This makes perfect sense as someone approaches retirement, and is back to the concept of whether the pension also needs to fund rent/mortgage payments.I consider somebody who is investing in equities through a pension vehicle, while simultaneously carrying a mortgage, to have leveraged exposure to both property and equities. That's an exposure in excess of 100% to those risk assets. I think that's entirely appropriate for a young investor with a long investment horizon but may not so appropriate for an older investor that is nearing retirement.
Its likely this age is rising for the population in general. 25/30 (and beyond) year mortgages are more common now than 20 years ago, and people are staying work later based on longer educational windows. Add to this the higher house prices and deposit requirements, and its likely most first time buyers are now in their 30's, looking at 25-30 year mortgages. I am not sure if there are stats available on this, but it would be interesting to seet's really not at all uncommon for folks that are advanced in their working lives to own a mortgage-free house
Maybe - and its likely it would be as a result of an inheritance. I am not sure how many of the pope's children [those born between say 1975-1985] would be in that boat. I guess time will tell in 10-15 years time !to have substantial cash savings (perhaps as a result of an inheritance) sitting on deposit outside their pensions.
I accept this, where they are material assets outside the pension fund. Where there are not, or its likely the assets outside the pension fund will be spent before retirement, then they are of a lessor importanceAgain, it's an investor's overall financial position that matters and I'm very wary of any catch-all "rule" based on age or account type.
Any particular reason you are so heavily invested in Emerging Markets? What triggered this alignment ?All new contributions are going into the Emerging Markets Equity, so this % will continue to rise.
This is a serious pension contribution, so well done for being in that position to do so!Currently paying 25% salary with company adding 10%. Pension pot is currently 5 times my annual salary. When I get to 50 I'll increase to 30% salary contributions and at 55 I'll go to 35% contributions.
I fully accept everyone's individual financial situation is different.I don’t think it’s wise to make assumptions regarding any individual’s overall financial position and to determine allocations accordingly.
That’s really my main point - it’s called personal finance for a reason.
A 40-year old with, say, €350k in a pension vehicle and a mortgage-free house has a completely different risk profile to somebody of the same age with a similar sized pension pot that is carrying a €750k mortgage
Any particular reason you are so heavily invested in Emerging Markets? What triggered this alignment ?
I am curious as to what people use to trigger changes in pension investment strategies...
What % of your salary are you hoping to have in retirement?
If for example you were to retire at 60, you effectively take 65% of your current salary as wages when working (100% less 35% contribution)
Are you aiming to maintain around this level in retirement, given the high contributions? Or is it just a case of building as big a pension pot as you can afford?
Sorry, I'm confused - are you saying the quoted text is not what I wrote? Or are you arguing that a leveraged investor has the same risk profile as an unleveraged investor?That is not what you said
Except that I didn't make that argument. On the contrary, I explicitly said that I was not arguing that it was inappropriate to contribute to a pension while carrying a mortgage.talking about how unwise it can be to be contributing to a pension whilst carrying high levels of debt
Thanks @rgfuller for your explanation and the science (or lack thereof) in your funding decisions. It makes perfect sense to maximise your contributions while you can afford to, and especially if it does not impact your current lifestyle.My main aim is to build as big a pot as possible taking the maximum tax advantage available now, given I can afford the maximum contributions.
Building as large a pot as possible, opens up the possibility to retire before the mandatory age without it having an impact on lifestyle.
No Gordon, I didn't. You may well have mistakenly read that into my comment but it was neither stated nor implied.You suggested that someone’s approach in respect of a €350k pension fund with a 20 year time horizon should depend on his/her debt profile.
No Gordon, I didn't. You may well have mistakenly read that into my comment but it was neither stated nor implied.
Well Gordon this is pretty easy to resolve - if I ever said what you are suggesting (or used words to that effect) you should have no problem producing an appropriate quote.
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