Moneymakeover Looking for financial advice - where to start

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Villainthesun

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Personal details

Your age: 45
Your spouse's age: 44

Number and age of children: 3 (11,8,4)


Income and expenditure
Annual gross income from employment or profession: €75,000
Annual gross income of spouse/partner: €90,000

Monthly take-home pay: €7500

Type of employment - e.g. Employee or self-employed. - Both employed - private cos.
Employer type: e.g. public servant, private company.

In general are you:
(a) spending more than you earn, or
(b) saving? - Saving - approx 2k. a month but nothing in place


Summary of Assets and Liabilities
Family home value: €500k
Mortgage on family home: nil
Net equity:

Cash: €350k
Defined Contribution pension fund: Self €150k, Spouse €350k
Company shares : nil
Buy to Let Property value: €275,000
Buy to let Mortgage: €105,000

Total net assets: €1.5m



Other borrowings – car loans/personal loans etc

Do you pay off your full credit card balance each month? yes
If not, what is the balance on your credit card?

No loans



Buy to let properties
Value: €275,000
Rental income per year: €18,000
Rough annual expenses other than mortgage interest : €5,000
Lender EBS
Interest rate 4.15 variable
If fixed, what is the term remaining of the fixed rate?

Other savings and investments:

An post regular saver (childrens allowance) 30,000


Other information which might be relevant

Recently sold a rental property, was far from home and had been causing stress with tenants, etc. So that is where a chink of cash came from.


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

Looking for a starting point as what do with the lump sum and a plan for regular saving. We both have maxed out our pension contributions in last couple of years (me PRSA through employer and spouse company pension scheme). In terms of spend we will probably do some house upgrades which will cost €30-35k in the next 12 months. Previously had used excess money to over pay mortgage on PPR.
 
In your shoes, I would -

1. Pay off the buy-to-let mortgage;

2. Carry out whatever improvements you consider appropriate to make your home more comfortable/energy efficient;

3. Keep your pensions 100% invested in global equity funds for the time being;

4. Consider starting bare trusts for each of your kids and contributing €6k pa to same to maximise the small gift exemption;

5. Ensure you are appropriately insured, including income protection; and

6. Any cash at hand that you won’t need to access for the next few years should be placed in a decent fixed-term deposit account.

You are doing exceptionally well BTW - keep it up and you could be in a position to consider early retirement if that’s of interest.
 
Thank you for your reply.

We were unsure if the next correct step was to pay off the buy to let.

It was something that I had never considered use the small gift exemption at this stage, but obviously makes sense.
 
Hi, reading a couple of threads with interest and getting great information.

Just wondering in relation to our investment property (was an accidental landlord situation). Obviously certain amount of time spent managing property and dealing with various issues.

If we were to sell the property and have another €160/170,000 what would be the best use of these funds. I suppose are priorities are like most people to give our children every opportunity education wise and lead a comfortable retirement.
 
I don’t think you should sell the rental (and I rarely come to that conclusion).

It’s producing a pretty decent net profit, you are reasonably well diversified across the major asset classes and you don’t really have anywhere obvious to invest the equity.

Just pay off the mortgage on the rental property and keep maxing out your pension contributions.
 
Thanks, yes have requested settlement figure and have plans afoot to clear mortgage. I was just looking for a sanity check was this the correct step or should we consider selling.

I see from reading other threads that sometimes people have an attachment to property that they wouldn’t have to other assets.
 
ClubMan said:
irrational emotional aversion to equity investments...
Click to expand...
I have always wondered how unique this is to the Irish psyche.
I always assumed it was just due to passed on lived experiences from a generation which thought ‘diversification’ meant investing in AIB AND Bank of Ireland.

But you’d think the Celtic Tiger property bust would have left similar scars.
 
You are in a very good situation financially.

If you are maxing out your pensions, there is not much more that you can do there. But your retirement income doesn't just have to come from a pension, the rental income is also an income in retirement and there is also an asset to sell in the future.
I would echo a lot of what Sarenco said, pay down debt, get any house improvements done now rather than later (costs are just going up).

If giving your children the best opportunity education wise means private secondary school, you are probably looking at €60,000 for each child. School fees inflation is mad (1st year fees for my son were €6,882. 5th year fees were €8,843). There are plenty of debates over public and private schools. The level of teachers are not better at private schools. If that is what you are looking for, places like the Institute etc are where you need to send them for their Leaving Cert.

Or you could mean giving them the opportunity to move out of home and have the "college experience" when they go to third level. Again, with rent etc, you are looking at another €60,000 each.

Using bare trusts is a good way to save for them if you want to help them out financially in the future.

- Pay down debt
- Get work on house done
- Have a comfortable cashflow fund
- Consider bare trusts for the children
- Invest the rest for the future


Steven
http://www.bluewaterfp.ie (www.bluewaterfp.ie)
 
We have done an exercise on budget/analysis of our spending.

Our current nett income is approx. €10k per month.

Our regular monthly spend is about €5200 (this will drop by €1200 when mortgage cleared), and our annual expenses are about €25,000 (holidays, depreciation on cars, insurance, etc).

Our plan is to put €2500 each month into a regular saver demand account at the highest interest available, this will cover holiday expenses, car upgrades, etc.

This leaves another approx €2,500 each month, what is the best plan for this? Funds similar to our mortgage or another regular saver?

After we pay off mortgage and put aside a rainy day fund (€50k to deposit ac). We will have approx €150k what options should we consider?
 
Thanks all.

In education terms the plan currently is that they will go to a local non fee paying school. I meant in terms of third level where there would be limited options locally and be able to give an opportunity to study and move away from home as they wish, I know from relations costs are currently €12-15k yearly.
 
You need to invest in the markets. Invest in a global equity fund and use the money in the future as part of your retirement or pay for education.

Your kids will also start getting more expensive as they hit the teenage years, so the disposable income may reduce over that time.
 
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