The Money Mustache Community
Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: celine31 on July 27, 2016, 10:20:45 AM
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hi everyone! Newbie here.
So I recently moved to ireland and have a good job and I'm thinking about saving up to 50% of my salary.
The company I work for is offering to match our pension contribution up to 7% which technically is free money.
The thing is I don't know if 1) I'll be staying with that company, 2) my goal is to be financially independent in the next ten years by buying properties and renting them so I'm hoping I wont be working a 9-5 job in a few years.
SO my question is, it it work investing in a pension plan in my situation, knowing I'll only have access to it when I turn 60(I'm currently 31)? or should I just save up to buy properties?
Also,should I buy a house for myself first or a rental one first?
thank you. Sorry if my questions are dumb or basics but I just only recently decided to think about my future!
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I think you would be crazy to pass up a 100% match up to 7%.
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I know !But then I'm thinking it's money I wont be able to use for like 30 years and I'm thinking I'd be better off saving up for a project that is gonna happen in the next few years, right?
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I'd take free money match today.
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okay thanks for the advice!
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yep... take free money wherever you can find it.
Who cares if you can't access it for 29 years... you'll have an awesome life when you do get to that age and you'll thank your 31 year old self.
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I always take the free money.
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This is one is probably 1) a small amount of your money so not a big deal and 2) choosing between two great choices, so i'd probably just do the match up to 7% and forget about it. Always good to have a backup plan. And, at least in the US though I don't know about Ireland, certain retirement accounts can be protected from lawsuits/bankruptcy. And, could increase your diversity (stocks + rentals vs. stocks + rentals + pension).
That said, it is possible to calculate this out if this were a larger amount of money or you got super nerdy and just wanted to. You'd need to look at $x in the pension at how much it will grow in real dollars vs. $x/2 invested (in stocks or properties or what have you). I'd do that with several different values for each, optimistic and pessimistic, and keep in mind you're only going to get so close especially across large time frames.
As far as buying a place for yourself first vs. buying a rental, I think those should be approached as almost totally independent decisions. You'll likely get minimal economies of scale (buying tools for your house that you can use on rentals, learning DIY skills) but not enough to allow something like that to outweigh things like buy vs. rent in your market and, frankly, whether you will actually want to be a landlord once you try it out or if a place is a good deal. Others with more experience landlording can provide more detailed takes, but that's my take from a high level.
One small note, it might be better for you to have a more direct title next time, as that might entice people with experience/history with pensions, rentals, and even pension matching vs rentals to your thread! :)