I’ve seen various finfluencers say it but then you’ve this man….
Getting ready for the future now
- Thread starter Calypso
- Start date
Definitely max them out which will be 25% in your 40s.
I’m not sure if it’s the best idea to dump it all in or try and feed it in slower over the years to avail of the relief which is relatively small percentage.
Will you be maxing out pensions regardless of the lump sum not that mortgage is paid off?
Yes plan is to max them out. I am already putting in 15% myself (on top of employer 10%) so I only have scope to input another 10%.
My wife is putting 5% into hers and her employer puts 5% so she can increase it by 20% but her earnings are low as she works part time.
I was planning to dump in the anount so we can get the benefit of compounding for the next full 20 years.
You could do this, but you’ll be taxed on the total (not just the gain) when you start taking an income which will go a long way towards nullifying the benefit of compounding inside a pension wrapper. You can, however, claim tax relief in future years, provided you remain with the same employer. You can’t carry forward the relief into a new pension scheme. I personally wouldn’t rely on this for such a large “pre-payment”.
You could also let it compound outside the pension too. The compounding will be taxable, but only the gain under CGT or Exit Tax.
Last edited:
Brendan Burgess
Founder
- Messages
- 58,468
I think that they are misinterpreting Charlie Munger.
His main point is that it's difficult to save $100k.
But that is irrelevant in your case as you already have it.
Anyway, compounding works on all amounts €100, €1,000 and €1,000,000.
They all get the same relative amounts, but the absolute amount will be higher on €1m than on €1k and €1k will have a higher absolute amount than €100.
I think the point of it though is that compounding really takes hold at 100k. You see real growth from that figure. Nobody is denying any figure can compound.
Renting the property again could have netted me €20,000. How can I use my 300k or so from the sale to still earn that?
Brendan Burgess
Founder
- Messages
- 58,468
€100k is irrelevant to compounding
even with simple interest, you get more each year on €100k than on €10k
even with simple interest, you get more each year on €100k than on €10k
You won't get c. 7% net guaranteed anywhere so you'll have to take on some risk/volatility in order to aim to get that sort of return e.g. via capital gains and dividend income from shares or something like that.
But it didn't. It was rented for 16800 with 2k expenses before interest. It might have with the new rules.
Rent would be 1800 to 2k a month now if I re rented from March.