Moneymakeover Early 30’s looking to build financial plan.

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AlmostSorted

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Personal details

Your age: 32

Partner's age if not married: 29


Number and age of children: 0


Income and expenditure

Annual gross income from employment or profession: €90,000

Employee share scheme: €9,000 (10%)

Bonus: €15,750 (17.5%)

Dividends: €2,000

Rent a room relief: €13,800 (2 rooms)

Total: c. €130k

Annual gross income of spouse/partner: €60,000


Monthly take-home pay: c. €8,000 (salaries only)


Type of employment - Employees (Engineer & Legal - both recently qualified)

Employer type: Private Sector Companies


In general are you spending/saving: Savers (c. €3,000 p/m)


Summary of Assets and Liabilities

Family home value: €430,000

Mortgage on family home: €330,000

Net equity: €100,000


Cash: €50k (€15k & €35k)

Defined Contribution pension fund: €75k (€65k & €10k)

Company shares: €40k

Index Funds: €275k (€175k Zurich Prisma 5, €100k Vanguard passive global equities)

Total net assets: €540k


Family home mortgage information

Lender: EBS

Interest rate: 3.2%

Type of interest rate: fixed

If fixed, what is the term remaining of the fixed rate: 3.5yrs

Remaining term: 34yrs

Monthly repayment: €1,325


Other borrowings – car loans/personal loans : No other borrowings


Do you pay off your full credit card balance each month: No credit cards


Pension information

Value of pension fund:
  • €65k started 3yrs ago. 5% EE contribution + 15% AVC & 10% ER. Invested in 100% passive equity fund.
  • €10k started 0.5yrs ago. 5% employee contribution & 5% ER.
Other savings and investments:
  • RSUs with employer. Offering 1:1 match on annual purchases (capped at 10% base salary). Currently holding c. €40k in total.

Other information which might be relevant

Life insurance: x4 times salary (€360k)

Mortgage protection: aligned with mortgage term and balance

Income protection: 2/3s final salary. None for partner.

Wedding upcoming in 2026: Cost of c.€50k


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

Long time observer of this thread and thought it would be helpful for us to get some insights from others on what they would advise if they were in our position again.

We’re both recently qualified professionals, commuting to work in Dublin. We’re living together for the past number of years and planning a wedding for later this year, with the view to start a family in the coming years.

I’d really appreciate some insight on how we can best set ourselves up for long term financial success as we move into what’s hopefully a busy phase of our lives with some potential unknown changes.

Should we be aiming to clear the mortgage with excess funds or leave inflation to do heavy lifting on mortgage and continue to allocate funds to index funds?

I’m maximizing pension contributions, with partner aiming to do the same after wedding. Are we too focused on pensions? Do have sufficient protection polices?

Any advice at all would be greatly appreciated.

Thanks for taking the time to read.
 
I’d suggest maxing pensions and pay down a chunk of the mortgage (possibly at the end of the fixed period by selling investments held outside the pension).

Apart from saving the 3.2 % interest (from you’re after tax income), there is great piece of mind with having a smaller mortgage, I’d keep repayments the same so you just reduce the term.

That’s unless you have something else earmarked for the cash, apart from tax relief on pension contribution any investment growth is tax free too

Can you put bonus towards buying employer shares in a tax free ( employee share on some way e.g. share ownership ship plan for example?) worth continuing if so.

Btw you’re earning a very efficient income from rent a room

I am not seeing any major gaps in insurance. Maybe reassess if kids come on the scene in the future

At your age I’d go 100% equities and wouldn’t bother with an ESMA 5 fund ( or everyone agrees on this)
 
How did you end up with 275k in index funds? Just savings?

And what do you plan to do with them?

Why not pay off mortgage?

Or buy investment property?
 
Thanks, Cameo - I’ll look into possibility of acquiring RSUs more tax efficiently.

Agreed on the fund allocation - this was a “compromise”…

Moneymakeover,

Index funds are a combination of annual small gifts received over the years and an inheritance, which was recently received, but no plan for these funds currently.

We considered paying down the mortgage before fixing, but we’re comfortable with the repayment amount, and my thinking is that the growth on the index funds covers the cost of mortgage and over the long term this gap will only increase. Agree on the benefits of mortgage amount being lower and think we’ll repay a lump sum on refinancing after fixed term expires to bring LTV closer to 50%.

I’ve thought about an investment property, but given the pro-tenant landscape and incoming legislation, I don’t think the potential hassle is worth it, especially given we’re in the higher income tax bracket already and would be heavily taxed on any rental income.

Thanks, both.
 
A rental property can also be time consuming relevant if starting a family.

Ye are on good money and in a good position for recently qualified.

€50k is a good chunk on a wedding.

I’d be selling some of those investments and putting them in pension.

Have ye health insurance?

Do ye have maternity leave pay fully topped up by employer?
 
faketales said:
A rental property can also be time consuming relevant if starting a family.
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Yes, a rental property is a really bad idea in the current environment and that won't change

faketales said:
I’d be selling some of those investments and putting them in pension.
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I certainly wouldn't put them all into a pension. While the tax free growth is great, you won't be able to access the funds for decades (quite rightly!), so having investments outside a pension is important as well.

Paying down the mortgage is a good idea as well. Aside from the investment side, you'll have peace of mind and more flexibility if one of you needs to reduce hours or change to a lower paid job.
 
Will you keep doing the rent a room when starting a family? Maybe you will but bringing a baby into the home changes the likelihood you will want strangers/extended family living with you so that 14k tax free may be gone.
 
Greenbook said:
I certainly wouldn't put them all into a pension. While the tax free growth is great, you won't be able to access the funds for decades (quite rightly!
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Just to note, less than two decades in this case.
AlmostSorted said:
Your age: 32

Partner's age if not married: 29
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They don't have to put everything into their pensions (that may not even be possible in a tax efficient way due to pension tax relief limits) but it probably does make sense to increase and maybe maximise their contributions to their tax relief limits.
 
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ClubMan said:
Just to note, less than two decades in this case.
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Agreed, but it is still limited how much you can take out from age 50

I think it is better to hold some investments outside of your pension in case you need to access before you're 50 and for flexibilty afterwards
 
Greenbook said:
I think it is better to hold some investments outside of your pension in case you need to access before you're 50 and for flexibilty afterwards
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I and others agree. Maximising/boosting the currently arguably modest pension pots doesn't mean that there's nothing left for non-pension savings/investments, paying down the mortgage, paying for the wedding, planning for the costs of children etc.
 
faketales said:
Have ye health insurance?
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No, I don’t have any private health insurance. My partner does and I know I need to sort this before turning 35.

faketales said:
Do ye have maternity leave pay fully topped up by employer?
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Good point, I’m not sure on this. We’ll have to look into this one. Thanks

FANTANA said:
Will you keep doing the rent a room when starting a family?
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I don’t think so, Fantana - this will fall away if we have children.
 
Focus on getting the pension contribution maxed firstly.

Consider selling the company shares and paying a lump sum. There may be minimum holding periods if company matched.

The biggest factor for you will be the expanding family.

Before making any major adjustments re mortgage/investments you need to consider how you are covered by childcare, schools etc and how that matches to your current working / home situation (commutes, working hours, remote work, family support, friends etc, full licence etc). Prudent to assume the rent a room income goes to €0. Give thought to wether you both want to return to work full time or not.

Talk to family and friends who have kids about their daily schedule to see what you may need to solve for. You are in a strong position financially if changes are needed.

Good suggestion re health insurance, worth considering the level of Maternity (and Fertility) cover, given the waiting period is generally 52 weeks for upgrades and new policies. Check if health cover is offered via your respective companies - even if self funded it can be cheaper and can have 0 waiting periods.
 
One other thing to consider is, if kid(s) do come along, would you be looking to move to a bigger property, closer to schools etc.
 
@AlmostSorted , you are in a great position financially and doing pretty much everything right. The main areas I think you should focus on are housing and family life.

For context, we are late 30's with 2 kids (3/5) and earned similar income through our 30's so not dissimilar to your own situation, minus the inheritance/gifts.

Housing: Commuting to Dublin is fine when you are free and single but the reality is that it will not be practical for both of you if/when kids come along. Will you need to move to Dublin or else one of you is likely to take time out of work?

AlmostSorted said:
Family home value: €430,000
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Not that it is the only metric to measure a house but €430k is not a lot in today's market especially if it is commutable to Dublin. Do you think this property will be suitable for you if/when kids come along?

You should probably discuss the rent-a-room with your soon to be spouse to make sure you are on the same page. It is a great additional income now but a lot of people like to start married life without house guests

Once married, make sure you are jointly assessed. It is likely that you there will be unpaid leave involved with maternity leave so you need to make sure you are not paying tax unnecessarily.

AlmostSorted said:
I’m maximizing pension contributions, with partner aiming to do the same after wedding. Are we too focused on pensions?
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Definitely keep maxing pensions. I would also get your spouse to maximize last year's AVC. If the only reason for not doing this is because you have kept finances separate up until now then you should probably consider discussing this and how it will work going forward. Personally I think all income should be used to put you both in the best position. It shouldn't be an "I earned it so I'm keeping it" situation.

I don't know which one of you will be having the kids but if it is your partner, i think it is even more of a reason to maximize their pension now before maternity leave (and any other time out) stops them from contributing to the pension

On the family life/planning, each to their own but we prioritized pensions and paying down the mortgage before kids came along. We put ourselves in a position to ensure my spouse could take the maximum unpaid maternity leave for both kids. I was also lucky to benefit from a good paternity leave policy in my own workplace. We felt that was more important to us than returning to work after 6 months and it worked out well.

They were also the toughest years in work especially when kids are sick and get sent home from childcare. That has resulted in us either using annual leave or just working ridiculous hours to manage the situation. We were lucky that our commutes were short and we could both work from home which helped. But with the youngest now 3, we are out the other side of most of the illnesses and baby related absences. It's starting to become a little more predictable
 
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