Should we look into investments?

H

hopeful_

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Personal details

Age : 44
Spouse’s/Partner's age: 42

Number and age of children: None

Income and expenditure

Annual gross income from employment or profession: €123,000
Annual gross income of spouse:€78,000

Monthly take-home pay - about €9,000

Type of employment: Private Sector both

In general are you:

(a) spending more than you earn, or
(b) Saving
Saving

Summary of Assets and Liabilities
Family home worth €420k with a €230k mortgage
Cash of €230k

Defined contribution pension fund.
Pension fund: €335k.
Wife pension: €260K
Company shares : €10K

Family home mortgage information
Lender AIB
Interest rate 2.55% Tracker

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?



Other savings and investments:


Do you have a pension scheme?
Yes. Details above

Other information which might be relevant

Life insurance: cover with work. Wife gets 4x salary

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

Right now we have a lot of cash as we need to renovate the house we are in, we have no intention of moving as location is perfect.
We are saving around €4,000 per month between us.
The renovation is our P1, after that the plan is to extensively overpay the mortgage by about 30K per year to pay it off early.
The renovation will cost in the region of 250K-260K, we paused starting the work on it due to the price fluctuations in the market.


Anything you suggest we need to change here? Should we invest the cash for now until we need it next year?

Thanks in advance.
 
There is no big need to offload the company shares if you want to keep them as an investment. They only makeup about 1.6% of your equity investments (assuming your pensions are mostly equity).

But I would still sell them and max your pension AVCs instead. Maxing your pension AVCs looks like one the first things you should be doing.
 
I'd hold off on the renovations for a while. It's absolutely crazy the price right now for any work like that. Not saying it will come down in price soon, but makes no sense at the moment unless parts of it are really essential.
 
And that tracker is a very expensive tracker. I'd be fixing in for 5 years and pay a lump sum off now.
 
hopeful_ said:
Anything you suggest we need to change here? Should we invest the cash for now until we need it next year?
Click to expand...

This really is the key question.

You are saving about €4k a month, so in a year's time, you will have another €48k.

So pay €50k off your mortgage now. That is the best, safest, tax-free investment you can make.

Should you invest the other €200k with a timeframe of a year?

I don't think so. I don't believe in timing the markets, but the future is very uncertain. A fall of 30% will hurt you more than a gain of 30%. With a gain of 30% , you will just have more money to add to your pension. With a fall of 30%, you will have to go to the hassle of borrowing €60k to do the job you want on your house. Not a huge issue, but definitely a consideration.

Theoretically you should sell the shares, but it's not material. You might sell them when you are doing up the house.

Brendan
 
Thanks all, appreciate the response.
@Brendan I am iffy about throwing it off the mortgage at the min as when it comes to the renovation if there is unknown costs at the time we will have borrow to fill them, I also don't want to wipe out all savings for the renovation and have to start again so want 20-30k as a rainy day fund left and then once that is in place we can focus on the mortgage. Maybe for now we just sit on the cash at 0% at least that is less risky given we have only a year.
If only it was safe to put our money in an bank in Argentina and make 37.64% interest on deposit :p
 
hopeful_ said:
Thanks all, appreciate the response.
@Brendan I am iffy about throwing it off the mortgage at the min as when it comes to the renovation if there is unknown costs at the time we will have borrow to fill them, I also don't want to wipe out all savings for the renovation and have to start again so want 20-30k as a rainy day fund left and then once that is in place we can focus on the mortgage. Maybe for now we just sit on the cash at 0% at least that is less risky given we have only a year.
If only it was safe to put our money in an bank in Argentina and make 37.64% interest on deposit :p
Click to expand...
with a 55%+ Inflation rate, and the Peso losing half of its value against the Euro in the last two years, this is not a recommended investment strategy I reckon.
 
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