Moneymakeover Inheritance Options

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Sunshine101

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Personal details
Your age: 55
Not married. No kids.

Income and expenditure
Annual gross income from employment or profession: €32k (working part-time)
Type of employment - e.g. Employee
Employer type: - private company.
In general are you:
(a) spending more than you earn, or
(b) saving? Saving

Summary of Assets and Liabilities
Family home value: €550k
Mortgage on family home: none
Net equity: €550k

Cash: €680k
Defined Contribution pension fund: €680k
Buy to Let Property value: €550k
Buy to let Mortgage: Zero.

Total net assets: 2.46 million


Other borrowings – car loans/personal loans etc

Do you pay off your full credit card balance each month? Yes

Pension information

Value of pension fund: 680K
Currently maxing out pension payments at 35% of salary
My employer also makes contributions of 30k annually

Buy to let properties
Value: 550k (mortgage free)
Rental income per year: 30k
Rough annual expenses other than mortgage interest : About 2k for maintenance, insurance etc.

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

Of the €680k cash I have (500k inherited), I'm going to invest 150k to upgrade my PPR - more comfortable, more energy efficient. And I want to have €100k accessible for a rainy day type fund. I might put 50K of that into a 12 month demand deposit account or something.

But then I'm left with just over 400k and I'm struggling to know what to do with it. I don't envisage myself working much more than the next 2 years or so. I want to have a comfortable retirement - lots of travel, events and experiences. Nothing outrageous. I'm not talking luxury 5 star getaways but comfortable. I'm not concerned about leaving a legacy/inheritance.

I've considered and got advice about investing it in a mid-risk diversified Investment Fund (with the likes of Goodbody's or similar). Or I've also thought about buying a property - probably an apartment and renting it out (I've been a landlord for 10+ Years and luckily have never had tenant issues). There's so much talk of the stock market being overvalued right now that I'm a bit nervous about dropping 400k in it. Plus I feel my pension is already well exposed to the market already. And while property is at an all-time high, there's few indications that it will drop anytime soon. I don't expect that I'd need to dip into the 400k anytime soon. I live within my means - between my salary (albeit small) and my rental income, I've a decent amount to live on. Would love some thoughts on Investment Fund vs Property or something else that I haven't considered.
 
Sunshine101 said:
There's so much talk of the stock market being overvalued right now
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The US stock market, not necessarily other stock markets like Europe, UK, etc.

But also, you have the capacity to ride out any medium-term turbulence since you have other income sources and no obvious upcoming uses for the 400k cash.
 
You also don’t need a rainy-day fund with your level of wealth. Stocks are liquid, even if they dropped 50% in the morning you would still be able to access 50k+ within a day or so. It’s more likely you would never need that rainy day fund though so it would be wasting away in a deposit account.
 
You're right about the €50k...but it's an important psychological comfort to me. I might upgrade my car over the next few years. It's handy to have funds on hand to lend to friends and family - which does happen. And in the grand scheme of things, it's a gain I'm willing to forego. Good points though re the US vs other stock markets. And I am taking a 7-10 year view on the investment.
 
Fee 1.15 ex Vat. Charges seem pretty standard. Asset mix - primarily equiities. About 30% US, 30% Europe ex UK.
 
If you are earning only 32k per annum how can your employer be paying 30k per annum to your pension ?
 
Sunshine101 said:
Fee 1.15 ex Vat. Charges seem pretty standard. Asset mix - primarily equiities. About 30% US, 30% Europe ex UK.
Click to expand...

You have to demand better transparency and disclosure on this from AIB Goodbody as it's imposible to make an informed decision based on just that.

So 1.15% + VAT of the value of the investment as the advisor fee?

The annual management charge on the value of the fund is ?

The allocation to investment is either 100% or 101% ? Who's covering the cost of the 1% Government Levy?

Are there any other entry charges or are there exit charges if you wanted to partially or fully encash the plan in the early years.

What are the current Additonal Investment Expenses or Other Ongoing Charges of the fund?

Billo said:
If you are earning only 32k per annum how can your employer be paying 30k per annum to your pension ?
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Because employers can put (up to) 100% of your salary into your pension.



Gerard

www.bond.ie
 
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Sunshine101 said:
There's so much talk of the stock market being overvalued right now that I'm a bit nervous about dropping 400k in it. Plus I feel my pension is already well exposed to the market already. And while property is at an all-time high, there's few indications that it will drop anytime soon.
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The stock market is over valued so you are thinking of avoiding that and plunging into the illiquid property market, which is also overvalued but that isn't going to fall but the stock market will?

The thing is, even if the stock market does fall, you have time to let it recover. It requires no work, no risk with tenants, you can sell it in a day and have the money back in your bank account in a week.

I agree with your approach but I would invest the excess in the markets and not property. And start enjoying the money, you are in a great financial position. When going long haul on your travels, turn left on the plane instead of right.
 
Billo said:
If you are earning only 32k per annum how can your employer be paying 30k per annum to your pension ?
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I asked nicely :-). An employer can contribute up to 100% of an employee's salary to a PRSA. But it can't be done retrospectively. So you negotiate up-front in a new role.
 
GSheehy said:
You have to demand better transparency and disclosure on this from AIB Goodbody as it's imposible to make an informed decision based on just that.

So 1.15% + VAT of the value of the investment as the advisor fee?

The annual management charge on the value of the fund is ?

The allocation to investment is either 100% or 101% ? Who's covering the cost of the 1% Government Levy?

Are there any other entry charges or are there exit charges if you wanted to partially or fully encash the plan in the early years.

What are the current Additonal Investment Expenses or Other Ongoing Charges of the fund?
Click to expand...
In fairness I do have very detailed info on charges. I just shared the headline - annual management charge on fund value 1.15% ex VAT. It's not AIB Goodbody's but similar type organisation. And their charges are slightly more competitive than Goodbody's. I shopped around.
 
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