Hello... And any input is appreciated!
Hi to all,
I have been on this site for the last week almost non-stop, reading all the great advice and other interesting information.
Thought I would put my own info out there so I may be able to gain some of your vastly greater experience and knowledge and hopefully be able to steer myself to some sort of FI.
My personal financial literacy is almost zero. I have bought and am reading 'The Four Pillars of Investing' but I would like to bounce a few ideas off you good people. Thanks in advance for any help, I really do appreciate it.
I am a single, 36 year old, employed in the Middle East for the last two and a half years. I come from a small Pacific Island country and thus I have not been previously exposed to a few of the financial decisions that I must now make.
Currently, I am on a monthly salary of $7300 usd tax free. I live in company provided accommodation and I don't own a car. My monthly expenses are roughly broken down as follows:
Club Membership: $150
Provident Fund (Compulsory): $366
Provident Fund (Voluntary): $1465
Mortgage (at home): $3130
Family commitments (at home):$1230
Utilities and Food (approx): $960
I have a bank account (online e saver), that is earning about 4% per annum. I have to date $60000 in it. At home I have $7850 earning about 3% per annum also in a fixed deposit. I feel like I'm about $13k short of my target Emergency Fund.
I own a rental property in my home country. They are all rented out and the rent earned per month is exactly the same as the minimum repayment to the bank. I owe $144k at 5.75% for the next 21 months and then I move to a variable rate which is currently 6.95%. The loan has 17 more years to run. The minimum monthly repayment is $1230 a month but I'm paying $4360. If I keep up these payments I should clear the loan in November 2015.
This is currently the cheapest rate going.
I don't own any other property but would like to invest in a home at some stage.
The company I work for has set up a compulsory provident fund for employees. It really is a mystery for me and this is where I will need the most help. I don't have any other form of super-annuation. I will try to break this down as best I can.
Monthly Contributions: 'X' Fund: $1110 - this is the company contribution (12%, after 10 years service they contribute 15%)
'Y' Fund $366 - my compulsory contribution (5%)
'Z' Fund $1465 - my voluntary contribution (this can be ceased at anytime and the entire fund can be withdrawn)
Current Balance - By contribution 'X' Fund $24641
'Y' Fund $9953
'Z' Fund $25169 - this can be withdrawn
The chosen investments for all three funds and current balance in each fund:
Fidelity International Fund 10% $6074
Russel Global 90 Fund 40% $24267
Russell US Dollar Liquidity Fund II 50% $29434
There is a whole range of Funds that we have to choose from. If required I can list these. We are able to make eight switches per year for free.
I feel like the funds I have chosen are earning very little.
At the moment any money earned is not taxable at home. The interest on the mortgage is tax deductible.
A few area where input from anyone is appreciated:
1. Am I paying enough or too much into my mortgage? If I redirected my voluntary contribution from the Provident fund to the mortgage I could take off six months of the term and save $2900 in interest.
2. Should I withdraw 'Z' fund and but it into my bank account paying 4%? I feel this is paying more than I am earning in the 'Z' fund. Or should I pay down the mortgage with this? Should I direct my voluntary contributions to this account?
3. Should I change my investment decisions in the Provident Fund? I don't know much about this topic and I'm trying to learn as much as I can but any inputs of what I can do while I study would be appreciated. I can list the other fund options if needed.
4. Should I leave it as it is?