What to do with cash reserve given changed circumstances

LJS1979

New Member
Messages
6
Hi all,

I’d be interested in people’s views on our current situation. We have moved to the US for a number of years (3-5) as my spouse was offered an international assignment. Our intention at this point is to return to Ireland but I guess you never now (he is a bit of a homebird). We had intended to move house in Ireland and had built up a decent cash reserve to fund this - we put this plan on ice given the move and now we are wondering about wha5 to do with the cash.

Age - 41
Age of Spouse - 41
Two children, ages 4 and 2.

Overview of current position

Salary - n/a at the moment but hope to get working in the new year once EAD comes through
Salary Spouse - 85k plus bonus of 10k, this is supplemented with various allowances while we are abroad (thankfully as it is really expensive)

When I go back to work we should be able to save 70k a year hopefully for the period we are here.

Cash in various Irish Bank Accounts - 350k
Shares - 150k

Pension
Me - Deferred DB Benefit of 7k pa and DC pot of 300k
Spouse - Accruing DB benefit (10k p.a accrued) and DC pot of 80k

We have rented out our house while we are in the US and do not intend to go back to it - open minded about keeping it longer term. If we can hold on to current tenant It would be a runner.

We purchased in 2005 for 370k - thankfully on tracker of ECB + 0.95% over 35 year term
Current Value estimated at 280k-290k with 260k on mortgage

Monthly Rent less Management Fee and agent Fee - 1,270 per month
Mortgage - 1,100 per month

We Would welcome peoples views on what to do with the 350k in cash. Some options we had been considering
1. Buy a house anyway given we don’t intend to go back to current house-not really inclined to do this for a few reasons (what to do with it until we get back and what if we don’t get back)
2. Buy a house in the US - possibly a runner but costs of EA are very high here so putting me off
3. Drip feed into equity markets over period of time

Thanks
LJS1979
 

Easel

Frequent Poster
Messages
171
What is your current accommodation situation in the US? Are you renting? How much p/m and how long is the lease?

What is your salary likely to be when you are in a position to work? Will it be difficult for you to get a job?

Current Irish home- Keep this as the tracker is very good and you have good tenants.

1- I wouldn't buy in Ireland if you intend on being in the US for 3-5 years. Your existing property is exposure enough to the Irish property market.
2- For me this would be dependant on how long realistically you intent to be in the US. if its 3 years you will have significant costs buying and potentially selling again in the medium term. If its over 5 years them my view might change slightly towards buying but. The ages of your children would significantly influence this decision for me. They will be settled in school and will have to be uprooted either way.
3- 3-5 years is not a relatively long time to invest in volatile markets. If you have your pensions heavily weighted in equities you will have good exposure for the markets for presumably 20+ years

If I was in your shoes I wouldn't be making any significant financial commitments until you have put some more thought into how long you intend to stay in the US. There is too much up in the air at present. Perhaps consider spreading the money into the highest interest rate accounts for 1 year after which you may have a better idea on what you want to do.
 

LJS1979

New Member
Messages
6
We’re renting at the moment, two year lease but with a break option in April. It’s expensive enough area - rent is 4K a month and it’s a fairly small detached house. Houses prices are also expensive although probably not as bad as Dublin on the upfront cost (same house would probably sell for 650k).

Property tax is outrageously high at 2% p.a. But you get good services for it - as I understand this can be offset against income tax so not so bad while working.

I hope that work will be ok to find but am really only start8ng out down that path now - would expect to be on 120k or more p.a.

I agree with broad sentiment that it’s not a great idea to buy until we are a bit clearer on length of stay. Pensions are equity based - aim is to max contributions from now.

Anything to be said for paying off some of mortgage with excess cash. I’d probably prefer to keep cash for future flexibility - sorry probably talking out loud there.
 

LJS1979

New Member
Messages
6
Hi all,

I’m back looking for some further advice / views on this topic.

The main updates from the previous post
1. We’ve decided that we definitely won’t be staying in the US long-term but will be here for another two to four years. All the recent stuff has helped us understand just how broken the system is here despite us enjoying our life at the moment.
2. Our liquid cash is approx EUR 600k with it split approx 440k cash and 160k shares. Our DC pension is roughly unchanged.
3. Both parents now working - expect to be able to save 90k- 100k a year after maxing pension contributions

We are planning to keep old PPR as investment over the long-term given low tracker. As a result we will need a new home when we move back. Given short time frame, cash seems the best home despite the zero interest rate.

Anything we’re missing? Should we try and purchase over the next 12 months if a “bargain” appears?

Thanks
LJS1979
 
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