Where to invest

anon123456

New Member
Messages
4
Age: 36
Spouse’s/Partner's age: 35

Annual gross income from employment or profession: 105,000 + bonus
Annual gross income of spouse: 83,000

Monthly take-home pay: Approx C.8400

Type of employment: Both Private

In general are you:
(a) spending more than you earn, or
(b) saving?
Saving

Rough estimate of value of home: €700,000
Amount outstanding on your mortgage: ~€60,000 (overpaying so will be gone by summer 2021)
What interest rate are you paying? 2.3% fixed

Other borrowings – car loans/personal loans etc: None

Do you pay off your full credit card balance each month? Yes
If not, what is the balance on your credit card?

Savings and investments: ~€40k
Savings €15k C. 1% interest
Investments C.€ 25k Put €20k across 2 EIIS schemes (should get back €13k In Q1 2020 (confirmed)) and €13k in Q1 2021 (Currently on track) so should be around €25k back after tax (iv already gotten back €6k in tax) all going well

Do you have a pension scheme? Yes, I am putting in 20% Employer 7% (Balance C.€218k), Wifes employer is putting in 15% (Balance €94k)

Do you own any investment or other property? No

Ages of children: 2.5

Life insurance: 4 times salary by employers. Also have income protection from employers 66% of salary, my wife is the same.

What specific question do you have or what issues are of concern to you?
We have been very focused on becoming mortgage-free over the last few years, putting all spare cash into our mortgage and being relatively frugal on our day to day expenses, with the addition of a redundancy payment and some investments that have worked out that’s going to happen next year (yay). So now we are going to have some spare cash for investment.
My wife is hoping to work a little less (4 day week) and spend more time with our little girl. Im estimating I will have around €1800 PM to invest in something (my wife is going to use her extra money for her pension + taking time off).

We may decide to move house down the road for a bit more space, our current house is sufficient really so we haven’t decided and we may have another child in the next couple of years. We are also looking to replace the car in the next 12/24 months (€8-10k Budget) no other planned expenses coming up.

I would like to have the option to retire at 55, but I like what I do so this may or may not happen.

Should I contribute above the tax-free limit into my pension for investment?
Iv ruled out an investment property, due to the hassle of managing it and potentially higher returns in the stock market.
Iv looked at EFT’s but the tax situation is making it a bit of a pain to track. I also don’t want to spend a huge amount of time managing it.
 

RedOnion

Frequent Poster
Messages
4,436
Are both your pensions in 100% equities?

I will have around €1800 PM to invest in something (my wife is going to use her extra money for her pension + taking time off).
Do you treat your money as pooled, or 'his & hers'?

Wifes employer is putting in 15% (Balance €94k)
How much is your wife putting in? Is hers an occupational pension or a PRSA?
 

anon123456

New Member
Messages
4
We only pool our money for shared expenses house/child/holidays etc. Day to day we keep our own funds.

Currently, she is not putting in anything (she is the spender) she is going to start contributing 5-10% and take a day a week off for a bit. Its an occupational pension
 

Brendan Burgess

Founder
Messages
40,583
Should I contribute above the tax-free limit into my pension for investment?
No, you should not do this. You have plenty of time to contribute to your pensions.

Your wife should be maxing her pension contributions with either her own money or "your" money.

You should realise your investments and clear your mortgage now.

With two of you working, you don't need to be borrowing money at 2.4% to put it on deposit at 0%

Don't worry about trading up at some stage in the future. When your plans firm up, you can reduce your pension contributions and save for the trade up.

Brendan
 

anon123456

New Member
Messages
4
Thanks for the advice, but once the mortgage is paid off where would I put additional money? Should I directly invest in something? Or do it via the pension?
 

anon123456

New Member
Messages
4
As a family, the best place to invest is your wife's pension.
Including putting in 20% backdated to last year, and starting 20% per month straight away.
I hadn't really thought much about that, but it does make sense. I will still have funds left over after that, so what's the recommended investment path after that?

These are the options I can see
1) ETF. this would be my preferred option, but tax is a bit of a pain outside a pension.
2) Trusts, iv seen this mentioned on AAM a bit an seems to be the best option in Ireland
3) Direct shares/bonds, requires more management
4) What have I missed/

You have plenty of time to contribute to your pensions.
That must be the first time you said that :)
Based on my calculations I would need around €1M to provide me with 30k per year in todays money (increasing by inflation 2% PA) with an investment return of 5% and a 4% withdrawal rate. I think I should be on track for retiring at 55, with the above contribution rates.
This excludes taking a lump sum and ignores the state pension, as I have no idea if that's going to exist in 20 years
 
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