Anyone hope to become Financially Independent?

Merowig

Actually I would go for higher pension contributions - that way you also avail of the tax incentive and you don't have to pay CGT.
In any case overpaying a mortgage is sensible as well.

Nody

Nody wrote: »

Actually I'd disagree on that one; as interest rates are so very low you'd be better of buying dividend/preference shares for the money while paying minimal on the loan. You'd have let's say 2% interest on the bank loan and get 6% from your shares. That way you'd earn more money to put towards said loan when the interest rates get higher and you'd earn more and your shares will in general have increased in value from purchase price on top of it.

..........

6% gross though

In the spirit of diversification I throw a decent lash at an executive pension and than from my spare personal cash I overpay the mortgage and invest in stocks. I invest more than I overpay but the odd year I might invest nothing and throw a good lump at the mortgage.

If throw €10k at the mortgage I see it as the guts of that "saved" over the current mortgage term. It's a guaranteed saving though. I don't have a tracker so my interest rate on the mortgage isn't at all low in comparison to a tracker

hmmm

Yes (to the OP). We're nearly there.

Live beneath your means. Forget about saving until you understand this concept. Don't let lifestyle creep force up your expenses.

The 4% rule of thumb was mentioned above - that roughly means that for every 100k you have saved, you can expect to spend 4k a year. It also means that for every extra 4k you spend a year in retirement, you need 100k saved. Live beneath your means

I don't find the idea of radical saving much fun. Hefty saving while enjoying life is important.

Pick your friends carefully. If they all borrow to buy BMWs, you won't get there.

Pick your partner carefully.

Pensions are the only decent investment tax break left in this country as far as I can see.

If you start now, you will be giving yourself options later in life. You might decide you enjoy your job too much to retire. Your parents might need support. You might have kids. Having a chunk of money saved is a great relief no matter how life turns out.

keane2097

I just want to point out that it's perfectly possible to have an absolute howl in your 20s while still making good progress along this road.

If you start putting even very small amounts away from your early 20s it will make a huge difference to your options when you are 40+, and really shouldn't impinge on your ability to do whatever you want.

As someone newly entered into the 30s club also I personally think this new thing of 'don't take responsibility for your life in enjoy your 20s' is fairly OTT. If you are not starting to take yourself a bit seriously by 25/26 there's a bit of arrested development going on IMO. You can do both anyway, and having money in your account every time the rent falls due will probably add to rather than detract from how much you are enjoying yourself.

keane2097

keane2097 wrote: »

............I personally think this new thing of 'don't take responsibility for your life in enjoy your 20s' is fairly OTT. If you are not starting to take yourself a bit seriously by 25/26 there's a bit of arrested development going on IMO................

Yup.
For the most part it's just electric picnic, a few city breaks a year and a round the World trip taking in Oz for 6 months of labouring.

The "full time mad bastads" are of course not worrying about pensions etc

garbanzo

Need to resurrect this thread. How are we all doing these days ?

I’m 52 and trying to work on an early retirement plan. Lots of things to weigh up...

FastFullBack

I'm 38 and recently I've been trying to get more control of my finances and plan for the future a bit more. I came across the FI movement. Here's an excellent podcast if you haven't listened;https://www.firepodcast.ie/.

If nothing else it's helped me understand how critical being tax efficient is and as mentioned earlier as a PAYE worker the pension really is the main tax efficient way to save. The problem the money is locked in.

The J Stands for Jay

FastFullBack wrote: »

I'm 38 and recently I've been trying to get more control of my finances and plan for the future a bit more. I came across the FI movement. Here's an excellent podcast if you haven't listened;https://www.firepodcast.ie/.

If nothing else it's helped me understand how critical being tax efficient is and as mentioned earlier as a PAYE worker the pension really is the main tax efficient way to save. The problem the money is locked in.

It's locked in until you're 50, so if you planned your split of investments between the pension and one you could use until you hit 50, you should be ok.

silent_spark

I don’t think FIRE is possible in Ireland, unless you are on a much higher than average income from the start.

Despite that, I still really love listening to American personal finance podcasts, even if so little transfers to this market and tax system. Even their cultural attitude toward debt is hugely different, so many people seem to be drowning in it. Listen to any episode of Dave Ramsey to see how many people in America struggle with consumer debt - it’s sobering. There are a few UK FIRE blogs and podcasts, but again the tax differences make them useless in practice.

That said, it’s good to focus on what we can do. We are near forty, earn less than the industrial average incomes, and live relatively frugally to those around us. We have a year of living expenses and a repair/maintenance fund saved, contribute the maximum to our PRSAs, plan to have the (modest) mortgage cleared in five years, and hope to increase our investment rate then. I think those on higher incomes have much more scope to take risks and invest more heavily, but for us clearing the mortgage is important to our overall security.

zephyro

McGaggs wrote: »

It's locked in until you're 50, so if you planned your split of investments between the pension and one you could use until you hit 50, you should be ok.

Yes, and a decent option for this split is to switch to contracting with a ltd. which offers far more opportunity for tax efficiency relative to PAYE.

BarryD2

Not having kids would be a critical part of any such plan for most individuals / couples. Families/ children are in many ways the lubricant for much of the economy. Swallow holes for income.

On the other hand, having children who will carry the state forward is a basic duty for any citizen who has the capacity.