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What advice would you give a 25 year old making €300k+ per year

  • 19-12-2021 12:48pm
    #1
    Registered Users Posts: 118 ✭✭ Paddyg96


    Title basically

    I’m a 25 year old and I started a business in 2017 that is now making me 300k+ per year.

    I thought there was probably a lot of wise heads in here, that could offer me some good advice as no one in my family has any experience with wealth.

    I feel a bit pressured and scared about whether or not I’m making good decisions

    i have about 100k in cash personally, about 60k in crypto, 70k in stocks and then about 200k in cash within my limited company.

    should I buy property? Should I keep all my money in the limited company to avoid heavy income tax?

    should I just buy a Ferrari and stop worrying about all this haha (jk)



Comments

  • Registered Users Posts: 7,372 ✭✭✭ Chinese whospers


    Don't base investment advice from people on the Internet. Look into professional investment advisors, but, you will still need to keep your wits about you. But, if you are that successful at such a young age, you must have some cop on.

    And I'm of the buying a ferrari could be a very valid decision opinion 🙂


    Good luck

    I’m in love with him and I feel fine.

    ^^^ although, I’m okay with getting back to winning ways, Jurgen.



  • Registered Users Posts: 2,261 ✭✭✭ garrettod


    Congrats on your success to date!

    Get an accountant or tax advisor.

    Maximise your pension contributions, you'll get a tax break, and be getting an excellet start on your retirement planning. You can also max out last year's contributions, and get tax relief, if you haven't already done so.

    Running alongside that, I'd be thinking about trying to buy a home. Regardless of your view of property prices, you'll need somewhere to live, for your entire life, so better to buy off you can (than rent).

    Personally, I think you are mad to be that heavily invested in crypto, they are way too volatile.

    I think you'd be better off buying a nice car with some of the money in crypto, if given the choice.

    How sustainable are your earnings, both personally, and within the company?

    Do you have any family members that aren't earning, that you could employ - hence giving them the chance to earn and use their tax allowances etc?

    Thanks,

    G.



  • Registered Users Posts: 2,233 ✭✭✭ massdebater


    10-15% of his investment pf in crypto doesn't seem excessive, considering he makes 5x that amount every year and is only 25yo.

    I agree, pension and buying a house is probably a good shout if he sees himself living in Ireland for at least another few years.

    A chat with a fee-only financial planner is probably the way to go.



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  • Registered Users Posts: 443 ✭✭ TP_CM


    Have you put any earnings into a pension? I drew down about 100-130k as salary which was more than enough and threw the rest into a pension fund tax free. I wouldn't leave it in the company account, you'll pay 12% corp tax, and then end up paying income tax whenever you do decide to take it out over the next few years, to buy a house or whatever.


    Edit: ah, I see someone already mentioned pensions. Probably the best way to do it in my opinion.



  • Registered Users Posts: 118 ✭✭ Paddyg96


    How did you feel paying 45-50% on that amount? I’ve got a lot of advice telling me to draw down 35kish to pay little tax and then invest the balance sheet….but I have no idea if that’s good advice or not



  • Registered Users Posts: 6,143 ✭✭✭ Flinty997


    Generally the advice is when you start to have a lot of money like millions, is to diversify.

    I'm not sure you're at that point yet.



  • Registered Users Posts: 2,261 ✭✭✭ garrettod



    Right or wrong, I took it to be €300k gross, so the €60k in cryptos is more like 33% of a year's net income.

    We're not sure how sustainable the income is, original poster doesn't have a house, or an investment property etc.

    Personally, I wouldn't risk €60k in cryptos (which could quickly become €30k), in those circumstances, but each to their own :)

    I agree with you 100% on getting advice from an independent advisor, who is paid by a fee, so not conflicted when recommending certain investments (that pay him / her a commission etc.)

    Thanks,

    G.



  • Registered Users Posts: 2,261 ✭✭✭ garrettod


    Hi Paddy,

    How sustainable is the income at your business?

    Is the income and level of profits fairly safe for (say) the next five years, or more? What might significantly disrupt it?

    Does your business need a property to trade from, and if so, what type of property and location? Are there options regarding buying a property outright, buying one with assistance from debt, or leasing a property?

    I'm off the view that the Irish tax regime won't see tax reductions, and will most likely see tax increases, over the next 10 years (or more) - given the increased national debt will need to start getting repaid etc. As such, I don't see any vendor to leaving the funds in your company. You are clearly too young to try to avail of tax relief available to retiring business owners who sell their businesses etc.

    Thanks,

    G.



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  • Registered Users Posts: 118 ✭✭ Paddyg96


    I would say it’s relatively sustainable, it’s more likely to increase than decrease in the next 3 years. However, I’m not naive enough to not realise things can change very rapidly!

    I have built up a very bit personal brand and reputation in my industry so if it was to change, I don’t think I’d struggle to land a 100k+ job.

    as for the property, all I need is a desk and computer. It’s 100% remote, could move to any any country in the world.



  • Registered Users Posts: 4,061 ✭✭✭ Treppen


    If you can 100% remote anywhere then that brings more possibilities.

    Off to Malta with you so... For a few years anyway.



  • Registered Users Posts: 2,284 ✭✭✭ CorkRed93


    pay a financial advisor, avoid crypto.



  • Registered Users Posts: 1,147 ✭✭✭ daithi7


    To paraphrase the late, great George Best, you could ' spend 99% of your money on booze, fast cars and fast women..... and then you can just squander the rest....' ;)


    P.s. otherwise get yourself two good financial advisors, a tax advisor (to limit tax & so save business & personal monies), & an investment advisor (to grow personal funds optimally for you).

    P.p.s. GillenMarkets are a good investment advisor imho (no relation to me whatsoever)



  • Registered Users Posts: 1,147 ✭✭✭ daithi7





  • Registered Users Posts: 21,924 ✭✭✭✭ AndrewJRenko


    Get professional advice on your exit strategy. You'll find some fool to give you more money than you could ever earn from it, and they'll probably keep you on at a large salary for a few years anyway.




  • Registered Users Posts: 26,154 ✭✭✭✭ Wanderer78




  • Registered Users Posts: 2,261 ✭✭✭ garrettod


    Hi,

    Thanks for the reply.

    Given the business doesn't need a property, why buy one within the business (and particularly, when prices are high, and property investment yields are low / possibly risky) ?

    If I were you, I'd be looking to extract as much from the business as I could - without leaving the business under cashflow pressure, obviously.

    Tax considerations come to mind, as do other personal priorities (hence I've mentioned pensions, and perhaps a home).

    If I were you, my first stop would be to get a decent accountant / tax consultant, to help you look at how you can minimise your tax position.

    Then, it's down to you putting togeather a few priorities, in terms of what you want from the future etc. Do you want a home, to provide for early retirement, to travel, to help a family member financially etc?

    A good independent financial planner might be the way to go (but get an independent, who charges an hourly fee, and only makes recommendations, but doesn't sell investment products).

    Well done again, on your success to date - it's a super start to life!

    Thanks,

    G.



  • Registered Users Posts: 4,061 ✭✭✭ Treppen


    There's a reason Dinny the Maltese Falcon resides in Malta.

    Why would you be paying Irish taxes if your business is online?



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  • Registered Users Posts: 443 ✭✭ TP_CM


    At the end of the day there was no clear way for me to avoid that 45-50% tax really. Even if you invest it, first of all that might not go well, and second of all, isn't there a 33% tax on profits made over a nominal amount, and when you go to draw down at any stage in the future, you will be hit with the tax. So the incentive wasn't there for me to invest.

    Definitely make sure you're maxing out your expenses. Computers/Printers/Screens/Desks/Chairs. There was also a cool tax incentive to buy a new electric car on the company funds VAT/Income tax free. If you were interested in buying a new electric car, I would certainly look into that.



  • Posts: 0 [Deleted User]


    Are you the "That Chapter" guy?

    Meeting with a few different "independent financial advisors" and see which one who you click with is probably decent advice.

    Don't go with some old fogie either - 40 to 50 age group maybe.

    Valuations on American Equities are very high now for sure.



  • Registered Users Posts: 1,981 ✭✭✭ Shapey Fiend


    I love the advice to buy a car rather than crypto. The car is guaranteed to lose all its value over time. Crypto assuming you're not buying memecoins or using leverage has been the best performing asset class in the last 10 years. Property is at an ATH now as well I bought some in 2006 when I was young terrible timing. With the chronic supply shortage I think it's wise avoid for a while till the markets more realistic instead of paying 3x what something is worth.

    Getting a good accountant is the main thing I'd say. Is the company limited? You seem to be doing plenty enough right to me you've got sound instincts if you're making that much.



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