Late 40's, toddler son, how to invest for the future

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Byzantium

Registered User
Messages
31
Personal details
Age: 49
Spouse's age: NA
Number and age of children: 2 year old son

Income and expenditure
Annual gross income: 95,000 + 15% Bonus
Monthly take-home pay: 4,200 excl bonus (joined company in Dec so bonus not paid yet) (this includes pension contribution of 1,000)
Type of employment: Employee
Employer type: Private company

Costs: Lifestyle costs: 800 (food/travel/insurance/utilities etc)
Mortgage: 900
Creche: 1200 per month
Leftover for saving: 1200

Summary of Assets and Liabilities
Family home value: 450,000
Share and own house with sister, tracker mortgage is 900EUpm. We have app190,000 left to pay. She is not prepared to sign paperwork to allow me to pay off mortgage for more ownership etc.

deGIRO: 80,000 value in ETF/stocks
Cash in Bank: 150,000
ETRADE: Company shares : have apps 270,000USD in trade stocks from past employments (preIPO)
PrizeBonds: 5K

Life insurance tied to mortgage
Death in service covered by employer (4 times salary)
Income protection covered by employer also

I have just created a will - trust with son as beneficiary.

Other borrowings – car loans/personal loans etc
No other borrowings
Credit card balance paid each month.

Pension information
Current Pension: Paying 1,000 per month (joined in Dec- so only started) company pays 6%.
Pension: Current value is 200k from past employments
Have 10 years UK pension secured

What specific question do you have or what issues are of concern to you?
  • How should I invest cash deposit in bank of 130,000? this is the key issue - I have no idea what to do - put it into deGiro? passive funds?
  • Should max the pension to 25% - will do that in April
  • How can I invest 3k pa for son via deGIRO
 
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Degiro did do accounts for minors in the past but due to increase in due diligence they stopped. Their may be a few other options but will need to be looked into fully.
Most pension and savings companies have products for parent to invest in behalf for their children.
One idea i'm toying with myself at the moment is using a portfolio/pie in Trading212 while the account is mine the pie will carry my sons name. The one item i need to clarify in my own head is how ownership when transfer when he gets to a certain age and if Revenue will accept that.
 
Philip S said:
Degiro did do accounts for minors in the past but due to increase in due diligence they stopped. Their may be a few other options but will need to be looked into fully.
Most pension and savings companies have products for parent to invest in behalf for their children.
One idea i'm toying with myself at the moment is using a portfolio/pie in Trading212 while the account is mine the pie will carry my sons name. The one item i need to clarify in my own head is how ownership when transfer when he gets to a certain age and if Revenue will accept that.
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I think you can call the pie what you like but its still your account, it was you that verified your id upon opening, theredore your money and associated liabilities
 
Byzantium said:
Share and own house with sister, tracker mortgage is 900EUpm. We have app190,000 left to pay.
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You have both a lot of cash and some debt and it would make sense to a bit less cash and zero debt. Think about it this way, you are lending to the bank at something like 1 per cent and they are lending the money back to you at 4 1/2%.

Byzantium said:
She is not prepared to sign paperwork to allow me to pay off mortgage for more ownership etc.
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Is the above living situation likely to change in the short term? Do you see yourselves in a decade’s time years with a teenager still living with your sister?

If this is a permanent living arrangement for all of you then you might want to look at giving your sister a personal loan so she can pay down her half of the mortgage quicker. I know this makes the arrangements more complicated, but you are already personally and financially entangled, so it doesn’t make a huge amount of difference.

Getting rid of your mortgage costs would free up to 20% of your net income overnight and give you a lot more lifestyle.
 
Not sure what you mean by trade stocks in previous companies pre IPO? Are you saying the 270k is invested in a concentrated 2 or 3 companies. Could this be divested into something broader (less risk).

See the thread on UK pension bonanza- you could top that 10 years up significantly at very low cost.

I would not worry about schemes like 3k per year into degiro for offspring - to me that is just pure hassle and admin, and maybe a nice idea when they are 14 years old, as an educational exercise. Far better to ensure your own setup is as efficient as possible so in 20 years you remain able to support them - be it college or getting on their own two feet. In simple terms, put that 3k into your own pension.

I am unclear on you home setup, is the family home the one you share with your sister, or is that a second investment? There is obviously a difference in views about paying off the mortgage - I'd like to ensure you are all clear on the long-term plan for ownership, who is living where, what are the exit options? If these things are not certain then it would appear to me the answer to where your cash needs to go will be property - to protect your long-term property interests/affordability.
 
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Thanks everyone for the replies, much appreciated. I will be living with my sister for the long term - she is a great help with my son and we do get on ok. I will look into paying off my portion. Being transparent here I am in tech and have had 2 layoffs the past 5 years with good severance packages, my sister is jealous about this. She knows I want to pay off mortgage and protect my lumpsum in doing so, she is being difficult.

I think I won't bother re the 3k Zurich/deGiro kids plan and will focus on my own plan. I will look into giving her a personal loan and will get all legally verified. I agree the funds need to be funnelled into property. I will top up my UK pension, would be ok to add another 10-15K in there.

Re stocks - I was awarded appx 200KUSD in previous employer stocks - the stock has fluctuated at a high of 90USD to now its averaging mid 50's. I agree I should look at selling some of this off and purchasing a more diverse porfolio.
 
I would strongly urge you to have an exit plan for the property in the medium term. Even right now you are saying things are a bit strained. What if even if everything is amicable one of you meets someone and would like to live alone with them? Your child will grow and while it's amazing to have her support you will need it less as he does and you might want your own family unit in time.
 
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Don’t loan to your sister. While I understand why posters are telling you to do this financially it’s a bad idea personally. You have enough exposure to her success or otherwise in life. Focus on having financial independence from her separate from the house. If you haven’t already put an agreement in place about the property and what happens if one of you wishes to sell
 
should I offload some of my ex employer stock - its apps 200K USD of a 230K USD portfolio? and diversify ?
 
Absolutely. That's a huge amount to have wrapped up in the same company. If that company has an issue tomorrow, your finances will take a massive hit. I would be selling all of it and diversifying into a portfolio of some description. With the amount you're investing, I'd get professional advice.

You say they're options and you mentioned 'pre IPO'? Have they fully vested? Or are they just that, options?
 
Options are fully vested and purchased. I will review forecast and next earnings call and try and sell 100K at the peak. Will see what other options I have, will get advice, thanks all.
 
Byzantium said:
Options are fully vested and purchased. I will review forecast and next earnings call and try and sell 100K at the peak. Will see what other options I have, will get advice, thanks all.
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Good idea to sell. Bad idea to try to time ‘the peak’. If you were successfully able to review forecasts & earnings to predict stock price movements, you would not need to be working a day job.

The reality is almost nobody can do this with any consistency.

If you’re worried about catching bad timing you could just sell down €20k on the first of each month for a year or whatever. Reverse dollar cost averaging I suppose.
 
Thanks everyone, great advice and I appreciate it. I spoke to my sister and we are going to pay off as much mortgage as we can - I will loan her also - no more than 20k and signed by solicitor. I want to help her out and being mortgage free would be great. I am going to start selling as per advice my stock portfolio - offload 50k from ex employer this year at least in stages and will look to buy Investment Trusts/equities etc. The remaining money to invest - I need to learn more and will take professional advice.
 
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