Moneymakeover Early 60s, where to invest €600,000 lump sum

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Timjoe

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Personal details

Your age: 63
Your spouse's age: 60

Number and age of children: 3


Income and expenditure
Annual gross income from employment or profession: 40,000
Annual gross income of spouse/partner: 61,000

Type of employment > one self employed, one employee private sector


Summary of Assets and Liabilities
Family home value: 700,000
Mortgage on family home: none
Net equity: 700,000

Cash: 50,000
Defined Contribution pension fund: 50,000
Company shares : none
Buy to Let Property value: 400,000
Buy to let Mortgage: none

Total net assets: €1,200,000 (breakdown is House 700k, btl 400k, cash emergency fund 50k and 50k pension fund value)


Family home mortgage information
Lender: none
Interest rate: none


Other borrowings – car loans/personal loans etc ; none

Do you pay off your full credit card balance each month? : yes
If not, what is the balance on your credit card?

Pension information

Value of pension fund: 100,000

Buy to let properties
Value: 400,000
Rental income per year: 25,000
Rough annual expenses other than mortgage interest : 2000
Lender : none
Interest rate: none


Other savings and investments: €50,000 as rainy day emergency fund . (mentioned already - a bit of which is in prize bonds)


Other information which might be relevant: 1 kid is in university, two are working and self sufficient

Life insurance: none


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

Have come in to a windfall (inheritance) of €600,000 net of tax. Want to know where to invest it. Interest rates are very low in the bank. The self employed partner is feeling burnt out / business not as good as in the past and worked 70 hour weeks for years. Ideally would like to retire and live off income from existing btl investment and income from new €600,000 future investment. One of the kids will need uni education for another three years @ about 18,000 cost per year. If buying a property investment we would like it to be as as little hassle as possible, as we have had some difficult buy to let tenants in the past, and it is not getting easier. If we could get a commercial prop investment let to a blue chip tenant on a long lease that may be ideal but we cannot see that happening nowadays within our budget. Or maybe some sort of a managed fund?
We do not have -or want - any mortgages, we drive modest cars paid for and are frugal enough with money. What would people invest the €600,000 in? Thank you for any replies / suggestions of what to invest in.
 
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Some things to consider

Does your house need any future proofing now? E.g new windows etc. you should get it done now.

I wouldn’t go with another property as too much concentration.

You should optimise your pension contributions too to avoid paying any tax at the higher rate

Do a budget to see what annual income you require.

Are you entitled to state pensions?

I’d ringfence approx 50k to fund college costs for your youngest

Maybe consider whether you want to help kids with a contribution to a house deposit?If you think you can afford it.

You probably need to think about your risk level but I’d be inclined to invest in an equity ETF or something similar. Lots on here will probably advise against this

But I think your key objective is to maintain your purchasing power so you want to invest in something that will grow with inflation if at all possible. Investing in cash is unlikely to achieve this.
 
Are you in a University city or close to one?

Stay well away from further residential property investment. Its now becoming impossible to make decisions about your property.

Your 50k in emergency cash is (to me) far too much...particularly in prize bonds

You should ploughing money into your pension, not for growth but for tax benefit. You are very light pension wise so close to retirement.

Start a low cost equity ETF as advised by previous poster. Lightyear is a good platform to look at.

*Edited to correct spelling
 
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Avoid another residential property. There are plenty of threads here on the huge risks and traps being created by the new rules.

Ploughing money into your pension is a far safer and better option
 
Timjoe said:
Income and expenditure
Annual gross income from employment or profession: 40,000
Annual gross income of spouse/partner: 61,000
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Timjoe said:
The self employed partner is feeling burnt out / business not as good as in the past and worked 70 hour weeks for years.
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Which is the self-employed partner? €40K or €61K?
And do these figures include rental income?
Timjoe said:
Defined Contribution pension fund: 50,000

Total net assets: €1,200,000 (breakdown is House 700k, btl 400k, cash emergency fund 50k and 50k pension fund value)
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Timjoe said:
Pension information

Value of pension fund: 100,000
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The pension information is confusing.
Timjoe said:
If buying a property investment we would like it to be as as little hassle as possible, as we have had some difficult buy to let tenants in the past, and it is not getting easier.
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At others have said, you have more than enough (arguably too much) exposure to property already with your home and one rental property. Buying another isn't a good idea.
 
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Do up a plan.
  1. What are our expenses over the next 3 years. Split this into bills, lifestyle and bigger purchases.
  2. Fund that cost
  3. You have your cash fund, top it up a bit more
  4. Invest the rest.
You can maximise the pension tax relief available to you but it isn't going to make a big difference to your pension pot given your age and the lack of compounding.

I am not a fan of property, an illiquid asset, an ongoing cost and the constant risk of bad tenants. With the new tenancy laws, I'd run a mile. Invest in the markets and get on with enjoying retirement.
 
Do you both have, or are well on the way to having, 2080 PRSI stamps to access the contributory state pension at 66?
 
How close are each of your older kids to home purchase? This being an unexpected windfall, are you in a position once you have taken care of your own needs to pass some of it down to them for eg a house deposit? (using some of their gift threshold and the small gift exemption). This might pay dividends in terms of keeping the empty nest empty :)
 
Cameo said:
Does your house need any future proofing now? E.g new windows etc. you should get it done now.
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@Timjoe if you haven’t already done so, installing solar PV plus battery is an excellent investment at your age, given it’ll pretty much last your lifetime. A ~€10k spend should net a tax-free, inflation-adjusting €1500 approx per year in benefit, and continues to pay out to a surviving partner.

An equivalent €1500pa in annuity benefits would be taxable and would still cost about €40k.
 
Brendan Burgess said:
Not sure what you mean by these figures
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Yes, I drew attention to the fact that the pension figures were confusing here but got no clarifying information in response.

Moneymakeover - Early 60s, where to invest €600,000 lump sum

Personal details Your age: 63 Your spouse's age: 60 Number and age of children: 3 Income and expenditure Annual gross income from employment or profession: 40,000 Annual gross income of spouse/partner: 61,000 Type of employment > one self employed, one employee private sector Summary of...
www.askaboutmoney.com
 
Timjoe said:
The self employed partner is feeling burnt out / business not as good as in the past and worked 70 hour weeks for years. Ideally would like to retire and live off income from existing btl investment and income from new €600,000 future investment.
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They should have a chat with a business advisor. Is there some way of working a lot less and earning some money? If not, retire. You can afford to do so.

With total assets of €1.8m you should not be working in a job you don't like which stresses you.
 
Brendan Burgess said:
Value of pension fund: 100,000

Not sure what you mean by these figures. But in any event, they are low.

Max your contributions so you pay no tax at 40%.
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Sorry for any confusion. I meant that the present value of the pension investment is approx €100,000. I invested a total of €78,000 over the years and it has grown to €100,000, after all annual fees etc taken out. Yes, I know it is not a big pension but we were bringing up kids and other expenses. We try to put as much as we can in to the pension. Yes we should try to put in more now.
 
Uafásach said:
Do you both have, or are well on the way to having, 2080 PRSI stamps to access the contributory state pension at 66?
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yes. One of us has worked and paid taxes for over 40 years, the other one for almost 40 years, so no problem there I think.
 
Greenbook said:
Avoid another residential property. There are plenty of threads here on the huge risks and traps being created by the new rules.

Ploughing money into your pension is a far safer and better option
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Thank you to you and everyone else for your kind and thoughtful suggestions.
 
Persia said:
Are you in a University city or close to one?

Stay well away from further residential property investment. Its now becoming impossible to make decisions about your property.

Your 50k in emergency cash is (to me) far too much...particularly in prize bonds

You should ploughing money into your pension, not for growth but for tax benefit. You are very light pension wise so close to retirement.

Start a low cost equity ETF as advised by previous poster. Lightyear is a good platform to look at.
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Within commuting distance of city. Do not know much about EFT but will look in to it. Think it is to do with shares though, and are not share markets near all time high now? Meaning a "correction" may be imminent? Thanks anyway.
 
Timjoe said:
One of the kids will need uni education for another three years @ about 18,000
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Timjoe said:
Within commuiting distance of city.
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Could the student not get bus or other means of transport to get to University. You wouldn't need to to budget for 18k a year in that event and would be more like 3-5k.

Eldest almost through University, she worked part time for a well known sports shop and worked Summers as well. All I've had to pay for is her fees and circa 3k a year.
 
Persia said:
Could the student not get bus or other means of transport to get to University. You wouldn't need to to budget for 18k a year in that event and would be more like 3-5k.

Eldest almost through University, she worked part time for a well known sports shop and worked Summers as well. All I've had to pay for is her fees and circa 3k a year.
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Unfortunately (financially wise anyway) there was not a course to suit the school-leaver in the nearest small city which has a sort of a uni, so the child is in Dublin studying which makes it a lot more expensive that if at home, obviously. Anyway, that expense will not not forever and the student is reasonably happy.
 
Timjoe said:
Think it is to do with shares though, and are not share markets near all time high now? Meaning a "correction" may be imminent?
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It's just not possible to forecast the stockmarket.

It's the best place for long term returns.

You might invest today and the market collapses tomorrow.

But if you wait for the stock market to fall and become good value, you will probably leave it too late.
 
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