2nd btl, avcs or other alternatives?

Narek14

New Member
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Hi

I'm mid 40s, have €360k mortgage on PPR at 2%, house value €500k, 20 yr remaining.
Also have mortgage free btl worth €320k earning c9k pa after tax
Pay into DC pension up to tax deductible limit.

Now have €100k unallocated cash and not sure what to do with it. Not minded to overpay mortgage given low rate and want to maximise income earning assets i will have in 15 yrs time. Was looking at dilosk btl 3.95% 200k loan on 300k btl with accelerated payments I could have paid off in 15 yrs.
Think I have enough share exposure through pension investments

Thoughts?
 

Gordon Gekko

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3,643
Have you enough cash savings elsewhere for a rainy day?

Assuming you do, I’d throw the €100k at your home mortgage; it’s a guaranteed after-tax return of 2% which just doesn’t exist in the current environment. Plus you’re already quite exposed to Irish property.
 

Narek14

New Member
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3
Have rainy day fund in state savings certs

Understand suggestion to put spare cash against mortgage (did this in the past) but would like to consider options that maximise income generation in c 15 yrs as I'd like to reduce working hours in my mid 50s and want to bridge to pension at 60
 

Marc

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1,046
Is your pension worth €1m and 100% equity?
If not how do you have “enough” share exposure but not too much property exposure?

I’ve been living in Ireland 10 years and I’m still floored when people think buying more property is the answer to their investment questions.

An equity portfolio is a perfect solution for savings over a 15 year period surely?
 
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Narek14

New Member
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3
Marc

I have 500k equity based pension that should grow with contributions and reasonable returns to the €1m you suggest in the next 10 years

My focus is investing 100k now in assets that could generate income for me between age 55 and 60
 

Marc

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Perfect. So, you have a €1m "headroom" for pension growth to keep within the €2m punitive cap.

I'd consider either buying an equity portfolio outside the pension (we have built three versions) and compare that with making additional PRSA AVC contributions over and above the tax relieved amounts.

Compared to exit tax, the PRSA AVC (without income tax relief) looks like this to age 57

4004


4005


You would defer your occupational pension for as long as possible and drawdown the tax free lump sum and ARF income to keep within your 20% tax band and bob's married to your aunty sue

Naturally, there is more to it than that, but in principle worth a deeper dive

Marc Westlake
Chartered Certified and European Financial Planner
www.globalwealth.ie
 

cremeegg

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2,949
I’ve been living in Ireland 10 years and I’m still floored when people think buying more property is the answer to their investment questions.
Well the OP is getting 2.8% after tax on property at the moment. With the possibility of capital appreciation. And higher yielding property is available.

Sorry Marc, I know you believe that shares are a better investment than property, but that is after all your business.
 

Gordon Gekko

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3,643
Buying shares in one’s own name whilst carrying debt is generally unwise. My strong sense is that deleveraging by throwing money at the mortgage is the right move.
 
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