Timid investor 51 years old - long term investment plans

Red Baron

Registered User
Messages
16
Age:
51
Spouse’s/Partner's age:
45

Annual gross income from employment or profession:
66000
Annual gross income of spouse:
18000

Monthly take-home pay (gross / 12)
5500
spouse
1500

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

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

Saving (on top of maxing out pension)
EUR1000 a month

Rough estimate of value of home
400,000

Amount outstanding on your mortgage:
What interest rate are you paying?
(Mortgage paid off)

Other borrowings – car loans/personal loans etc
None

(Car (Toyota Yaris)is 12 years old - so need to buy another car - idea is to buy new and keep for 10 years).

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

Paid off every month.

Savings and investments:
Do you have a pension scheme?
Me
30% of gross - Employer 8% of gross - currently EUR730,000 medium risk equity invested
Wife
25% of gross - not invested about EUR90,000

Do you own any investment or other property?
PPR (as above)
400,000

50% of holiday home in the process of selling (only used it 2 weeks a year)
>100,000

Life assurance (property fund) (on my fathers life)
255,000

Company I work for USA shares
400,000
38,000 (Dividends in USA stockbroker from last 10 years)

Pension
730,000

Pension Spouse
90,000

Ages of children:
15 (EUR7500 per year private school)


Life insurance:
0

Bitcoin
4,000
--------------------------------------------------------------------
COMMENT:
Feel we are doing pretty well (except for too much cash) - reluctant to push hard on the
invest more in equities angle as the usa stock markets are currently at all time highs.
(Maxed out inheritance from parents class a so not a self made man)

Crazy 'current position'
Too much cash (340,000) (Surplus since mortgage paid off built up in 'joint account' unchecked) - losing to inflation.
Too much in employers stock (used to get it slightly cheaper as employee)

Minor idea - buy an apartment: (Wife prefers physical property instead of shares).
(not clear if it is for direct use or buy to let - probably better to wait for
son to be 18 (in 3 years time) so can be his PPR) (Action - we have viewed 4 apartments) (Not buying trophy house due to divorce risk)

Last agreement with my wife: invest current surplus (at least 500 per month) to stop cash building up further.

Pretty much decision averse + minor health issues so staying liquid- last push 3 years ago was to get my spouse's pension set up.
(hence for example cash building up).

My wife's Davies select execution only pension
1/- can we invest in ETF's etc (for example Vanguard VUSA on Amsterdam market) with gain only taxed as income when we retire?

I understand outside pension investment break down into:
2/Life assurence wrappers investments with 41% 8 year deemed disposal. 1% stamp

3/Buying for example USA shares (which I am familiar with through employer share buying)
- 15% withholding tax in dividends - dividends as income, CGT 33% on sale.

I should pretty much stick to 1/ 2/ and 3/- I can vary my own (not very flexible) pension into emerging markets if I wanted paperwork free exposure to something strange (I can choose from about 10 funds in total including emerging markets (which seems to be Taiwan & China from the biggest holdings in the fund)) - and keep my outside penson investment to 2/ and 3/

(News:
-Searching for an apartment angle is about 3 months old,
-Some money coming in from holiday house sale and medium size inheritance
- not sure whether to invest big (and psychologically) risk market crash tomorrow) (The money was previously invested in property)
- or drip feed EUR x0,000 a month (dollar cost averaging?) over the next year into USA equities.)

(Probably sticking to my guns in general and 'over stuffing money' into pension funds)

=========================================================
What specific question do you have or what issues are of concern to you?
=========================================================
Repeated from summary/comment above:

In my wife's Davies select execution only pension (This pension is currently not invested.)
- can we invest in ETF's etc (for example Vanguard VUSA on Amsterdam market quoted in euros) with gain only taxed as income when we retire?
(This was commented about in askaboutmoney before so I assume it to be true)
- does buying ETF's in pension being OK/paperwork free (ie no 8 year deemed disposal) extend to more exotic ETF's?)

- Advice for being stuck in decision limbo (from my own personality) and my wife's 'cash + physical property' bias?

(Not too much discussion about 'buying an apartment is probably a bad idea' - at least until my son is 18/his PPR (3 years away)- as there seems to be no clear logic attached.)

+ general investment advice.
 
Last edited:

Brendan Burgess

Founder
Messages
45,762
Is this summary correct?

Pension fund €730k in equities
Pension fund €90k in cash
Shares €400k
Family home: €400k
Property fund : €255k ( Is this a savings product which you can access? )
Cash from holiday home: €140k
Bitcoin €4k
Total: €2m

Brendan
 

Brendan Burgess

Founder
Messages
45,762
You face the dilemma a lot of people face.

1) The government and opposition have made it quite clear that they do not want people investing in residential property. I think you should take their advice and avoid it for the moment.
2) Cash is very risky as inflation could reduce the value.
3) The stock markets do look overvalued

However, I think you should sell the shares in your employer and invest the €700k or most of it in a diverse portfolio of shares. Not necessarily American shares. A mix of American, Irish and European.

You have €2m in assets, so you don't need cash and if the stock market crashes, your lifestyle will not be affected.

Brendan
 

Brendan Burgess

Founder
Messages
45,762
Minor idea - buy an apartment: (Wife prefers physical property instead of shares).
(not clear if it is for direct use or buy to let - probably better to wait for
son to be 18 (in 3 years time) so can be his PPR)

Probably a good idea. So by investing in shares now, you are investing in a liquid asset which you can sell easily to get the funds to buy the property.
 
Last edited:

AAAContributor

Registered User
Messages
148
Advice for being stuck in decision limbo (from my own personality) and my wife's 'cash + physical property' bias?

I'm not surprised at the analysis paralysis. You are burying yourself in the weeds of personal finance.

The one exercise I'd recommend that will kill two birds with the one stone (i.e. help you address your decision limbo and your wife's preference for cash and property) is to list out what your goals and objectives are. You have a fair amount of resources there. By listing out your objectives i.e.

1. Target age for retirement; income required net of tax for your desired lifestyle?
2. Be able to fund child's third level education and living costs (any chance they may study abroad etc.?)
3. Health - you mentioned some issues with this. Are you adequately covered to avail of the best healthcare?
3. Personal ambitions (travel, charity, fund a long held dream - private pilot's licence etc).

These are only a few examples.

The advantage of articulating these high level objectives is that it will give you a target to aim at which will thereby determine your investment decisions and how you go about optimising your balance sheet. This takes care of your decision limbo. It will also highlight if your wife's preferred investment approach of cash + property is up to the task of helping you reach those goals and sustain your desired lifestyle.
 
Last edited by a moderator:

Red Baron

Registered User
Messages
16
Is this summary correct?

Pension fund €730k in equities
Pension fund €90k in cash
Shares €400k
Family home: €400k
Property fund : €255k ( Is this a savings product which you can access? )
Cash from holiday home: €140k
Bitcoin €4k
Total: €2m

Brendan
Just under 2 million.
I might have over estimated a little (also CGT due on shares for example).
(Pension money not accessible until I am 65.)
The Property fund is a savings product I can access.
 

Red Baron

Registered User
Messages
16
I'm not surprised at the analysis paralysis. You are burying yourself in the weeds of personal finance.

The one exercise I'd recommend that will kill two birds with the one stone (i.e. help you address your decision limbo and your wife's preference for cash and property) is to list out what your goals and objectives are. You have a fair amount of resources there. By listing out your objectives i.e.

1. Target age for retirement; income required net of tax for your desired lifestyle?
2. Be able to fund child's third level education and living costs (any chance they may study abroad etc.?)
3. Health - you mentioned some issues with this. Are you adequately covered to avail of the best healthcare?
3. Personal ambitions (travel, charity, fund a long held dream - private pilot's licence etc).

These are only a few examples.

The advantage of articulating these high level objectives is that it will give you a target to aim at which will thereby determine your investment decisions and how you go about optimising your balance sheet. This takes care of your decision limbo. It will also highlight if your wife's preferred investment approach of cash + property is up to the task of helping you reach those goals and sustain your desired lifestyle.
I have been working on 'the money will never be enough', 'keep on working while they still pay me','keep investing' (at least with money in my name). There are other financial risks: Divorce, retiring early, change jobs (perhaps with several months between jobs), my health may cause work issues/unemployment at any stage, my wife wants to retire abroad - to be honest the money/cash seems to encourage entertaining these disasters.
I realise the questions were rhetorical:
>1. Target age for retirement; income required net of tax for your desired lifestyle?
'When they stop paying me', costs low except for child's school fees.
>2. Be able to fund child's third level education and living costs (any chance they may study abroad etc.?)
Child can live at home (2 Universities within 30 min cycle)
>3. Health - you mentioned some issues with this. Are you adequately covered to avail of the best healthcare?
Have and will always need private health insurance.
>3. Personal ambitions (travel, charity, fund a long held dream - private pilot's licence etc).
Need to work on these there is too much only 'work/eat/sleep' - one unfortunate thing is it is hard for my wife to take holidays - the most we have done for a while is 5 days off around a weekend (city breaks to European capitals) + my son and I have taken 2 weeks in the now sold holiday home.
I am trying to think of more...
4. The older generation in the family is going into nursing homes/dying off - so I should be making good use of my health/wealth while I still am relatively sound in mind and body.
5. My brother and sister are not economically active , and my father is very old - so I might need to shoulder some of their economic burden.
(i.e. Effectively 'give back' some inheritance I already received if there is not enough to go around - I had thought not expecting any more was the likely 'worst economic outcome'.)
(Without considering any wider family responsibilities (Aunts, Uncles, mother in law)).
 

Marc

Registered User
Messages
1,576
This is such a common scenario.

We help people work out these issues by moving the conversation away from the money altogether.

I’m a Financial Planner but I don’t believe that people have financial goals. We have lifestyle goals that have financial implications.

You should aim to determine exactly what’s important to you

Your child’s education etc

Then assign some specific parameters to these important issues like when are they happening and have a guess at how much they might cost.

A competent financial planner will be able to answer a really important issue for you which is to show you that everything is going to be OK financially however long you both might live under any reasonable set of assumptions without fear of running out of money.

If that’s not the case, they'll be able to show you why and what you could do about it to give you a better chance of achieving everything that’s important to you.

Typically this would be by making recommendations to change things so that you are more likely to achieve your objectives.

This gives context to the decision making process and stops it being “confrontational” between your “I want to do something” and your wife’s position which seems to be “i”m happy as I am thanks”

This approach works because it follows the same approach as addiction therapy which is that if you want someone to break a bad habit, you need to give them a compelling reason to do so.

A good financial planner will bring objectivity to the process and show you visually the consequences of decisions you make now illustrated into the future.

It’s no good just saying your wife should invest her pension. She needs to understand why that perfectly good advice makes MORE sense than her approach and the consequences of her continuing down the path she is on.

it’s exactly the same as saying to a smoker “you know you should stop”. Of course they know they should stop and it doesn’t help to point it out.

Only once you have gone through a process of setting out and agreeing what’s important about money to you BOTH should you even think about making any decisions about what to do with it.

Otherwise you’re just like Alice in Wonderland - if you don’t know where you’re going, then any road will do.

Bringing this level of clarity to the process will flush out solutions that are not only more sensible, more tax efficient and just plain better, they will also have the added advantage of meeting your own personal values about money so they are much more likely to be implemented. Which is most of the problem right?

I’ll leave you with a for example

Typically when we have these conversations with our clients the things they agree most on are things like “we want to make provision for our children”

So we start at the other end of the process and say OK let’s put €335,000 over to your child NOW to kick off some intergenerational estate planning.

As they’re a minor lets use a legal structure like a family partnership to keep control with you and your wife but move the ownership of the cash to the next generation. That’s education and housing provision taken care of in perpetuity and it means that every cent of your investment returns are saving CAT at 33%. Because your child is making the gains not you.

It also means that you could gift the employers shares to your child and claim a CGT CAT offset - another tax saving.

To be clear I’m not suggesting you could afford to do all this right now but it’s certainly a better direction of travel.

When we crunch the numbers we would probably find that you don’t have enough personal resources left to do that so you’d need to make sure that you were milking your own cash properly or you would run out of money. Ah ha!

Equally you might need some of the cash back again in the future for other future needs.

Ok how about a loan to your child? They can repay it if you need the cash back in the future but at least you are putting it to work in the meantime.

So the whole process is iterative getting to the right solution by working with you to trade off who might need what and when.

Almost nothing in this process starts with questions like should I buy more Bitcoin?

And for the avoidance of doubt no you shouldn’t.

Marc Westlake
Chartered Certified and European Financial Planner
www.globalwealth.ie
 
Last edited:

Red Baron

Registered User
Messages
16
(Wife seems adamant that accommodation for my (now 15 year old) son is the top priority:
-This has only been mentioned in the last 6 months.
-Cash has been building up for 10 years.
However we are where we are - and it looks like any idea of investing or otherwise changing the cash into something else while looking for a property is seen, maybe even correctly, as a means by me to put off buying property for a while.)
 

Steven Barrett

Registered User
Messages
4,225
(Wife seems adamant that accommodation for my (now 15 year old) son is the top priority:
-This has only been mentioned in the last 6 months.
-Cash has been building up for 10 years.
However we are where we are - and it looks like any idea of investing or otherwise changing the cash into something else while looking for a property is seen, maybe even correctly, as a means by me to put off buying property for a while.)
This is something that I advise clients against doing. Her intentions are good but she shouldn't chose where your son wants to live. He may want to move abroad or to another part of the country for work. He may also meet a girl who doesn't want to live where you wife has picked. Or it might just be an awkward commute from where it is to his work. There are loads of reasons. There is no issue with helping him out financially with a property when he is old enough to buy one but you shouldn't pick where it is.


Steven
www.bluewaterfp.ie
 

Marc

Registered User
Messages
1,576
Our latest guide sets out the key components of an Estate Plan.

One of my observations as a "blow-in" is that much of the wealth in Ireland has really been created in the last 50 years or so and therefore there isn't a history in many families of joined up estate planning between generations.


Marc Westlake
Chartered Certified and European Financial Planner
www.globalwealth.ie
 

LS400

Registered User
Messages
696
Advice for being stuck in decision limbo (from my own personality) and my wife's 'cash + physical property' bias?
I'm no relationship expert, but from reading your post, I get the impression there's deeper issues at play here, you've mentioned divorce/separation a couple of times in your post, and can see that your both not on the same page financially.

Her "Bias", will not disappear overnight.


You need to physically hook up with an independent financial adviser, together, to have your future plans teased out and explained. That cost money, and in your case, it is well affordable.


Her intentions are good but she shouldn't chose where your son wants to live

Yes she should. What 15 year old knows anything about location, rentability etc.

If the lad wants to change location in 10 years, he has a platform to do it. That's boxed off for her.
 

Steven Barrett

Registered User
Messages
4,225
Yes she should. What 15 year old knows anything about location, rentability etc.

If the lad wants to change location in 10 years, he has a platform to do it. That's boxed off for her.
Why would you buy a house for a 15 year old? Give him the money when he's old enough to live on his own and let him pick where he wants to live.
 

Paul O Mahoney

Registered User
Messages
1,383
Reading this just reminds me of our situation, my wife also has this need to have mountains of cash to buy a place for the kids (2) , or having enough if they wanted to "start a business " and multiple other what ifs.
I let her off , each got a car at 18 which they both still have, but after that I said to her "what about you? " Do you want to keep working until 65/66/67?"

Obviously she said no, but I explained to her that the kids will have enough when we are gone, and its time to think about her retirement and living a bit.

I went away and gathered all the information, pensions, savings, shares value of properties added everything up took away what we owed and showed her the figure, she was shocked it was so high, and that changed everything, she now maximises her pension to limit, has moved money into multiple investment funds some lump sum some monthly, still has cash on deposit, "just in case money " our daughter leaving to live in Spain last month has further pushed her see if she can put more away.

Irish Mammys are always putting cash away and , not being disrespectful, they take each year at a time and forget what they have and more importantly what they need.

I'd sit with her go through everything line by line and as others have said if both of ye are not sure what to do, find a good adviser, and make all that money work for everyone in your family.

Honestly since we started this a few years ago the worry of having substantial funds on deposit, in shares and having an underfunded pension we now understand what we have, what we probably will have , and what our children might need, but it's not cast in stone and I know we still probably need to talk to a professional advisor next year.

First thing I'd do is make a will if ye haven't done so yet....that really focuses the mind.

My tuppence
 

Red Baron

Registered User
Messages
16
Thanks for the replies.

Paul O Mahoney seemed to give the most hope. Explicitly putting down our plans and resources on paper may help. I do list out assets out periodically, and where to find them if I die. There is USA Estate tax to be considered for example.

Having to argue my own point of view/reasoning/even rational/'emotions' without deferring to pretty much pension company advice while she does the same, sounds like opening a can of worms but might need to be done.

I did try to in a petty way divide our investments to keep track of her investment return 0% and my investment returns (double digit%) the idea being to have her watch me grow rich (hopefully to get her to change her mind).

My wife is pretty strong willed and repetitively insistent, so may well have her way on buying an apartment. Only damage limitation I have is setting a budget (without needing a mortgage and not selling our current house).

Buying an apartment would mean selling the stock in the company I work for.

It would be possible to sell the apartment if it did not suit at a future date.

I am nervous about large property transactions, expensive to sell again, maintenance problems, and horror stories: cracks/flammable cladding/building errors.

Apartment is tricky as the location you want to live in, might not suit for Buy To Let, basically higher rental % yield in average (but still Dublin commutable) locations. (I am talking bicycle commute (5km) not car commute). ie there are compromises between 'is this for my son to live in eventually' or 'is this a buy to let'.

My wife does not like her current job "the money" suggests she can give in her 3 months notice and take time off for holidays and finding her next job. Only 'real' thing wrong with her current job is difficult to take holidays. Other than that I do not think she will find anything better.

I should really address professional services, only one I used was a freebie at work no cash up front, almost tick the box exercise, I cannot see my situation being so unusual as to require custom financial advisor help. I googled and noticed couples argued about finance a lot so it is more a councillor than a financial advisor that is required ! (Pretty resigned to paying for real estate, solicitor and occasionally accountancy fees.)

A few people in the company I work have gone through redundancy fairly recently, and had professional help with it, so after 20 years may have similar investment/pension/company stock issues in addition they got redundancy money. As it happens none of them had a current partner, so the partner angle would be absent, some had kids. I may have paid more into pension than them. One guy's pension plan was a couple of apartments around Europe, which makes my plans seem positively timid. (He retired at 51.) i.e. I may easily get the advice they got.
 

mtk

Registered User
Messages
591
ne guy's pension plan was a couple of apartments around Europe, which makes my plans seem positively timid. (He retired at 51.) i.e. I may easily get the advice they got
Hi red barron, Not sure I understand that do you mean you can talk to your former colleagues ? or company will allow you to see same adviser or something else
 

Red Baron

Registered User
Messages
16
Hi red barron, Not sure I understand that do you mean you can talk to your former colleagues ? or company will allow you to see same adviser or something else
I could talk to my former colleagues. I had not thought of going to the same advisor until you mentioned it.

I was binge reading the rest of askaboutmoney. One post was on financial advisor and risk averse client, maybe that is my situation, I can do little more than advise my wife ( I can refuse to write a check, and refuse to transfer money) and I cannot (guarantee/certify) future return on medium to high risk assets. Though I suppose "now" she is promoting property over shares, ie an investment of sorts, which has risk attached. ie I cannot complain about her no/low risk point of view, now it is me that is dragging my heals blocking investment (in this case in property).
 
Top