Future planning - not making most of our situation

wildgeese

New Member
Messages
1
Hi everyone

New to boards and just looking for some financial pointers. We have been too passive with our money I feel and would like to change that.

Age: 47
Spouse’s/Partner's age: 52

Annual gross income from employment or profession: 55,000 private sector
Annual gross income of spouse: 82,000 public sector

Monthly take-home pay : approx 2200 – (one day parental leave a week)
Spouse - 3500
Type of employment: 1 Private Sector, 1 Public Sector

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

Rough estimate of value of home: 220,000
Amount outstanding on your mortgage: 0

Other borrowings – car loans/personal loans etc: 0
Do you pay off your full credit card balance each month? Yes

Savings and investments:
Cash: 210,000
Stocks & Shares : 75k

Do you have a pension scheme?
Yes. approx. 260K spread across 3 occupational plans (current and 2 previous). All Defined Contribution.
Current Pension - company contributes 35% of employee contribution to a maximum of 2,500. I am maxing out my pension

Spouse has a defined benefit pension – buying back notional service and will have 40 years by the time pension age is reached.

Do you own any investment or other property? No

Ages of children: 13, 10, 7

Life insurance: I have death in service 2 x my salary.
Life insurance cover - benefit amount of approx 300000 for each life.

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

1. We have too much cash hanging around in current account and I want to maximize our returns. I am reading up on ETF’s but the fact you have to cash out after 8 years be it a loss or a gain seems ridiculous or maybe I have the wrong end of the stick. Are there other instruments that I should consider?

2. We will hopefully have 3 going to college. In an ideal world all 3 would go to a college in the same city but that would be pure luck. I was toying with the idea of an investment property that even one could use while in college. My spouse is not in favor of this and to be honest but I am just trying to explore all options.

3. I am just starting to look at AVC - would there be of any benefit to either myself or my spouse contributing to these.

4. We are thinking of investing 50k in 10 year solidarity fund but just wondering if ye think that is too much or is there a better strategy.

Any suggestions for our situation would be greatly appreciated.
 

50andOut

Frequent Poster
Messages
59
1. You do not have to cash out after 8 years. There is an imputed tax calculation at 8 years for any gains. You can pay any tax due here out of other funds or sell the small amount required to cover

2. Realistically they won't all go to the same place, I'd separate out the investment property vs the college accommodation aspects and look at merits individually. Will an investment property be viable. If so it can help pay for whatever accom costs you may have later

3. You state you are already maximising your pension? If you have excess funds per month and there is an option to increase then you should bring to the max for your age

4. Why do you want 50k in a 10 year fund? Is this locked in for the period? College starts in 5/8+ 11years, I would be phasing savings in line with these timelines - depending on your monthly disposable income. Maybe you Dom not need savings for college expenses...

Couple of other questions:

You don't say how much you save per month?
Are both jobs are secure and you plan to remain in these for next 10 years ?
Would you be looking to trade up/invest in your own property?

50+0
 

SBarrett

Frequent Poster
Messages
3,519
You can access the State Savings bonds at any time and earn a lower rate.

It is a difficult time for deposit holders as there aren't many options available. It is quite the leap going from deposit to equity investment. The usual bit in between of bonds, aren't offering much of a return at present. On the 8 year tax, as 50+0 pointed out, you don't have to cash in at 8 years, you have to pay the tax due. This is because you have gone 8 years without paying any tax on the gains you have made up to that date. If you then sell at a lower price, you are entitled to a refund on the extra tax you have paid.

Buying a property for college going kids is a difficult one. It will use up all your cash for one. You also have to be prepared to have a house rented to students and the parties they will be having in it. Don't be under any illusion that your kids will be different, they won't. And they will have housemates too. Even if they aren't party animals, students don't clean much, so the house will have to be cleaned properly ever summer when they leave.

But overall, you are in the great position and these are great problems to have.


Steven
www.bluewaterfp.ie
 
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