After paying Mortgage off

veryangryman

Due to complete this at year end.

Any thoughts on what to do with the spare cash once this is done? The bore in me says throw most of it into pension for tax purposes but lets hear some peoples meandering experience on what they did/wish they did

bonaparte2

Borrow the same again, plunge the lot into property. Money is cheap and you have an advantaged over the unpropertied classes that would be a shame to waste.

NIMAN

I'm guessing that is tongue-in-cheek advice.

Apiarist

Have a great holiday in some exotic country and change your username to a veryhappyman? Once that is done, put it into the pension -- you may save more in taxes than gain from property in the short term at least.

ArthurG

What stage of your life are you at?.

UsBus

veryangryman wrote: »

Due to complete this at year end.

Any thoughts on what to do with the spare cash once this is done? The bore in me says throw most of it into pension for tax purposes but lets hear some peoples meandering experience on what they did/wish they did

But a nice little apartment in Spain or Portugal..6 months there, 6 months here in the future when you retire, avoid the winter here then....

bonaparte2

Take up dry stock farming . Problem solved.

StupidLikeAFox

bonaparte2 wrote: »

Take up dry stock farming . Problem solved.

.....many many more, far more complex problems created

Apiarist

bonaparte2 wrote: »

Take up dry stock farming . Problem solved.

Or buy a 100 acre site of marginal land and plant trees. Of course, you or your descendants will have to worry about all the money when the trees are cut and sold. But that delays the problem by 25-40 years!

veryangryman

veryangryman wrote: »

Due to complete this at year end.

Any thoughts on what to do with the spare cash once this is done? The bore in me says throw most of it into pension for tax purposes but lets hear some peoples meandering experience on what they did/wish they did

Keep paying your current mortgage payments (or maybe 75-80% of it), but pay it into a savings account. It won't be long building up and you'll have a slush fund to dip in and out of as you see fit.

pawdee

Re-mortgage the house and buy bank shares. Can't go wrong.

machaseh

Do whatever you want to do with it. You can invest the rest in a variety of things (real estate, stocks, cryptocurrency, start ups, gold....) or put it into pension.

SozBbz

Whats the rest of your info OP?

How long do you have left in work?

How good is your pension.

How much money was your mortgage costing you monthly?

Pension is probably the easiest/most obvious thing to do with it, but I also like the idea of going on a holiday with some of the extra money. You don't have to start the increased pension contribution straight away - you could just keep the money for 6 months, do something nice and frivolous with it and then increase you pension contributions from that point forward.

douglashyde

Low Risk: Max out pension contributions.
Medium Risk: Buy-to-let mortgage, take advantage of 100% interest relief, pick an area with high yield but that will see gentrification.
High Risk: Buy Gold, Bitcoin, ETH and baked beans and wait for for the nest recession over the next couple years.

FGR

douglashyde wrote: »

and baked beans

You had to leave it to the very end to break out the best advice :pac:

Second to this I'd also agree with using the extra cash over 6 months towards a nice holiday - then slam it into a pension fund.

That said - fortune favours the bold. And that history is written by the winners..so..

veryangryman

SozBbz wrote: »

Whats the rest of your info OP?

How long do you have left in work?

How good is your pension.

How much money was your mortgage costing you monthly?

28 years odd left. Pensions currently around 75K, current job does a 2+8 contribution between me and them.

Mortgage had been maybe 1300 per month due to me increasing rate of payments. In this final year i've gone uber on it and throwing maybe 2.5k a month at her. Get debt free while still having legs and marbles is a big incentive.

collie0708

veryangryman wrote: »

28 years odd left. Pensions currently around 75K, current job does a 2+8 contribution between me and them.

Mortgage had been maybe 1300 per month due to me increasing rate of payments. In this final year i've gone uber on it and throwing maybe 2.5k a month at her. Get debt free while still having legs and marbles is a big incentive.[/QUOTE

Great achievement!!!!

I’m in a similar position to you OP, currently looking to understand varies investment options available the plan is to invest the old mortgage payment to allow me to build up a nice next egg. Already maxing the pension.

SozBbz

ah ok, you possibly are a bit younger than I'd originally assumed.

You're limited then as to how much you can put into your pension on a tax free basis, the amount you can contribute tax free will rise in time but for now I don't think you could efficiently that much money in each month. Maybe look at maxing out your contribution based on the age limits but I think you probably need some proper investment advice for the remainder.

Nijmegen

So OP you're maybe 40 if you're looking to retire at 68 or thereabouts...?

Is your pension a PRSA or a company scheme do you know? Ie, do their contributions count towards your tax free limit (if it's a PRSA they do, if it's a company scheme they perhaps do not - a little win a lot of people trying to be tax efficient discover!)

Generally maximising your pension contributions is a good move given the tax benefits. You can start accessing your pension age 60 so to be honest, if you've got your mortgage paid off with 28 years on the employment clock you could probably start thinking about early retirement if you go at it the right way.

Generally investing in Ireland is only efficient via your pension, or into the dreaded and frankly overrated property market. Replace your mortgage free life with another debt and a property you have the ballache of managing? Stick my money tax free into my pension fund for someone else to manage per my general instructions and let me take out loads of it at 0% and 20% come the day I am eligible.

30-39 you can contribute 20% and 40-49 25%, then 30% in your early 50's, 35% in your mid-late 50's and 40% at 60 and over. This is of course capped at an income of €115k. I dunno what your income is, maybe it's above that (if you're paying off your mortgage at this stage by throwing €30k of your net salary at it on an annualised basis maybe this is a consideration!) but something to be aware of. If you were, the limit is €23k in your 30s and €28,750 in your 40s, which is gross rather than net pay. So I'd say you're in a position to maximise your pension and still be coming out with some of that net pay you're throwing into the mortgage today for whatever you like.

The usual thing to do is build up a 6 month contingency and then what's your plan...? Do spend things on stuff you'll enjoy like travel. Don't forget to save for things like kids going to college.

jimmycrackcorm

douglashyde wrote: »

Low Risk: Max out pension contributions.

This 100%. Nothing can beat using your maximum AVC when you. Not only is your pension contribution doubled through tax relief but it will also likely experience significant growth

veryangryman

Thanks for the suggestions sofar, keep them coming (thinly veiled needless bump to the thread) :pac:

Wasnt aware of the AVC ceiling. Might as well use some of the spare Lolly on a decent holiday. Im 37 FYI

Nijmegen

veryangryman wrote: »

Thanks for the suggestions sofar, keep them coming (thinly veiled needless bump to the thread) :pac:

Wasnt aware of the AVC ceiling. Might as well use some of the spare Lolly on a decent holiday. Im 37 FYI

Maxing out your pension and still have spare cash?! Does your career lend itself to moving to a 3 day week........

To be honest once you've tapped out your pension fund that's kinda it for tax efficient investment unless you're getting into some serious tax planning, ala company in Dubai and all that...

My recommendation is to not do something that will see you go into debt, ie leverage off your income to buy more property on a mortgage or something. The peace of mind of going debt free is never to be underestimated.

Do you have yourself a 6-12 month emergency stash of cash? ie enough to get you through an unforeseen event or between jobs. Always worth having and topping up over time to account for pesky inflation.

After that you should probably sit down with a broker who can point you in the direction of some funds or shares to start investing in. Bad thing about funds is that every 8 years the gains get taxed at 41% outside a pension, but really if you have that much spare cash you don't want it frittering away and you don't want it sitting in a bank account getting dust.

What are your ambitions, OP? Kids? Will they need educating?

To be honest if you're 37 and are able to max out pension contributions and still have walking around money with no pension, you need to go talk to a serious financial planner as you're a veritable cash machine and they should sit down and talk to you about your ambitions and model them on out.

collie0708

Nijmegen wrote: »

Maxing out your pension and still have spare cash?! Does your career lend itself to moving to a 3 day week........

To be honest once you've tapped out your pension fund that's kinda it for tax efficient investment unless you're getting into some serious tax planning, ala company in Dubai and all that...

My recommendation is to not do something that will see you go into debt, ie leverage off your income to buy more property on a mortgage or something. The peace of mind of going debt free is never to be underestimated.

Do you have yourself a 6-12 month emergency stash of cash? ie enough to get you through an unforeseen event or between jobs. Always worth having and topping up over time to account for pesky inflation.

After that you should probably sit down with a broker who can point you in the direction of some funds or shares to start investing in. Bad thing about funds is that every 8 years the gains get taxed at 41% outside a pension, but really if you have that much spare cash you don't want it frittering away and you don't want it sitting in a bank account getting dust.

What are your ambitions, OP? Kids? Will they need educating?

To be honest if you're 37 and are able to max out pension contributions and still have walking around money with no pension, you need to go talk to a serious financial planner as you're a veritable cash machine and they should sit down and talk to you about your ambitions and model them on out.

I recently met a financial advisor and his advise was exactly the same as what you have proposed.

He never mentioned the 41% tax on funds after 8 years, I’m due to meet him next month to discuss investment options, does anyone have any suggestions that are more tax efficient????

Nijmegen

collie0708 wrote: »

I recently met a financial advisor and his advise was exactly the same as what you have proposed.

He never mentioned the 41% tax on funds after 8 years, I’m due to meet him next month to discuss investment options, does anyone have any suggestions that are more tax efficient????

You find it you let us know... so there are options like trading equities directly, where you pay CGT on gain of sale but you then pay income tax on gains from dividends. Can be a real ache to administer yourself and then if for example you were making 50:50 in gains in the value and dividends you’d probably be approaching the 41% exit tax.

There’s a frustrating middle ground between filling your pension and being rich enough to afford Gucci offshore type tax arrangements. The Irish state does its best to screw you hard when you try to engage in activities it also actively tries to attract foreigners to do here (eg foreign fund managers from the UK re-domiciling to Ireland.)

At some point you just have to live with the screwing. The exit tax is a lot higher than it was pre recession and I believe Irish people have about a quarter as much money invested now.