What to do with extra cash?

A

Arklow14

Registered User
Messages
5
Age:

44

Spouse’s/Partner's age:

44

Annual gross income from employment or profession:

125k + 30% bonus plus 20k in shares ( roughly)

Annual gross income of spouse:

44k (Half time)

Type of employment:

Me Private Spouse Private

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

Saving.

Rough estimate of value of home:

450k

Amount outstanding on your mortgage:

n/a

What interest rate are you paying?

n/a

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?

n/a

Savings and investments:

20k Emergency fund – credit union

100k Company Shares

Do you have a pension scheme?

Yes Hybrid Scheme DB – currently will pay 10k a year on retirement, rising to 20k if I stay until 65. DC Scheme Irish Life 100% equities. Current value 200k. I make 2000 a month AVC

Do you own any investment or other property?

No.

Ages of children:

8 and 10

Life insurance:

Yes 500k term policy

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

I have been aggressively paying off my mortgage over the last 5 years. As its now finished I now have about 40k extra this year. I am currently exceeding my 25% pension age limit for AVC. My job is not 100% secure as a multinational.

Option 1 – Buy 2 20k government bonds maturing in 10 and 15 years to support college fees

Option 2 – Just put into my pension even though over limit. The fund growing tax-free is the motivation here. ( I don’t like the fee and tax structure of the college savings investment funds, Zurich, Irish life etc.

Thanks
 
Are you married to your spouse? If so, is she maximising her tax relief?
 
I don't think you should overcontribute to the pension fund. You have plenty of time to max out the pension fund contributions. And, if you want to access the cash for education, you won't be able to.

Buy a portfolio of shares or an ETF.

Brendan
 
OP you haven't articulated any financial goals or lifestyle ambitions?

While not helpful to the OP directly, have they got the balance wrong in managing their finances? Overcommitting to paying down the mortgage has resulted in tax relief forgone and now they are in a position that they have excess resources. With a high income, company shares once the mortgage is at a manageable LTV and the rest of the finances/expenses are in check, then the focus should be on maximising tax relief and using the excess to pay off the mortgage? Time in the market etc.
 
Arklow14 said:
I make 2000 a month AVC
….
I am currently exceeding my 25% pension age limit for AVC.
Click to expand...
You can contribute €28,750 to your pension given your age and salary, regardless of any employer contribution. So, it doesn’t look like you are maximising your pension contributions.

Paying down a mortgage ahead of schedule in priority to maximising pension contributions is a mistake, IMO.

Is your spouse contributing to a pension?

Is there any work you could do to your home to make it more energy efficient?
 
Sarenco said:
You can contribute €28,750 to your pension given your age and salary, regardless of any employer contribution. So, it doesn’t look like you are maximising your pension contributions.

Paying down a mortgage ahead of schedule in priority to maximising pension contributions is a mistake, IMO.

Is your spouse contributing to a pension?

Is there any work you could do to your home to make it more energy efficient?
Click to expand...
Apologies was not clear. The 2000 is avc, I also pay 520 a month into the DB and 400 a month into the DC
 
Itchy said:
OP you haven't articulated any financial goals or lifestyle ambitions?

While not helpful to the OP directly, have they got the balance wrong in managing their finances? Overcommitting to paying down the mortgage has resulted in tax relief forgone and now they are in a position that they have excess resources. With a high income, company shares once the mortgage is at a manageable LTV and the rest of the finances/expenses are in check, then the focus should be on maximising tax relief and using the excess to pay off the mortgage? Time in the market etc.
Click to expand...
I suppose no real lifestyle goals , did a lot of work on the house so all big jobs done. I just want to make sure I have enough for kids college and pension
 
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