Re: Help I need a maker
Out of interest, why is this marked as a key post?
Anyways...
Key Points
1) Yes you should speak to an independent FA ASAP as you are well into your working life and yet have no pension. This should be your top priority along with clearing the credit card as pensions are very well tax incentivised.
2) Clear the credit card now, why wait 2 months? You have the cash in savings, so clear it now... its costing about €35 - €65 in interest every month.
3) You have savings of €8k - €10k (after clearing your CC); what sort of interest are you getting on this? Unless its 5%+, then theres another thing to do straight away that'll make a difference whilst thinking about what the long term goal is. Every month on deposit at 5%+ should yield €40 - €50 in interest.
4) You have €2.4k in cashflow after the mortgage and bills each month... this gives you a good amount to play with. Obviously you don't save all of this as you surely have other expenses, but i'm sure a reasonable amount could be saved. You could set up a €1k a month savings scheme at 7%+ interest. This would be a step in the right direction.
5) What else you do will depend on your appetite for risk and your discussions with a FA. I'd imagine putting your lump savings on deposit at 5%+ and accumulating additional savings at 7%+ along with contributing to a pension whould be among your safer options. You could of course decide to invest in equities, property etc...
A little note on investing:
Whether you consider property, equities or some other asset class consider the following:
> Will the expected return comfortably exceed 5% (if not, then deposit is a better option)
> Will the asset class make my life uncomfortable (owning a buy to let can be stressful and would require plenty of time and effort)
> Does the difference between the expected return and the secure 5% return justify the risk (you might believe equities will rise by 10%, is this extra 5% return worth the risk of possibly losing money?)
> Can you afford to lose money and how much (if you really can't afford to lose the money, then don't invest in something that can lose money!)
> Will the investment have unplesent tax implications (check how it effects your tax bill)
> What happens if you suddenly need the money? (how liquid is the investment)
What I'd Do
If I were you (I'm not however), i'd aim for something like the following...
Net salary: €3,500pm
Mortgage: €1,300pm
Rent: €730 (I have reduced to reflect one empty month per year... we're in recession after all!)
Monthly Bills: €600
Balance: €2330
Living: €400 (I don't know what you have in monthly bills? does it include nights out, holidays etc.???)
Save: €1,000 (direct debit saved into a 7% regular saver account)
Pension: €500+ (only a rough guess at the amount you should be paying, could be more/less)
Residual: €430
I'd keep the residual amount in my current account for emergencies and transfer every now and then any excess over €3k from the current account to the 5% deposit account.
So with the above...
Pension: Putting €500pm away
Saver: Putting €1,000pm away at 7%
Lump Sum: Have €10k at 5% and adding money to it as current account grows above 3k
I'd then probably consider investing some of the lump sum money; perhaps I'd put 5-6k into equities or perhaps i'd wait for the lump sum to grow to €20k - €30k and buy an investment property. As I said, this is the portion that you have to speak to an FA about and which is ultimately up to your risk appetite.