Pension or Investments or both? Lost in the jargon...

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Guest116

Guest
Age: 30
Spouse’s/Partner's age: -

Annual gross income from employment or profession: 85k
Annual gross income of spouse: -

Type of employment: Private sector

In general are you spending more than you earn or are you saving? Saving

Rough estimate of value of home: 370k
Amount outstanding on your mortgage: 258k, 27 years remaining
What interest rate are you paying? 4.55%

Other borrowings – car loans/personal loans etc: None

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

Savings and investments: 45k in 4% deposit account

Do you have a pension scheme? no

Do you own any investment or other property? no

Ages of children: -

Life insurance: Got mortage protection policy...


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

I am looking for advice on what to do with regards to a pension and investments. I have 45k sitting on deposit and I will have 65k my the end of the year. On average I can save 2k per month but I have no idea on what to do with this.

I also have some income from contracting outside of my main employment but thats very infrequent, but this year it will be about 30k. It might be zero next year for all I know. I am registered as self employed for this.

I also dont have any pension but there is a company pension paying 8% employer contribution that I could go into (its a defined contribution pension).

I have read aboout Quinn Freeway funds but when comes to anything beyond a deposit account I am lost in the jargon and can't figure out whats a good choice. Everything has pro's and con's and there are no easy decisions.

I am risk averse in that I dont want to loose my savings but I'd like to be sure I am investing correctly. Should I start the pension, should I invest (but where?), should I just keep with the deposit account?

Or do I just need to go to an independent advisor?
 
If your employer will pay 8% of your salary into a pension, you should definitely go with that. You could put up to 20% of salary into the pension scheme also which would be €1,416 per month. After tax and PRSI relief this would cost you around €750 per month. So you still have €1,250 per month that you could save.

I'd look at splitting that €1,250 between some of the regular saver deposit accounts in the Askaboutmoney Best Buys section and a long-term unit-linked savings plan with low charges. See www.investandsave.ie or, as you mentioned, Quinn Life.
 
Hi

I agree with above poster re the pension - 8% is a good amount which you can then add to as suggested. Why would you not take the 8%?
Plus the tax relief on the AVC's make this the best method of investing for a pension by far.

What plans do you have for the 45k savings?

If you have nothing in the pipeline, then I would recommend paying off a lump sum from the mortgage - you are earning less on the deposit than you are paying for the priviledge of the loan.

Re the monthly excess have you also considered overpaying your monthly mortgage payments in order to pay off the loan years earlier.

check out Karls ever popular mortgage calculator to see the impact this lump sum and/or overpayments could have will have over the term of the mortgage.


Paddy
 
Re. the pension I was holding off as I thought I was going to go down the road of being self employed so the 8% was of no benefit and I felt I wanted to first build up a bit of savings. However, I think I will probably remain in the private sector for another few years now.

I know the mortgage is 4.55% but after the mortgage interest relief (plus I will now be renting out 2 rooms for 830 per month) I am happy to leave it as it is and build my savings and investments. The mortgage interest relief plus the rent from the rooms will cover the interest repayments on my mortgage).

Also, I should have explained that I have 40k in a 5% 4 month fixed term deposit (NIB) and the remaining amount in a 3.9% (it was 4.5% up until a few weeks ago). So I do plan to keep my savings in a 5%+ type of account.

So I think starting the pension sounds like a good idea anyways.
 
Aristotle, you could consider setting yourself up a PRSA, it is not dependent on your employment status and would provide you with a portable pension.
 
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