Moneymakeover 25 year old public servant

I

irishfirefan

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Personal details

Your age: 25
Your spouse's age: N/A
Partner's age if not married: N/A

Number and age of children: N/A

Income and expenditure
Annual gross income from employment or profession: 50000
Annual gross income of spouse/partner: N/A

Monthly take-home pay: 3000

Type of employment - e.g. Employee or self-employed: Employee
Employer type: e.g. public servant, private company. Public Service

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

Saving


Summary of Assets and Liabilities
Family home value: 215000
Mortgage on family home: 172000
Net equity: 43000

Cash: 10000
Defined Contribution pension fund: N/A
Company shares : N/A
Buy to Let Property value: N/A
Buy to let Mortgage:N/A

Total net assets: 10000 + home value


Family home mortgage information
Lender: Avant
Interest rate: 3.4%
Type of interest rate: tracker, variable, fixed: 4 year fixed rate until 2029
If fixed, what is the term remaining of the fixed rate? 4 years
If tracker, what is the margin e.g. ECB + 1%

Remaining term: (Original term is not relevant): 35 years
Monthly repayment: 700

Other borrowings – car loans/personal loans etc: N/A

Do you pay off your full credit card balance each month? No credit card
If not, what is the balance on your credit card?

Pension information

Value of pension fund: Single Public Service pension. Plan to start PRSA AVC as soon as possible (can contribute 10% max given existing public service pension). This will be invested into international equity fund at 0.75/1% AMC.


Other savings and investments:
5000 emergency fund

Other information which might be relevant

Life insurance: Mortgage protection insurance in place. Income protection in place.


What specific question do you have or what issues are of concern to you?

Advice regarding next steps given recent house purchase and assuming PRSA AVC contributions will start imminently.
 
irishfirefan said:
What specific question do you have or what issues are of concern to you?

Advice regarding next steps given recent house purchase and assuming PRSA AVC contributions will start imminently.
Click to expand...
Might be worth reviewing this key post.

Key Post - Overpay mortgage or contribute to pension or do something else?

This comes up in a lot of different threads, so I will set out some principles here to kick off the discussion. I will edit it in the light of feedback. There are many options with your savings in excess of your emergency cash fund Pay down your mortgage Build up a fund to enable you to trade...
www.askaboutmoney.com
 
You’re doing well; 25, earning 50k, public sector, home owner. That’s fine.

A few things that might be helpful to know – are you likely to get promoted? Move through the ranks. Some parts of the public service are better than others for career progression eg civil service, local authorities’ admin areas. Progression is very useful in terms of your pension scheme and career salary averaging.

Are you likely to stay in your current property? Would career progression require you to relocate?

Have you plans for big expenditure items – car etc.

Can you do rent a room? That could be an option for you; it’s easier to do rent a room at age 25 than in later years.

You could give a little more detail on the AVC allocation.

At 25, you should ensure that you enjoy life as well.
 
Thanks for those replies @Tuscany @ClubMan - I will read that key post linked above in more detail.

Regarding AVC allocation - my plan is to go via execution only broker to a fund such as Zurich International Equity at 100% allocation and 0.75% AMC. Initially putting in about 5000 per year, increasing as my salary increases.

Rent a room is definitely something I'm considering - likely could rent out two rooms at €100 per week which would go a long way to covering the mortgage repayments (and gives scope for overpayments etc)

No big expenditure planned in the near future. Likely to stay in the house for the next 5 years at least, but would look to trade up down the line.

Promotion not guaranteed, scope for this is relatively limited, however will get increments and pay rises annually.
 
Last edited:
Just to update with some further details on AVC allocation.

PRSA AVC with Royal London (0.6% AMC) 100% allocation. Paying 10% of gross salary per month into this (to take into account existing public service pension scheme contributions)

This AVC is invested as follows:
- 90% Royal London BlackRock Developed World Equity Index Fund
- 10% Royal London Emerging Markets Equity Index Fund
 
A very nice set of financials. Homeowner, decent mortgage rate, low AMC on PRSA AVC, and coherent allocation if 100% global equity is the goal.

I would prioritise career advancement and growing your income. That would let you intensify your monthly savings behaviour (10% of a bigger number, non-pension equities, mortgage overpayment), while also freeing up options to relocate home in future if desired and permitting some more discretionary spending.

Be confident that you have the risk appetite for 100% equities. Returns have been good for 10+ years, but there will be horrible bear markets (< -30% p.a.) too over the course of your lifetime. Will you stick with the strategy through these bear markets? If you think not, then revise the allocation.

No other notes.
 
Focus on paying down the mortgage, firing in overpayments early on makes a huge impact. Rent-a-room is a no brainer for you for a couple of years.

& well done - you clearly have your head screwed on ;)
 
You’re in great financial shape for your age and making all the right moves.

The asset allocation of your PRSA is spot on for your age.

The only thing that strikes me is your mortgage term seems unusually long. Nothing wrong with that, per se, but I would try and pay it down ahead of schedule if you find you have any spare funds.

And make sure to live life to the full - you won’t get your 20’s back!
 
Personally, I would not put 5,000 pa into an AVC, as tax relief at 40% will not be available on all of the 5,000.
 
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