23 years old and not sure what to do

[rupereta]

Hi everyone,

Basically as the title says, I am a 23 year old and I am not sure what to do in order to make the most out of my money.

I have followed the stickied flow chart and have gotten to the end of it. I have paid off of all my debts and am starting to invest a little bit.

These are my financials:

Savings: 61k in the bank

Investments: ~5k in ETFs

Pension: Currently at 8k. I put 470 into it per month, my employer also matches up to 250 bringing it to 720 per month.

Salary: 86k last year, I am getting promoted this year and so I would hope to be up to about 120k p/y starting from June

Anyway, as the general consesus is to invest in ETF's, deemed disposal kind of has me worried as it basically wipes out most of the compound interest that I could accrue over my lifetime. I was thinking of just saving up and buying a house/apartment to rent out so that I could build a passive income stream. Is it best to save up and buy a house as soon as possible with the cash I have/will have, or should I just take out a mortgage and avail of the lower interest rates and instead put the money into e.g the S&P 500? I have been looking at housing prices over the last few years https://tradingeconomics.com/ireland/housing-index#:~:text=Housing%20Index%20in%20Ireland%20averaged,points%20in%20March%20of%202013, I can see that we're nearly at peak celtic tiger levels which also has me weary at investing in property at this stage. So all in all I am really not sure what my next step should be or what I should strive for.

Any advice here is greatly appreciated

 

[rukidden]

@rupereta Jaysus im 23 and make half what you do ,and have a 3rd in savings ,only starting my pension. Have to say . Fair play to you

 

[rupereta]

@rukidden I feel like I've definitely been lucky with the cards that I've been dealt, but at our age if we play it right I think we can definitely make the most out of what we got through the power of smarter decisions and compound interest tbh

 

[walterroger]

@rupereta Hmm my advice would be to keep on doing whatever it is you're doing.

 

[dafo]

@rupereta Off topic (sort of) but what kind of software engineering are you working in to be in a role like that so young?

Don't need to provide company specifics of course, but I'm in the process of reskilling into dev/software engineering and would love to know!

 

[resjudicata]

@rupereta Assuming you did a3-4 year college course that’s a savage salary for so little experience, what it you do

Property is booming right now, not a great time to invest in it

 

[drturi]

@rupereta It seems like you’re in a fantastic financial position for a 23 yo, so my first question would be if you feel like you’ll stay in your current location in the medium to long term? If so, then I’d suggest to ignore the inflated market conditions and buy a property. In doing so, you can direct any rental expenses you’re currently paying into equity in your new home. Additionally, if you can afford a place that will allow you to rent out a room or two you’re laughing, as you can claim €14k/year in tax relief. As well as this, I’d advise putting 15% of your salary toward pension contributions if you have the discipline. Overall, I wouldn’t be too worried. You’re in a great situation, so focus on continuing your success in your current field.

 

[rupereta]

@drturi I am hoping to stay with this company for the next 3-5 years as I am still early enough in my career, although living in Dublin isn't ideal with the insane cost of living that we have here...

Just wondering, can you only claim the 14k if you rent out a room in the house in which you are living? Am I better off to buy a "bigger" house to live live in and then rent out rooms in it instead of buying one flat out and purely renting it out to people?

Raising the pension contribution could be a good call though as the higher tax bracket definitely screws me a bit so thanks for that. From other posts I've seen they recommend to put half your age in percentage towards a pension but maybe in this climate it might be better to raise it a bit more than that.

 

[spinuscyn]

@rupereta Ya you need to live in the house to claim this.

Makes a lot of sense if you we’re going to move out and rent anyway.

Also people staying with you are not considered tenants to easy to ask them to leave if it’s not working out. This is much better than renting a property as a landlord who lives elsewhere

 

[byrkije]

@rupereta What kind of work do you do?

 

[rupereta]

@byrkije I'm a Software Engineer for a big tech company.

 

[charles1972]

@rupereta Hey, is it a FAANG?
How many years experience do you have?

 

[rupereta]

@charles1972 Yes it's FAANG, I got hired right out of college into a graduate program and have been there about a year and a half now

 

[charles1972]

@rupereta Thank you for getting back to me! I am starting in a FAANG in a few weeks, also my first job out of college. Was this your starting pay or did you get a raise?

 

[rupereta]

@charles1972 Nice and congratulations! I have gotten a pay rise since I started but my initial offer was actually this:

65k base, 12k sign on bonus in year 1 and 10k sign on bonus in year 2. This also came with around ~50k worth of RSUs but they haven't vested yet so I didn't include them in my initial post. I also am on call often enough so I get nearly an extra 10k from that overtime p/y.

Good luck in starting your FAANG job, I hope you enjoy it as much as I am!

 

[charles1972]

@rupereta Thank you very much for the detailed answer. Very similar to what I am getting so maybe we'll be in the same company

Anyway best of luck and thanks again!

 

[resjudicata]

@rupereta Do you play rent or live with parents ?

 

[rupereta]

@resjudicata Currently living at home due to covid, but we seem to be coming out of the other end of it now so my rent will definitely go up quite a bit as I am slated to move to Dublin soon

 

[john178]

@rupereta I know you are young but max out your pension contributions.

You can put in 1075 per month yourself if it is a DC pension and not PRSA. For a PRSA you and your employer contribution is combined for tax relief.

Also look at your pension fund as you can probably change it to something else that makes more sense.

 

[scripturewinds]

@rupereta Are you paying rent? If so you should really consider buying.

If you are buying a house/apt to live in then don't view it as an investment, it's a home. It's also happens to be an asset, but that is secondary. When/If you buy be sure you'll be happy to live in/own his for 10-15 years.

You can buy individual stocks, investment trusts, US domiciled ETFs and companies like Berkshire Hathaway.

Not sure how you feel about Crypto but a small position in Bitcoin and Etherum should be considered.

But really sort out your housing situation first, then figure out the rest.