To sell or not to sell?

zekepes

We (well DH really as he invested before he met me) have three investments. I have just gathered together all the data I can find on them and entered it into a spreadsheet and compared them to paying the amount off the mortgage at an interest rate of 6%.


NEW STAR (very poor performance)

Initial investment in 2001 of £2500 now worth £1585 (high point dec 07 £1821). We would be approx £3115 better off if that amount had been paid off the mortgage in 2001 instead.

SOCIETE GENERALE (breaking even performance)

Initial investment in 2001 of £7000 now worth £9720 (high point may 07 £10330). We would be approx £210 better off if that amount had been paid off the mortgage in 2001 instead.

JUPITER (Good performance)

Initial investment in 2001 of £5000 now worth £19890 (high point apr 07 £22745). We would be approx £9830 worse off it that amount had been paid off the mortgage in 2001 instead.

We are currently making overpayments on our mortgage debt and making annual lump overpayments rather than investing further (started early this year as for the last few haven't been in a position to do either).

I know my above calculations are crude when comparing their performance against paying the initial amounts off the mortgage rather than investing them but...

My question is would you cash them in and pay them off the mortgage now?

napoleon

I had a new star fund until a year ago. I was amazed that they kept taking a high annual charge from the fund even though it was losing me money. unbelievable, I'm glad I got out of that one

purch

My question is would you cash them in

No one can answer that without knowing what the Funds are !!!

dunstonh

My question is would you cash them in and pay them off the mortgage now?

You have asked us to comment on your investments but you havent told us anything about them.

You have also only listed two options (keep or sell to repay mortgage). What about the other options that are available? Would they be more beneficial to you in the long term (or even short term)

zekepes

Sorry!

I am clueless about investments, clearly!

They are all Stocks and Shares ISA's

Jupiter UK growth Fund (Income)
New Star Technology Unit Trust
SocGen European Growth Unit Trust

So I guess I have posted in the wrong place, too.

I don't really understand about other options. Do you mean re-investment somewhere else? If so, we are not thinking along those lines yet. I am sure, when we have paid off our mortgage debt, we will look more closely at investments and changing the New Star and SocGen funds if they continue to perform badly.

It really is a straight pay a lump off the mortgage, so we can clear that debt quicker, or forget about them for now and hope they improve.

Many thanks for taking the time to respond. I was just interested in knowing whether you would be tempted to cash them in if you still have mortgage debt.

LongTermLurker

zekepes wrote: »

Sorry!

I am clueless about investments, clearly!

They are all Stocks and Shares ISA's

Jupiter UK growth Fund (Income)
New Star Technology Unit Trust
SocGen European Growth Unit Trust

So I guess I have posted in the wrong place, too.

I don't really understand about other options. Do you mean re-investment somewhere else? If so, we are not thinking along those lines yet. I am sure, when we have paid off our mortgage debt, we will look more closely at investments and changing the New Star and SocGen funds if they continue to perform badly.

It really is a straight pay a lump off the mortgage, so we can clear that debt quicker, or forget about them for now and hope they improve.

Many thanks for taking the time to respond. I was just interested in knowing whether you would be tempted to cash them in if you still have mortgage debt.

Although in ISAs, the general question holds in this forum, so OK to leave here imo.

No wonder the New Star one's done badly - technology after 2001??? I guess it was cheaper than in 1999 anyway...

Are they all in individual ISAs with each fund manager? If so, it would make sense to transfer them all into a fund supermarket (Hargreaves Lansdown?) and then re-allocate your investments to different funds - 1 ISA, several funds. That way you'll get a far better balance.

Edit - obvious point, your £14500 investment has grown to £31195 over the last 7 years, so not a bad investment overall.

dunstonh

ISAs are a use it or lose it allowance. The long term benefits of having the held tax free can outweigh the short term benefits of paying off the mortgage early. Cashing these in means you will never recover the tax free allowance used in the past.

You have just 3 funds and invested at a fairly high risk. The alternative option is to switch to a fund supermarket and spread the risk and diversify. This can be an almost nil cost option.

sabretoothtigger

Wow that jupiter one is amazing

I would cash them in, leave 10k in the jupiter one maybe. In theory there is no profit till you actually cash it in, afaik though maybe this applies more to shares or trackers then managed funds
Theres few things that can excel as easily as paying off your debts because its so tax efficent plus your main residence is capital gains free so its the best thing you can do imo. ie. your house is like an isa or better

You allready sound like you know what you are doing

a7man

Unless you need the money I would consider reinvestment. The technology fund is not likely to see any dramatic increases so worth getting rid of and the SocGen fund as you said is fairly static. You could split the socgen fund up into 3 - 4 separate funds maybe with 1 or 2 speculative investments and the others safer? Obviously its up to you if you want to risk it and try to beat the 6% on your mortgage!

zekepes

sabretoothtigger wrote: »

Wow that jupiter one is amazing

I would cash them in, leave 10k in the jupiter one maybe. In theory there is no profit till you actually cash it in, afaik though maybe this applies more to shares or trackers then managed funds
Theres few things that can excel as easily as paying off your debts because its so tax efficent plus your main residence is capital gains free so its the best thing you can do imo. ie. your house is like an isa or better

You allready sound like you know what you are doing

Yes, that one has been very good! Pity he didn't have a magic ball and invest the lot with them - looking on the bright side though it wasn't all invested with new star, lol!

No, we have no clue what we are doing. This am DH was all for selling them (just got the new star statement!), I was all for selling them a year ago (when we first started to seriously think about overpaying the mortgage). Now it isn't looking so likely....

I think now that that 2K was put in New star and 5K in Jupiter pre Apr 01 and 7K in socgen post Apr 01, which makes some sense.

Thanks for your replies, they have helped. I think that we aren't going to sell them now and we can then have the *fun* of looking back and seeing if that was the rigt decision in 2-4 years time.

zekepes

a7man wrote: »

Unless you need the money I would consider reinvestment. The technology fund is not likely to see any dramatic increases so worth getting rid of and the SocGen fund as you said is fairly static. You could split the socgen fund up into 3 - 4 separate funds maybe with 1 or 2 speculative investments and the others safer? Obviously its up to you if you want to risk it and try to beat the 6% on your mortgage!

Yes, I do think that we should think about reinvesting. I don't think that is going to happen right now though. We should be able to clear out mortgage debt in 3-4 years by other means and then I guess we will start investing again, and start to learn a lot more about it. Hopefully we can convince ourselves to start taking holidays then too!

Thanks for your advice. I certainly know a little more and have a better grasp of how much I don't know!