Moneymakeover Mid working life check-in - Am I on the right path?

Age: 36
Spouse’s/Partner's age: n/a

Annual gross income from employment or profession: 128k

Monthly take-home pay:
From employment: 6100e (200e to ESSP, 250e AVC)

Type of employment: e.g. Civil Servant, self-employed: Private

In general are you:
saving: 2.5k
1,330e towards extra mortgage payment
1,250e investments

Rough estimate of value of home: 380k

Amount outstanding on your mortgage: 121k

What interest rate are you paying: 2.1%

Other borrowings – car loans/personal loans etc: No

Do you pay off your full credit card balance each month? No credit cards

Savings and investments: 172k

Company stock: 30k (100k yet to vest)
cash: 12k
Crypto: 90k
Stocks: 30k (mix of SP500, commodities etc) but in 2 separate accounts?

Do you have a pension scheme: Yes, Zurich, 95k so far

Do you own any investment or other property?
No

Ages of children: 2 and 8

Life insurance: Mortgage protection

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

I've reached the ripe old age of 36 and decided i need to check-in and see where i'm at. Keep me honest guys.

My questions are below:

1. I have 2 separate stock accounts (degiro) for both kids, i plan on adding each month until they are 21, am i better combining these into 1 account or keep as is?

2. I'm paranoid about my pension, should i have more in the pot at this age? Admittedly i max out my contribution but could throw more AVCs at it.

3. My mortgage term will end soon but we need to renovate the house in a few years. Should i throw much at the mortgage to pay it down at term end or keep cash for renovation? In theory i could save some of the cash for the renovation after paying a lump off the mortgage but it might be a grind, renovation will cost around 100k.

Any overall tips are greatly appreciated. I realize I'm exposed a lot with the crypto but only 11k was initially invested.

TIA

Financially? Yeah youre doing good

Your AVC is 250 when it could be more like 2500. Over the next few years the SFT is going up to 3m and you're one of the few that can reach it. Max out the AVCs. Put the pension into all equities and enjoy the ride. Incredible position at 36

I'd be inclined to cash in the crypto and pay down your mortgage... You have a big gain so either you have a return in mind that it hasn't reached yet or you should be cashing out.

matrixworld said:

Admittedly i max out my contribution but could throw more AVCs at it

Click to expand...

I dont understand this. If you're maxing it out you'd have no capacity for more avc, unless you mean sans tax relief? Given your gross salary, if you're maxing then you can't be doing more. Can you clarify this 1

If you had €31k mortgage would you borrow another €90k to put into crypto? Of course not. Sell down most if not all the crypto (pay your CGT) and put off mortgage.

Fibbernacci said:

out

Click to expand...

Just to clarify, the sft? Is this the max pension pot. When you say it's going up to 3m, does this mean the tax free portion will also increase?

Large disposable income, reasonable LTV, low interest rate, substantial taxable investments, 172% (before CGT) of renovation cost covered - I’d be maxing AVCs over paying down your mortgage. The mortgage will still be manageable if the interest rate is refixed at c. 3% in the future.

Mortgage will be gone in a few years but substantial tax relief forgone.

Itchy said:

Large disposable income, reasonable LTV, low interest rate, substantial taxable investments, 172% (before CGT) of renovation cost covered - I’d be maxing AVCs over paying down your mortgage.

Click to expand...

Would have thought the op could both pay off their mortgage and max pension contributions

Well diversified assets there, well done. I wouldn't be afraid of keeping the crypto. Could go to 1m and you don't need that 90k really. A small cost basis punt given it only cost you 11k. I don't hold any crypto and the natural urge when you don't is to poo poo it as not a traditional investment. But its proved most wrong to date and might continue to do so...

Without needing to know the details of your family, will there be maintenance payments out of your income? Or a potential pension adjustment order ? You didn't mention childcare costs either. No need to respond on this but worth considering. Whatever arrangements are in place now might not always be the case.

Pinky22 said:

Just to clarify, the sft?

Click to expand...

Pinky22 said:

When you say it's going up to 3m, does this mean the tax free portion will also increase?

Click to expand...

No.

Larder13 said:

Well diversified assets there, well done. I wouldn't be afraid of keeping the crypto. Could go to 1m and you don't need that 90k really. A small cost basis punt given it only cost you 11k.

Click to expand...

Usually when you invest you have a target return or an exit point, one would assume an 8x return on your money should be well above any reasonable expectation.

The fact that the crypto only cost €11k is completely irrelevant. Treat every € equal. If you had €90k cash, would you put it into crypto? If the answer is no; you should sell down to the level you would be willing to invest in today.

Cost basis can never be irrelevant due to CGT, an often missed point

Overall, you are doing very well for your age.

The following posts are all fine tuning.

It's silly to have €90k in the crypto Ponzi scheme, but if you want to keep it there, that is fine. You can comfortably afford to lose €90k.

Likewise, it's silly to have separate De Giro accounts for your children, but if you get some psychological comfort from doing so, even though it's incorrect financially, that is fine.

And while you don't need to keep €100k for your building project, it's not a huge mistake to keep it.

matrixworld said:

3. My mortgage term will end soon but we need to renovate the house in a few years. Should i throw much at the mortgage to pay it down at term end or keep cash for renovation? In theory i could save some of the cash for the renovation after paying a lump off the mortgage but it might be a grind, renovation will cost around 100k.

Click to expand...

So this is the first issue to deal with. You need €100k "in a few years". You seem to be saving €30k a year. So you will be able to build up that fund when you need it. Or even take out a short term credit union loan and pay it off quickly.

So, you do not need to keep money separately for this project.

matrixworld said:

1. I have 2 separate stock accounts (degiro) for both kids, i plan on adding each month until they are 21, am i better combining these into 1 account or keep as is?

Click to expand...

matrixworld said:

Ages of children: 2 and 8

Click to expand...

This is unwise. You should not be engaging in such compartmentalised thinking about your finance. Maxing the overall efficiency of your you own finances is the best way to maximise your children's long term financial security. If you want, for some strange reason, to have each child's name on a pot, do so in a separate spreadsheet. But do not keep the funds separate from your own finances.

For example, it is much more efficient to maximise your pension contributions than to save outside a pension. If you save outside a pension because little Jimmy and little Mary have their names on your de Giro accounts, you are not maximising their long term finances.

matrixworld said:

Amount outstanding on your mortgage: 121k

Click to expand...

matrixworld said:

Savings and investments: 172k

Click to expand...

Max your pension.
Then clear your mortgage.

With three years to go to the refurbishment, build up savings again towards the cost of refurbishment. And by clearing your mortgage now, you will build up savings again, much quicker.