How to Better Use My Savings?

[Nomoneynohoney]

I have an ok amount of money considering the current economic situation and my working-class upbringing. The reason for this amount of money is mostly luck due to a recent inheritance but I work hard aswell and try not to buy too much stuff that I don't actually need. The problem is that I am really inefficient in terms of how my money is spread out/invested.

I have around €5k in my current account, and judging from online sources, that is far too much to have in a current account. I have about €15k in the credit union but it doesn't seem to be a very fruitful place to save. Then I have €1k in a PRSA pension. For added context, I'm 29 years old.

Would there be better ways to save my money and increase the interest I get? It seems the interest on most savings accounts now is pretty low. That leaves putting more into my personal pension or investing in the stock market as other alternatives. But I've read that Irish legislation around capital gains taxes (that I don't really understand) makes direct stock market investments not worth it.

Any general advice or suggestions on better ways to better use my savings would be very much appreciated. Thanks.

 

[Bilbo1]

Hi nomoneynohoney, I'm no expert but here's some thoughts...

I don't think you will make any money on the interest. The interest they give you is too low, and you have to pay 33% DIRT tax on any interest you gain. This is taken at source, so you actually only get 67% of the interest that you would make.

I think the best you can do is to look for a way of not paying bank fees for your deposit/current account, so at least it does not cost you money.

So you need to decide how much you want to keep in a instant access deposit as an emergency fund, and what to do with the rest.

Are you planning on buying a property in the future? Those 15K could be used to start saving for a deposit.
I understand that investing in the stock market only makes sense over a fairly long timeframe, not if you are going to need the money in just a few years. If you are going to use it for a house, it is better to keep it accessible.

To explain the Capital Gains Tax:
When you sell your shares, if you have made a gain (sale price - purchase price): the first €1270 per year is tax free. For anything you gain above that, there CGT rate is 33% tax on it.

 

[Boyd]

Agree with above points. I suggest you fill out the "Money Makeover" template (search the forum for same), as it's almost impossible to give advice without a full financial picture.