Not Maximising My Fortunate Situation

Scooter

New Member
Messages
4
Hello everyone,

I'm a new member but I've been a reader for years. I'd be interested in your advice on my financial situation

Age: 44
Spouse’s/Partner's age: N/A

Annual gross income from employment or profession: 95,000
Annual gross income of spouse: N/A

Monthly take-home pay: 3,600

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

In general are you:
(a) spending more than you earn, or
(b) saving?
Saving

Rough estimate of value of home 240,000
Amount outstanding on your mortgage: 0

Other borrowings – car loans/personal loans etc None

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

Savings and investments: €115k in CU, €80k in Ulster Bank Loyalty Saver, €17.5 in Ulster Bank Home Saver, 1k in Prize Bonds

Do you have a pension scheme? Yes, using AVC's to make maximum 25% contributions

Do you own any investment or other property? No

Ages of children: none

Life insurance: Death in Service benefit I think..

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

I think it's pointless having €115k in the credit union, annual return wouldn't even cover inflation but I don't know how to improve the situation.
I really want to move it somewhere that it has the opportunity to make a better return. I'm comfortable with locking it away for 5 years. The mortgage is paid off, I'm happy where I'm living and don't have the urge or need to move anytime soon. I would consider myself to have a medium to high risk attitude, 4 out 5 which I know isn't reflected in my current situation.

Do you have any advice for my situation please? Or maybe to make it more interesting if I handed control of my finances to you, what changes would you make, savings wise not spending ;)
 

Sarenco

Frequent Poster
Messages
6,395
Congratulations on being in such an envious financial position.

In your shoes, I think I would do something along the following lines:
  1. Ensure your pension is invested 100% in a global equity fund;
  2. Invest around €75k in a global equity investment trust like F&C Investment Trust plc;
  3. Keep around €25k on deposit; and
  4. Invest the balance of your after-tax savings in 5-Year State Savings Certs.
Separately, I would take out an income protection policy if this is not a benefit offered by your employer.
 

Scooter

New Member
Messages
4
Thanks Sarenco. Pension is 70% invested in global equities, 30% lower risk equities.

I not familiar with F&C Investment Trust, I'll take a look at them
 

Blackrock1

Frequent Poster
Messages
615
what are your goals? do you want to retire early? if not id spend some of the money, you cant take it with you!
 

Scooter

New Member
Messages
4
what are your goals? do you want to retire early? if not id spend some of the money, you cant take it with you!
Haven't really given it much thought to be honest. My aim was always to pay off the mortgage early, now that's done I don't really have a goal. It would be nice to retire at 60 though...
 

Sarenco

Frequent Poster
Messages
6,395
Pension is 70% invested in global equities, 30% lower risk equities.
It's important to look at your allocation to risky/safe assets across all your accounts and not to look at your pension in isolation.
It would be nice to retire at 60 though...
That looks like a very reasonable target given your financial trajectory to date.
 

aristotle

Frequent Poster
Messages
807
How much is in your pension at the moment?
If you are looking to retire in 16 years you will need a decent pot by then.
 

David_Dublin

Frequent Poster
Messages
589
If he's been maxing out his AVCs and continues until 60, and is in equities, I'd say keeping the pension below a certain value might be the bigger challenge than it being substantial enough.
 

SBarrett

Frequent Poster
Messages
3,492
Savings and investments: €115k in CU, €80k in Ulster Bank Loyalty Saver, €17.5 in Ulster Bank Home Saver, 1k in Prize Bonds
{/QUOTE]

You have almost 5 years net income in cash. Far too much.

Your mortgage is paid off, you should congratulate yourself on doing that by 44. Now it is time to start building wealth so you can have lots of choices in the future.

First thing is cash in your prize bonds. They are a waste of money. Then decide how much money you are comfortable with on deposit. We don't know what your occupation is so don't know how easy it would be for you to find work if you lost your current job. An guess would be €25k - €30k. Stick it in a State Savings product. The returns on those are low too but you can get something and can access your money at any time.

The rest you should look to invest and grow over the long term. When you say lock away for 5 years be careful. There are lots of products out there that will literally lock your money away for that period with no access at all to it. Stay away from those. Others have early exit penalties in those years. Better going for something where you can get your money within a week.

Putting this money away shouldn't be the end of it either. You should build on this initial investment too. Saving & investing reduces the amount of disposable income you have and therefore the cost of your lifestyle. It also increases your wealth and makes it easier to sustain your chosen lifestyle into retirement.

Steven
www.bluewaterfp.ie
 

aristotle

Frequent Poster
Messages
807
If he's been maxing out his AVCs and continues until 60, and is in equities, I'd say keeping the pension below a certain value might be the bigger challenge than it being substantial enough.
Well we just dont know based on the info provided. We dont know his current pension pot size or if his employer contributes.

On a worst case scenario lets say he has just started contributing 25% and the employer doesnt contribute then his pension pot might get to 400k in 16 years but that doesnt account for reducing risk and moving out of equities nearer to retirement so the returns may reduce and therefore might not be 400k.

If he has a current pension pot of 200k then he is tracking towards 650k pot again assuming staying in equities (https://www.newireland.ie/pension-calculator/)
 

Scooter

New Member
Messages
4
Thanks everyone for your replies

€3,600 a month doesn’t sound right on a €95,000 salary.
You're right, I rounded the figures and didn't explain that there are some deductions at source e.g. health insurance

You have almost 5 years net income in cash. Far too much.

Your mortgage is paid off, you should congratulate yourself on doing that by 44. Now it is time to start building wealth so you can have lots of choices in the future.

First thing is cash in your prize bonds. They are a waste of money. Then decide how much money you are comfortable with on deposit. We don't know what your occupation is so don't know how easy it would be for you to find work if you lost your current job. An guess would be €25k - €30k. Stick it in a State Savings product. The returns on those are low too but you can get something and can access your money at any time.

The rest you should look to invest and grow over the long term. When you say lock away for 5 years be careful. There are lots of products out there that will literally lock your money away for that period with no access at all to it. Stay away from those. Others have early exit penalties in those years. Better going for something where you can get your money within a week.

Putting this money away shouldn't be the end of it either. You should build on this initial investment too. Saving & investing reduces the amount of disposable income you have and therefore the cost of your lifestyle. It also increases your wealth and makes it easier to sustain your chosen lifestyle into retirement.
Thank you, this is the sort of advice i was looking. Id be comfortable with €25k on deposit and I take your point about understanding what 5 years really means

Well we just dont know based on the info provided. We dont know his current pension pot size or if his employer contributes.

On a worst case scenario lets say he has just started contributing 25% and the employer doesnt contribute then his pension pot might get to 400k in 16 years but that doesnt account for reducing risk and moving out of equities nearer to retirement so the returns may reduce and therefore might not be 400k.

If he has a current pension pot of 200k then he is tracking towards 650k pot again assuming staying in equities (https://www.newireland.ie/pension-calculator/)
Ok so pension is approx €290k today and employer contributes also but my 25% contributions are only for the last 3 years, after the mortgage cleared. I was of the opinion that I can't do anything here since I'm already maxing out my contributions?

If he's been maxing out his AVCs and continues until 60, and is in equities, I'd say keeping the pension below a certain value might be the bigger challenge than it being substantial enough.
Can a pension be too big??? Why would someone want to keep it below a certain value?
 

Mousehelp

Registered User
Messages
30
Well we just dont know based on the info provided. We dont know his current pension pot size or if his employer contributes.

On a worst case scenario lets say he has just started contributing 25% and the employer doesnt contribute then his pension pot might get to 400k in 16 years but that doesnt account for reducing risk and moving out of equities nearer to retirement so the returns may reduce and therefore might not be 400k.

If he has a current pension pot of 200k then he is tracking towards 650k pot again assuming staying in equities (https://www.newireland.ie/pension-calculator/)
Who said Scooter is a he?
 

David_Dublin

Frequent Poster
Messages
589
I think you’re both a disgrace to be honest.

The poster could also be transgender.

Wake up.

We should all be really careful about using highly inflammatory terms such as “he”, “she”, or “they”.
You're right. And there are way more gender insensitivities than that in the posts. The shame, head hanging here....
 
Top