Moneymakeover Help with plan

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lucygoose

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Personal details
Your age: 42
Your spouse's age: 43
Number and age of children: 2 kids (national school age)

Income and expenditure
Annual gross income from employment or profession: €47k (part-time)
Annual gross income of spouse/partner: €180k

Monthly take-home pay: 9.4k (after AVCs)

Type of employment: PAYE Employees
Employer type: both private sector

In general are you: (b) saving

Summary of Assets and Liabilities
Family home value: €1,100k
Mortgage on family home: €280k

Cash: €300k (€150k fixed at 3% until early 2027, the rest at variable rates of 2-2.5%)
Shares: €150k (global equity Investment Trusts)

Value of pension fund (passive global equity funds):
Mine: €140k
Spouse: €785k
Both maxing AVCs

Family home mortgage information:
Lender: Avant
Interest rate: 1.95%
Type of interest rate: Fixed until Spring 2029, 22 years remaining

Other borrowings – car loans/personal loans etc
None

What specific question do you have or what issues are of concern to you?
Up until now we've taken a very simple approach to building wealth, it's global equity funds using our pensions, and with anything left over after maxing AVCs, doing something very similar with global equity Investment Trusts.

We've two long term plans, the first is to both have the option to retire in 8 years' time by the time I'm 50. The second is to sell up when we're about 60, and buy two flats, one here and one where I'm from, and split out time between both countries afterwards.

We recently inherited €300k, what would you do with it in our shoes?
 
Once the fixed term deposit matures (I’m assuming that’s the €300k inheritance), I would simply pay off your mortgage.

Otherwise, it looks like you are making all the rights moves to achieve your future plans
 
lucygoose said:
Interest rate: 1.95%
Type of interest rate: Fixed until Spring 2029,
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This might be one of those rare cases where you might be better off investing rather than clearing your mortgage as the rate is so low and is fixed.

If you invest in equities, you should get a return greater than 1.95% per annum after charges and tax, but you might not. Equities can fall in value. but you can handle the risk.

On balance, I would clear the mortgage but I would not argue strongly with anyone who suggested investing in equities at least until the cheap fixed rate ends. Then review the situation.
 
We were also torn, so figured we could do both, and split the money 50/50 between investing and the mortgage.

When we went to overpay the mortgage, AIB's 3% fixed rate was coming, and we worked out it returned about the same as overpaying the mortgage after DIRT. When the term comes to an end, we'll likely overpay it, unless circumstances have changed. In the meantime, I think we'll go ahead and invest the rest in Investment Trusts as we've been doing so far.
 
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lucygoose said:
invest the rest in Investment Trusts as we've been doing so far.
Click to expand...
I presume that these are subject to 41% 8 yearly deemed disposal and exit/encashment tax? If so then (diversified) direct equity shareholdings subject to CGT would be much more tax efficient.
 
Given you start to accumulate meaningful levels of wealth quiet quickly from here, is it worth advise around additional vehicles for tax efficient transfer to kids in later life/inheritance?
 
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