Investing in US government bonds/ bank savings or pay off Irish mortgage

[BiddyMaggie]

Have €200k to invest. Currently residing in USA may apply for green card but paid salary & paye in Ireland on a relo.
probably move to US package on next promotion
Irish mortgage fixed at 2.15% 4 years left balance €215k (overpaying monthly)
US government bonds/ bank savings accounts offer 4-5.5%.
Where should we invest - pay off Irish mortgage or invest in US bonds/savings account or even a US pension 401(k)
(AIB allowing full repayment of mortgage with no fixed breakage fee)
We are fixed mortgage repayment at 2.15% for 4 years which is remainder of term. With dirt , prsi , grossing up the 2.15% plus not having to wait 2-5 years for a return on our investment paying back mortgage seems simplest and most sensible investment of our savings.

 

[Gordon Gekko]

You’ve got currency risk though so the rates aren’t like for like.

All other things being equal, you’d repay the mortgage, but it depends whether you need the money for something else, e.g. buying a home in the US.

Your post is quite difficult to follow.

 

[skrooge]

With a relatively low fixed rate mortgage why not look at deposit accounts as a (marginally) better option to overpaying your mortgage.

Better to save than to overpay a low fixed rate mortgage in some instances?

A recent post got me thinking are we close to the point where it makes financial sense to save rather than to pay down debt i.e., for some borrowers the return on savings (net of DIRT & PRSI) is greater than overpaying a fixed rate mortgage. There was a point in the past where this strategy...

www.askaboutmoney.com

Normally I'd suggest fixing but if you're not sure of what you're going to need those funds for you could also avail of the higher variable rate deposits and review regularly. Right now it would give you the best of both worlds i.e., better return and you retain flexibility to access the funds for whatever you want.

Best Buy - Savings Best Buys

Savings Best Buys: There are 3 savings best buy threads on AskAboutMoney that are updated frequently. Instant Access and Notice Accounts - Lump sum variable rate savings. Fixed Term Deposits - Fixed Lump Sum Term Deposits from a few months to a few years. Regular Savings - Smaller sum...

www.askaboutmoney.com

The sums you're talking about add a few extra considerations.

DGS limits are €100k so you'll need to spread your money across a couple of providers.

Another consideration is PRSI -an extra 4% kicks in on top of DIRT if untaxed income exceeds €5k.

Perhaps part overpaying your mortgage and placing the remainder on deposit, spread across a couple of banks, would maximise your after tax return for relatively little risk.

 

[Dr Strangelove]

Have €200k to invest. Currently residing in USA may apply for green card but paid salary & paye in Ireland on a relo.

I think getting the tax part wrong could cost you much more on getting the investment part right. Maybe start a thread on your tax situation as people can be caught out by this.

 

[BiddyMaggie]

You’ve got currency risk though so the rates aren’t like for like.

All other things being equal, you’d repay the mortgage, but it depends whether you need the money for something else, e.g. buying a home in the US.

Your post is quite difficult to follow.

Funds currently sitting in BOI account doing nothing. Don’t need for USA mortgage but looking where to invest. Bank of America have euro account and when currency rates are good we can move across. Would still be liable for dirt and prsi 4% if in 1 account.
Paying off Irish mortgage seems straight forward, no risk and immediate savings on interest and allows our mortgage repayments to build up and invested to build back up cash flow. Have Zurich savings Prisma 5 & Balanced funds which we will put monthly mortgage payment into after clearing.

 

[BiddyMaggie]

With a relatively low fixed rate mortgage why not look at deposit accounts as a (marginally) better option to overpaying your mortgage.

Better to save than to overpay a low fixed rate mortgage in some instances?

A recent post got me thinking are we close to the point where it makes financial sense to save rather than to pay down debt i.e., for some borrowers the return on savings (net of DIRT & PRSI) is greater than overpaying a fixed rate mortgage. There was a point in the past where this strategy...

www.askaboutmoney.com

Normally I'd suggest fixing but if you're not sure of what you're going to need those funds for you could also avail of the higher variable rate deposits and review regularly. Right now it would give you the best of both worlds i.e., better return and you retain flexibility to access the funds for whatever you want.

Best Buy - Savings Best Buys

Savings Best Buys: There are 3 savings best buy threads on AskAboutMoney that are updated frequently. Instant Access and Notice Accounts - Lump sum variable rate savings. Fixed Term Deposits - Fixed Lump Sum Term Deposits from a few months to a few years. Regular Savings - Smaller sum...

www.askaboutmoney.com

The sums you're talking about add a few extra considerations.

DGS limits are €100k so you'll need to spread your money across a couple of providers.

Another consideration is PRSI -an extra 4% kicks in on top of DIRT if untaxed income exceeds €5k.

Perhaps part overpaying your mortgage and placing the remainder on deposit, spread across a couple of banks, would maximise your after tax return for relatively little risk.

With a relatively low fixed rate mortgage why not look at deposit accounts as a (marginally) better option to overpaying your mortgage.

Better to save than to overpay a low fixed rate mortgage in some instances?

A recent post got me thinking are we close to the point where it makes financial sense to save rather than to pay down debt i.e., for some borrowers the return on savings (net of DIRT & PRSI) is greater than overpaying a fixed rate mortgage. There was a point in the past where this strategy...

www.askaboutmoney.com

Normally I'd suggest fixing but if you're not sure of what you're going to need those funds for you could also avail of the higher variable rate deposits and review regularly. Right now it would give you the best of both worlds i.e., better return and you retain flexibility to access the funds for whatever you want.

Best Buy - Savings Best Buys

Savings Best Buys: There are 3 savings best buy threads on AskAboutMoney that are updated frequently. Instant Access and Notice Accounts - Lump sum variable rate savings. Fixed Term Deposits - Fixed Lump Sum Term Deposits from a few months to a few years. Regular Savings - Smaller sum...

www.askaboutmoney.com

The sums you're talking about add a few extra considerations.

DGS limits are €100k so you'll need to spread your money across a couple of providers.

Another consideration is PRSI -an extra 4% kicks in on top of DIRT if untaxed income exceeds €5k.

Perhaps part overpaying your mortgage and placing the remainder on deposit, spread across a couple of banks, would maximise your after tax return for relatively little risk.

We are fixed mortgage repayment at 2.15% for 4 years which is remainder of term. With dirt , prsi , grossing up the 2.15% plus not having to wait 2-5 years for a return on our investment paying back mortgage seems simplest and most sensible investment of our savings.

Funds currently sitting in BOI account doing nothing. Don’t need for USA mortgage but looking where to invest. Bank of America have euro account and when currency rates are good we can move across. Would still be liable for dirt and prsi 4% if in 1 account.
Paying off Irish mortgage seems straight forward, no risk and immediate savings on interest and allows our mortgage repayments to build up and invested to build back up cash flow. Have Zurich savings Prisma 5 & Balanced funds which we will put monthly mortgage payment into after clearing.

We are fixed mortgage repayment at 2.15% for 4 years which is remainder of term. With dirt , prsi , grossing up the 2.15% plus not having to wait 2-5 years for a return on our investment paying back mortgage seems simplest and most sensible investment of our savings.