What to do with excess cash on deposit.

MBags

Hi all.

I am posting because I am at a loss as to what my next steps should be.

I'm 27, earning 50k per annum, and after rent/bills I have been able to save 23k over the last couple of years. At the moment I am saving 1,000 euro per month into a regular saver account - the balance of which is 8,000 - and the rest (13,000 euro) is in a notice account.

The regular saver earns interest at 3.5% and the notice account at 2%.

I get the feeling that at my age I should be doing more with my money. With the regular saver, I am building up a nice deposit for a down-payment on a house in about 4 years. But I do not know what to do with the money which is currently sitting in a deposit account earning 2% variable.

Should I keep my money where it is or would it be better elsewhere?

homer911

Have you started a pension?

MBags

Hey Homer, thanks for your reply. I forgot to mention that I have a staff pension as part of my job. 2% of my income is deducted at source for this + matched by the employer. I've made no additional AVCs to this and am happy to keep it as it is.

coylemj

MBags wrote: »

Hey Homer, thanks for your reply. I forgot to mention that I have a staff pension as part of my job. 2% of my income is deducted at source for this + matched by the employer. I've made no additional AVCs to this and am happy to keep it as it is.

Well you won't be happy when you reach retirement age with a pension pot accumulated with only 4% of your salary. You are foregoing massive tax benefits by not stuffing money into an AVC.

Have you read all the controversy about the Dublin airport pension fund? The Aer Lingus employees had a total (employer & employee) of 12.375% or thereabouts of salary going into their pension fund and even then they are seeing their benefits pared back. With only 4% of your salary going into your pension fund, you will get less than a third of the pension that they are now seeing reduced because of poor investments returns and increased life expectancy.

MBags

coylemj wrote: »

Well you won't be happy when you reach retirement age with a pension pot accumulated with only 4% of your salary. You are foregoing massive tax benefits by not stuffing money into an AVC.

Have you read all the controversy about the Dublin airport pension fund? The Aer Lingus employees had a total (employer & employee) of 12.375% or thereabouts of salary going into their pension fund and even then they are seeing their benefits pared back. With only 4% of your salary going into your pension fund, you will get less than a third of the pension that they are now seeing reduced because of poor investments returns and increased life expectancy.

I'm 27 and my goal right now is to save as much as I can for a deposit on a house in 3-4 years time. Stuffing money into an AVC isn't going to help me do this, hence why I am happing to leave it as it is for now.

SBarrett

3-4 years is too short an investment period to be taking risks. What if you go for it and your investment falls by 20%? How many years will that set you back?

Trying opening multiple regular saver accounts with different banks to get the best rates available.


Steven

draiochtanois

This post has been deleted.

MBags

draiochtanois wrote: »

This post has been deleted.

Thanks guys. I am now thinking about drip-feeding what I have on deposit into regular savers. If I keep saving 1k p/m I should be able to hit my goal. I will look at investing any additional savings that would put me ahead of this.

tomfoolery60

If you need the money in 3-4 years then really savings accounts/state savings schemes are the best way to go - you can't afford to deal with the capital risk if you lose money. And keep the saving up, you are in an enviable situation to be able to put so much away!

David900

MBags wrote: »

I'm 27 and my goal right now is to save as much as I can for a deposit on a house in 3-4 years time. Stuffing money into an AVC isn't going to help me do this, hence why I am happing to leave it as it is for now.

Some pension providers can show your projected yearly income based on your current contributions.
Personally speaking, this was a huge eye opener for me and I'd seriously recommend looking into this.
I would advise starting to put away a little bit, e.g. €50 per month and you can increase this over time. You won't even notice this but it will begin to shift your thinking of the importance of it.

Out of curiosity, would you be able to provide the target you've set for a house deposit? Are you aiming for 20% initial pay down?

SBarrett

David900 wrote: »

Some pension providers can show your projected yearly income based on your current contributions.
Personally speaking, this was a huge eye opener for me and I'd seriously recommend looking into this.
I would advise starting to put away a little bit, e.g. €50 per month and you can increase this over time. You won't even notice this but it will begin to shift your thinking of the importance of it.

Out of curiosity, would you be able to provide the target you've set for a house deposit? Are you aiming for 20% initial pay down?

All pension plans have quotes showing the return if you contribute X and it grows by Y each year.

You can do it yourself easy enough on excel using the =FV fucntion


Steven