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What would you do with €130K in savings as a 30 year old?

HillCloudHop

I've managed to save 130K through the combination of a frugal lifestyle, living several years rent free and a decent paying job.

Not sure what my next step is. I'm hesitant to buy into the stock markets. I know people say you can't time the market, but I feel that it's primed for a major pullback at some point in the near future (people have been this for years though). The markets seem crazy at the moment. I conversely don't like the idea of my savings rotting away in a bank.

I've got a PRSA. I can't take out a mortgage at the moment as my line of work means it will be at least 5 more years before I'll know where I'm living long-term.

What would you do?

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[Deleted User]

Jim2007 wrote: »

Warnings are well justified.

For sure, but the point was well made that the poster referenced is completely wrong in saying there is no value in a bitcoin. Try buying one now for $30k and you'd be laughed out of it.

What's the value of the Mona Lisa? A couple of euro in wood and canvas ruined by being used. Yet, it's considered priceless.

While people place a value on bitcoin and the like it has value in the exact same way as a canvas with oil paint hanging in the Louvre.

bilbot79

sphinx501 wrote: »

I am in a similar situation, have 50k in Irish Life MAPS but the returns have stagnated after 5 years so trying to decide between...

- Maximising AVC on an existing PRSA
- Maximise Mortgage Repayments (Currently 30 Years Remaining)
- Invest in ETF (VWCE)

I am contemplating ETF option with continuous monthly buy in, as I don't want the money locked into PRSA or property. Thinking a decent % return on ETF will out grow my mortgage (currently 2.2%).

I think you have order right there. After AVC it's mortgage and then stocks n shares.

Debt is cheap now but if you pay it off while rates are low you'll be able to take advantage of impacts of higher rates later with the spare cash. If you don't pay it off and rates go up well it'll be more money to the bank and less invested for you.

patsy_mccabe

Deleted User wrote: »

For sure, but the point was well made that the poster referenced is completely wrong in saying there is no value in a bitcoin. Try buying one now for $30k and you'd be laughed out of it.

What's the value of the Mona Lisa? A couple of euro in wood and canvas ruined by being used. Yet, it's considered priceless.

While people place a value on bitcoin and the like it has value in the exact same way as a canvas with oil paint hanging in the Louvre.

You still don't get it. Just because something is trading for a certain value, doesn't mean that it is worth that value. Think of the classic bubble of trading tulips.

Think of it this way. Anyone can set up a cryptocurrency. Its all unregulated. Let's say you set one up and so does your friend. Let's say there's a 1000 units in each. You buy one of his units for €1000 and he buys yours for €1000.
Your cryptocurrency is now worth a million € and so is his. It really is that crazy.

timeToLive

Jim2007 wrote: »

It’s frightening that you seem to fail to understand the intrinsic value of a currency.... it is zero! Now it does not matter if it is a dollar, a Euro of your favorite crypto currency, it’s worthless unless people believe in it.

Now people believe in say the Dollar or the Euro because the are the currency of major trading blocks. Which means that is widely accepted in business transactions and there are mechanisms in place to support or at least people have that expectation.

This is not the case with any crypto currency, there is nothing behind it but people’s believe in its story, nothing in place that might be used to try and restore confidence in it, should that confidence be shattered and no why to widely use it in commerce without being able to convert it into a monetary unit such as the dollar or the euro. It has all the risk characteristics of a tulip bulb and no amount of sophisticated maths etc is going to calm the nerves if the balloon goes up.

I don't think ignorant investors should put their money in cryptocurrency but your post reads like a mishmash of critiques you have heard. It sounds like you haven't really read up on it because all of that has been discussed to death.

[Deleted User]

patsy_mccabe wrote: »

Think of it this way. Anyone can set up a cryptocurrency. Its all unregulated. Let's say you set one up and so does your friend. Let's say there's a 1000 units in each. You buy one of his units for €1000 and he buys yours for €1000.
Your cryptocurrency is now worth a million € and so is his. It really is that crazy.

It would be if that's how it worked. In your scenario your coin has no liquidity. Nobody else is going to buy the coin for €1,000. To see how wrong your scenario is why don't you try and show us your bank statement with €1m in it. You will find people that made millions out of bitcoin.

People think they are being smart when they say bitcoin has no value, they claim to be inheritors of the wisdom from person that cried 'the emperor has no clothes' - 'You still don't get it.'. It's a bit sad really.

Take shares as an example where some here think are safe whereas bitcoin isn't. Some shares are crazily priced. I wouldn't buy bitcoin or the likes of TSLA for that matter, but I can see they have value.

BTW, reread your sentence very carefully.

patsy_mccabe wrote: »

Just because something is trading for a certain value, doesn't mean that it is worth that value.

Now think about gold, or lots of art.

Jim2007

Deleted User wrote: »

For sure, but the point was well made that the poster referenced is completely wrong in saying there is no value in a bitcoin. Try buying one now for $30k and you'd be laughed out of it.

What's the value of the Mona Lisa? A couple of euro in wood and canvas ruined by being used. Yet, it's considered priceless.

While people place a value on bitcoin and the like it has value in the exact same way as a canvas with oil paint hanging in the Louvre.

It is not the same at all, art works have a price as far as the owners are concerned - the amount the insurers are willing to pay in the even of the piece being damaged, stolen or lost. And it is not a currency so there is not possibility for currency speculation involved.

Tar.Aldarion

There is crypto, and there is bitcoin, I'd consider them two different levels of safety and validity. Especially since they are being adopted by paypal/visa and being rolled into bank usage.

patsy_mccabe

What about Titcoin? It has a market cap of $ 17,931. With a name like that, it can only go in one direction.
( See what I did there ...... tits up, and all that)

https://crypto.com/price/titcoin

Unearthly

Tar.Aldarion wrote: »

There is crypto, and there is bitcoin, I'd consider them two different levels of safety and validity. Especially since they are being adopted by paypal/visa and being rolled into bank usage.

Tesla announced today big investment into Bitcoin sending the shares up. I intended to put money in last night but hadn't yet passed KYC with the broker

Car99

[Deleted User] wrote: »

Will it be a great anecdote? Or will it be a brief amusement, and the main takeaway people will have is "what a gobsh1te that guy must be"?

Only if he lost on the table and became financially ruined afterwards would ppl think that. If he was rich while charismatically delivering his anecdote people would say fortune favours the brave bravo and all that.

rapul

Lot of ignorance here, bitcoin would have been a good investment for the OP let alone anyone else to be honest.

The J Stands for Jay

rapul wrote: »

Lot of ignorance here, bitcoin would have been a good investment for the OP let alone anyone else to be honest.

Yeah, but only in hindsight

rapul

McGaggs wrote: »

Yeah, but only in hindsight

Not necessarily.
Someone pretty big just pumped 1.5 billion in.

Tar.Aldarion

There is a difference between a tweet and his company buying 1.5 billion of something and accepting payments for their cars in it.

rapul

Tar.Aldarion wrote: »

There is a difference between a tweet and his company buying 1.5 billion of something and accepting payments for their cars in it.

This.

People just don't seem to understand, ignorance is bliss ay!

Bigfatmichael

Take a couple months off work and go travel the world if they allow it.

If your happy where you are living rent or mortgage free don't bother with getting a mortgage just for the sake of it.

I wouldn't bother maxing out your pension if your single and no kids or wife especially at your age. Do you really want a ton of money tied up till your 65 and die with it in the bank account.

Buy yourself nice clothes, nice peripherals but don't bother with a new car, biggest depreciating asset you can own.

Invest 20% of it into the stock market on good stocks with different ranges. Don't invest it all in technology.

Enjoy the money, live like a king. Coke and Hookers FTW.

OEP

Cryptos should be seen more as investing in an emerging technology as opposed to a currency. There is ignorance on both sides of the argument. But when people say they have no use, that is complete ignorance - just start looking into DeFi. Most of the coins are useless, but some like Ethereum could prove to be revolutionary. Like any emerging tech, it is a very risky investment. Some form of crypto will become commonplace in the future, and you are naïve if you don't think that. We're going to have driverless cars, drones, IOT devices in the next few decades and digital currency makes sense for these. That does not mean it will be one of the ones currently available, these should be seen as 1st / 2nd generation and it may take many iterations until the right one is developed.

mrasgar

My generic plan for anyone with money and a job:

0. Cash keep some thousand quid cash in the bank/building society, enough to survive on for 6-12 months (more if you're conservative).

1. Maximise pension contributions: and invest that money into well-rated ethical funds in less overpriced (P/E ratio and so on) and higher potential growth markets like Eastern Europe, Asia-Pacific (especially their small to mid-cap stocks if you can find such funds) and in clean energy. The earlier you buy stocks the more you're likely to make.

2. Buy a house an affordable, decent size house in an area you wouldn't mind living in and coming back to, both in the short term and long-term if all goes wrong. Ideally in cash, otherwise with as small a mortgage as possible that you pay off quick in 5-10 years (though the term may be longer, to keep monthly payments low). Live in it (as often as you can if your job involves travel) and if you find good lodgers use the tax-free 14k/year allowance for additional income or mortgage overpayments, as applicable.

3. Invest after you have a paid-off house, decide how comfortable and convenient it is for you to buy a 2nd house close by (more hands on), vs investing in the stock market (easier to buy and forget). For both, use the same principles of affordability, long-term value, then growth, as opposed to going after the latest fashionable trends as this risks losing more of your money (even though these will give some people higher returns in the short term, most people lose money). And don't invest all of your spare money (perhaps 2/3rds), even if you think certain markets are safe and inexpensive, because you can always buy more if/when there's a recession and fall in prices. Don't borrow to invest.

[Deleted User]

^^

Good advice, and one of the best ways for most people to generate wealth.

JibJabWibWab

mrasgar wrote: »

My generic plan for anyone with money and a job:

0. Cash keep some thousand quid cash in the bank/building society, enough to survive on for 6-12 months (more if you're conservative).

1. Maximise pension contributions: and invest that money into well-rated ethical funds in less overpriced (P/E ratio and so on) and higher potential growth markets like Eastern Europe, Asia-Pacific (especially their small to mid-cap stocks if you can find such funds) and in clean energy. The earlier you buy stocks the more you're likely to make.

2. Buy a house an affordable, decent size house in an area you wouldn't mind living in and coming back to, both in the short term and long-term if all goes wrong. Ideally in cash, otherwise with as small a mortgage as possible that you pay off quick in 5-10 years (though the term may be longer, to keep monthly payments low). Live in it (as often as you can if your job involves travel) and if you find good lodgers use the tax-free 14k/year allowance for additional income or mortgage overpayments, as applicable.

3. Invest after you have a paid-off house, decide how comfortable and convenient it is for you to buy a 2nd house close by (more hands on), vs investing in the stock market (easier to buy and forget). For both, use the same principles of affordability, long-term value, then growth, as opposed to going after the latest fashionable trends as this risks losing more of your money (even though these will give some people higher returns in the short term, most people lose money). And don't invest all of your spare money (perhaps 2/3rds), even if you think certain markets are safe and inexpensive, because you can always buy more if/when there's a recession and fall in prices. Don't borrow to invest.

The 3 point plan is 0, 1, 2, 3... and based on what OP has posted, not one point is applicable. *awkward silence*

McGiver

mrasgar wrote:

1. Maximise pension contributions: and invest that money into well-rated ethical funds in less overpriced (P/E ratio and so on) and higher potential growth markets like Eastern Europe, Asia-Pacific (especially their small to mid-cap stocks if you can find such funds) and in clean energy. The earlier you buy stocks the more you're likely to make.

How to do that?
Are you assuming retirement in Ireland?

McGiver

Stark wrote:

ETFs are taxed higher at 41% and they also have this really annoying 8 year "deemed disposal" rule so calculating the tax can be quite burdensome for a retail investor

Thanks, I wasn't aware. 41% is a daylight robbery.
I've checked the deemed disposal thing - insane stuff - it's basically an upfront taxation! Why ETFs are subjected to this beating by the Revenue doesn't make sense to me.

As a blown-in, I find the income tax system here unbalanced and convoluted, let's say. CGT is way too high for retail investors, given that you get very little back (in services or infrastructure). Yet Google Facebook Starbucks Amazon pay almost 0% tax.

Where I'm from, CGT is flat 15% for all instruments (stocks, etf, bonds, funds, cfds whatever) held less than 6 months. But for long term retail investors (>6 months holding time) it's zero tax.

Too high CGT discourages people investing. So they either keep cash or invest in non- or less liquid assets. Not great overall (I'd say it could fuel property bubble and exacerbate property shortages).

Rob2D

OEP wrote: »

Cryptos should be seen more as investing in an emerging technology as opposed to a currency.

Agreed. So many show their ignorance by attacking all crypto as useless made up currencies that will go nowhere.
I wonder how shocked would they be to discover that, in the current Top 10 crypto's, NONE of them are currencies specifically except for DODGE. Funnily enough. And that's only there because the meme is trending.

The current crypto space is actually much more similar to the dot com bubble of the 90's. Not all will survive, but those savvy enough to pick out the ones that do have the potential to do very well for themselves indeed.

OP could do a lot worse than investigating the crypto market IMO.

mrasgar

McGiver wrote: »

How to do that?
Are you assuming retirement in Ireland?

There are funds you can buy within your pension provider, which target specific markets, industries, and types of stocks. Funds typically hold 50-100 stocks in them (buying specific stocks is best left to the experts, as most people lose money when they don't diversity enough).

For example here's a list of funds from Aviva: aviva-fundcentre.longboatanalytics.com

The J Stands for Jay

McGiver wrote: »

How to do that?
Are you assuming retirement in Ireland?

The pension providers has various funds which may meet those requirements. Of they don't, there are a few of those pension providers who allow self directed investment. People usually assume this means buying individual shares or residential properties, but they can be used to invest in ETFs (without the ridiculous tax and admin burden), investment trusts, SICAVs, etc. You'll definitely be able to find an ETF that meets your requirement.

[Deleted User]

Jim2007 wrote: »

It is not the same at all, art works have a price as far as the owners are concerned - the amount the insurers are willing to pay in the even of the piece being damaged, stolen or lost. And it is not a currency so there is not possibility for currency speculation involved.

So you admit bitcoin is a currency, which clearly has value. And one's man's much praised Turner's prize winner is another man's messy bedroom.

Look, anyone that thinks crypto like Bitcoin doesn't have value (regardless of basis) is a fool, one that probably is bitter about not buying them for less than $3k when they are now nearing $50k. It might sooth their sense of self worth for missing out, to dismiss the likes of bitcoin. They are only fooling themselves and their fellow deluded.

[Deleted User]

Rob2D wrote: »

The current crypto space is actually much more similar to the dot com bubble of the 90's.

Bitcoin is something I've only ever got as far as 'I wonder' when it comes to buying. IF/When, and it may actually be considered a safe haven, there's a serious correction I would consider bitcoin as an investment IF it drops.

Stan27

Id invest or go towards buying a house

But if you havent travelled id take time off work and travel for a few months.

The J Stands for Jay

[Deleted User] wrote: »

So you admit bitcoin is a currency, which clearly has value. And one's man's much praised Turner's prize winner is another man's messy bedroom.

Look, anyone that thinks crypto like Bitcoin doesn't have value (regardless of basis) is a fool, one that probably is bitter about not buying them for less than $3k when they are now nearing $50k. It might sooth their sense of self worth for missing out, to dismiss the likes of bitcoin. They are only fooling themselves and their fellow deluded.

Crypto and fiat currencies are all essentially valueless other than that there's an expectation that someone will be willing to exchange it for something of value. The main difference between fiat and crypto is that people have been believing in fiat for their whole lives (some likely still think it entitles them to an amount of fold from a central bank), and that taxes are payable in specified fiat currency. While currency has a value, it is still "worthless". This worthlessness doesn't matter unless you believe that everyone will suddenly no longer believe it has a value, or of its value relative to the items you need (whether they are another currency, food, raw materials, etc) fluctuates too much for your needs.

At the current moment in its young life, crypto doesn't have as much utility as a means of exchange as it would need to gain widespread acceptance. The current price seems too high, and someone will get burned when there's a correction. Who knows when this will be. Like someone mentioned, it's likely that most coins will go the way of the early car or aircraft manufacturers, forgotten by history, leaving losses for their owners. If crypto does catch on (and I believe it will, but probably not one of the current projects), there will likely be one winner and a bloodbath amongst the loosers.

There is money to be made, and I have dabbled in the past, but for most, the gains will be made at someone else's expense. Recommending investing a portion of someone's wealth in crypto is similar to recommending a portion to penny stocks and day trading. It can work, but only as a small portion and only if actively managed. Not everyone wants to work daily on their investments.

DaveQuinn2020

Some good advice here Op.

As a CFP, here is my 2 cents worth

1) Maximise pension contributions. Tax relief on the way in, and tax free growth (which is an underrated advantage in my view). Employer / company contributions are much more efficient than personal contributions if thats an option.

2) Low Cost Index Funds - Vanguard / iShares (Blackrock) or other with good global diversification. Watch the Tax, as tax on ETF's is complicated if you are not using a life assurance company.

3) Try not to get sucked into the latest investment mania (Crypto, some tech, Tesla etc). A well diversified portfolio, with an eye on value, will serve you well long term. The other options are speculative.

4) Have a plan, and stick to it. Think about your next 10 years and make deliberate decisions. Pay a fee-only advisor to help with this. If you are not paying for the advice up-front by way of a fee, you are paying for it elsewhere through commissions and higher charges.

5) Keep it simple.