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Investing in stock market vs paying off mortgage
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emmie
Posts: 70 Forumite
Have 50K lump sum, best to invest or pay off mortgage, or do a bit of both?
If invest in stock market, where do I start? Am complete newbie. People keep telling me now is a good time to invest as market is low, so will get good return for money. - Have seen a few IFA's, but all have a different view, leaving me confused.... Have never had a lot of money, so whole new territory for me...
Am 37, and have 3 young children, so would like to invest a portion for at least 10 years for possible uni education.
If invest in stock market, where do I start? Am complete newbie. People keep telling me now is a good time to invest as market is low, so will get good return for money. - Have seen a few IFA's, but all have a different view, leaving me confused.... Have never had a lot of money, so whole new territory for me...
Am 37, and have 3 young children, so would like to invest a portion for at least 10 years for possible uni education.
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Comments
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People keep telling me now is a good time to invest (possibly)as market is low (true, but could go lower), so will get good return for money (might not will).
if worst comes to worst, how much of your money are you prepared to lose ?0 -
If invest in stock market, where do I start?
Do you want to DIY or get advice?
How do you want to invest? shares, investment trusts, unit trusts etcHave seen a few IFA's, but all have a different view
Correct. Investing is about opinion. There are multiple investment strategies. Asset allocation, sector allocation, high yield, fund of funds, random selection or others. Each has merits and at different times one may be better than another. With 50,000 odd investment options out there you are very unlikely anyone who would recommend exactly the same thing.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
What rate are you paying on your mortgage?Have 50K lump sum, best to invest or pay off mortgage, or do a bit of both?
If invest in stock market, where do I start? Am complete newbie. People keep telling me now is a good time to invest as market is low, so will get good return for money. - Have seen a few IFA's, but all have a different view, leaving me confused.... Have never had a lot of money, so whole new territory for me...
Am 37, and have 3 young children, so would like to invest a portion for at least 10 years for possible uni education.
The Bank of Scotland IASA at 5.8% gross (4.64% net, 3.48% to a higher rate taxpayer) may be paying a higher fixed rate than the rate you are paying on your mortgage. The gap may widen if December brings another rate cut.
If so, why not stick the money in there, enjoy a profit margin over and above your mortgage rate for 11 months and review your strategy then? If mortgage rates do rise before the end of the term, bring forward that review!0 -
I would pay off the mortgage then take the difference in reduced interest payments as the sensible amount of regular investment on the markets over the next few years0
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With a ten year time horizon you should be looking to use equity investments for most of the money. While it's extremely simplistic you might consider getting started with regular payments into a UK Equity Income fund (something like Invesco Perpetual Income) and a fairly aggressive Global Growth fund (something like Neptune Global Equity).
Investing gradually reduces your risk, at the cost of reduced gains if it happens that the day you start is the cheapest time to buy. You might consider planning to invest the 50,000 mostly in equities over a three year time span and put much of it in a government bond fund and a corporate bond fund until you do that. Don't neglect cash either - nothing at all wrong with having 25,000 in cash for a year to reduce risk.
A professional spending significant time on you would be expected to use more than just two funds. There is a significant variation in opinion about how to invest and what to invest in so you need to select the one that you are most comfortable with.0 -
Have 50K lump sum, best to invest or pay off mortgage
No brainer.
Pay off Debt.
It has been proven time and time again, that this is the most sensible course.
If the events of the last 12 months have taught us anything (and by the nature of some of the responses to this thread, some havn't been paying much attention) using Debt to Finance investment, which essentially this would be if you chose this course, is a bad idea !!!'In nature, there are neither rewards nor punishments - there are Consequences.'0 -
Its a personal choice, but I'd always pay of debt/ mortgage before investing or saving. You're guaranteed to save money by paying the mortgage, there's no guarantee with investments....0
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If you are going DIY and dont know what you are doing then clear debt every time. However, that isnt necessarily the best approach.
There are things like tax, risk profile and personal circumstances to consider.
Short term debt is typically expensive and is common sense to clear. Long term debt like mortgages is typically cheaper and at the moment very cheap. So, clearing the mortgage isnt necessarily the best option.
ISAs are a use it or lose it allowance. The benefits of using the ISA allowance may or may not be as great in the short term but in the long term the gains can be far higher than clearing a low cost affordable mortgage payment. So utilisng up to the ISA limit could be the best option.
Clearing the mortgage but then paying monthly into an ISA (to the level of the monthly mortgage payment) is another possibility.
Or a combination of clearing some of the mortgage and using the ISA allowance.
There is also retirement provision to consider as well. You dont choose to pay the gas or electric. You pay both. Retirement provision or mortgage is not one you choose either. It should be both. However, many do choose and it puts them in a difficult position later. However, in your case, you could do some catch up here.
There are many scenerios where different options could be the best. One that wont change is that short term expensive debt should always go before investing.I am an Independent Financial Adviser (IFA). The comments I make are just my opinion and are for discussion purposes only. They are not financial advice and you should not treat them as such. If you feel an area discussed may be relevant to you, then please seek advice from an Independent Financial Adviser local to you.0 -
3 kids at 37, I'd pay off my mortgage first. Of course, assuming you've exhausted tax-free savings for this year (ISA's)0
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Don't have an ISA !!
Mortgage is 5 year fixed, will check interest rate. Max overpayment we can make without penalty is £500 per month (we have 4 years left to run) - With Nationwide
Some of the IFAs I have spoken to suggest that if we invest lump sum in a selection of products on the stock market, we could get a good enough return to pay off the mortgage in x years time - am waiting for projections atm
Don't feel happy with DIY approach to investing as am a newbie0
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