Investment/future Advice

Discussion in 'Investments' started by marbar, Mar 12, 2017.

  1. marbar

    marbar Registered User

    Posts:
    15
    Hi all,
    I dont know much about investments and have 2 questions, if anyone can help.

    #1 What should I be reading in order to make informed decisions about my savings, investments, property, pension, future etc? Or course I should take?

    #2 The second is in relation to my current plan.

    I currently live abroad (not tax resident in ireland) with property (26 years left on 250k mortgage) and savings back in Ireland (200k) due to mature in Oct. Property is rented out and covers mortgage + 40% or so. No pension

    In the absence of any informed financial knowledge, I plan to:
    • put savings back into deposit account (rather than pay off mortgage or buy more property) until i move home
    • move home in about 4 years (i'll be 40 by then)
    • buy a new property (hoping to have 60-70% of value in saving)
    • continue to rent old property for life
    • begin putting as much as possible into pension plan
    My only consideration at present is to pay as little interest as possible, and take advantage of tax breaks i'm aware of.

    I'd appreciate any thoughts on the above plan. is it stupid? sensibe? Anything else that I shoudl be considering?
     
  2. Brendan Burgess

    Brendan Burgess Founder

    Posts:
    31,883
    What interest rate are you paying on your mortgage in Ireland?

    What rate will you get on your deposit in October?

    Do you pay tax on your rental income in Ireland? Do you pay it where you are currently resident?

    Brendan
     
  3. marbar

    marbar Registered User

    Posts:
    15
    Hi Brendan,

    Mortgage 3.7%

    deposit AER 1.1% - 3 years

    yes i pay tax on rent. nothing so far though as the interest has balanced, but this year i will need to pay

    i'm tax resident in another country, but it's tax free
     
  4. Brendan Burgess

    Brendan Burgess Founder

    Posts:
    31,883
    When your deposit matures, you will be getting close to 0% on it.

    So why are you borrowing money at 3.7% to place it on deposit at 0%?

    Pay off the mortgage.

    Brendan
     
  5. marbar

    marbar Registered User

    Posts:
    15
    is it likely i can pay off the mortgage in full though? won't the bank insist on getting their interest?

    the property is an apartment. when i move back, i'll need a bigger place, and if i pay the mortgage on the apartment i'll need to borrow a larger amount for the bigger property. i would really like to keep the apartment to contribute to a pension

    so one way or another i need another mortgage. it will either be:
    a smaller mortgage for property #2, with tenants paying rent on #1 to cover the mortgage,
    or a larger mortgage on property #2, with rent coming from #1 and no/smaller mortgage

    sorry i'm full of more questions
     
  6. Brendan Burgess

    Brendan Burgess Founder

    Posts:
    31,883
    You can pay off a variable rate mortgage at any time without penalty.

    With €200k, you will be saving around €5,000 a year after tax.

    You will be continuing to save for the next four years and so will probably have the deposit to buy your home.

    In any event, you would probably be better off selling the apartment and buying your home for cash.

    If you have surplus cash at that stage, you should be saving through a pension fund. That is a much better investment than a directly owned property with an expensive mortgage.

    Brendan
     
  7. marbar

    marbar Registered User

    Posts:
    15
    thanks for your help Brendan

    really appreciate it