenco said:
The OP finds himself in his early 40’s, mortgage free with a modestly sized pension and material cash savings.

In most circumstances, that’s just bad financial planning.
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I dislike the paternalistic philosophy associated with the auto enrolment plans for pensions.

On the other hand, it will tend to reduce the likelihood of the scenario you described above occurring.

Nerak14 said:
I’ll have c2k a month to re-deploy with a hope to down gear on work in 5 yrs so I won’t have that level of disposable income after that.
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Would you consider making the pension contributions anyway? You can avail of the tax relief in future years, when your income is lower, and you are no longer making the same level of contributions.
 
That’s a great position in your late 40s.

Bear in mind that the level of tax-relieved pension contributions you can make will increase by 5% in the year you turn 50.

Beyond that, I would keep your pension 100% invested in equities and build a cash lump sum with your after-tax savings.

IMO it’s prudent to have 10 years’ worth of anticipated expenses in cash at retirement.
 
Why would you advise building a cash position? All he needs is a small emergency fund and the rest should all be put maxing pension and then maxing after tax investments like into an Investment Trust. Why would you not want to use a vehicle that can grow your wealth and instead lose money by holding it in cash?
 
Fisoon said:
Why would you advise building a cash position?
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To mitigate sequence of returns risk when spending down a portfolio.

I don’t think anybody should be 100% in equities in the run up to retirement.
 

All investments will have currency risk, unless you restrict yourself to eurozone equities...which would be a made thing to do. Taxes are payable in all scenarios too.

Brendan suggested in the first reply to build up a lump sum and pay that in. You have €100k in cash anyway, so start with a lump sum out of that and build it back up. One lump sum a year isn't hassle.

If it is, outsource the tax to a life company. Yes, you pay more but you don't have any hassle with taxes, it is all down for you.



Steven
www.bluewaterfp.ie
 
For the avoidance of doubt, I was suggesting that if someone had a basket of global companies, ‘you wouldn’t swing for them’. Other than that, I agree. I don’t get the obsession with being mortgage free. I have priortised pension funding over mortgage overpayments.

@Sarenco, I agree with you on sequencing of return risk, but I’d keep five years’ expenses in cash, not 10. 10’s too conservative in my view.
 
it would really help people if they were taught about pensions in secondary school. I knew nothing about them until a short while ago
 
After careful consideration of all the opinions I have decided just to continue maxing pension until I retire and just saving the rest as cash. I don't think I have the personality for investing outside the pension and by maxing it out I should have enough in retirement along with the cash reserves

I'll be keeping it fully in equities to hopefully give it the bump it needs to catch up

Thanks all
 
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A question for the forum. Would it not be better to invest most of the savings into your pension over and above the limits as it will compound tax free?
 

In that case do you have a spouse with scope for extra pension contributions?
 
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