Investing in stock market vs paying off mortgage

swiss69

The reason for using IFA's and Bank Advisors for most people is that they dont undertsand the basics, never mind the complexeties of advice. I have worked in this industry for many years and some ADVISORS dont understand the basics!

Without knowing facts how can people just give out guidance on here? dunstonH does not give advice, he makes comments, which are factually correct.

If I had come on here asking for the same advice I would have got similar answers but then if I had thrown in that my mortgage rate is currently 3.45% - How many people would have still said pay my your mortgage off? How many would have asked if I was married and if I was, whether my wife worked?

Lets say she didn't and could claim interest tax free, I could obtain more than 5% gross just by being on deposit so would paying off my mortgage be the right thing to do?

Is anyone going to ask what rate of tax I pay - Surely this is important too?

Does anyone know how much it costs to put three children through university...Ok lets assume its in todays money and it costs £20,000 each....How much will be needed when the children are 18/19/20 etc... Does everyone know how to project forward in todays money?

Has anyone asked whether emmie has a Pension?

What are her protection arrangements? Is the mortgage on Repayment and is she comfortable with the monthly payments?

All areas of financial planning are linked and this is why most people choose to take advice.

Emmie - I would say you were right to ask a few Advisors for their views. The decision as to whether to invest or repay the mortgage is a personal one in my opinion.

The market is lower now than it was a year ago and on a par with what it was 5 years ago. It may go lower but you have already said you have a 10 year time horizon so what it does in the next 6 months or so should be irrelevant to you. Historically and since records began, shares tend to outperform other assets over ten year periods. Diversification and risk control are key factors in ensuring positive returns combined with a regular review of your risk tolerance.

Your tolerance to risk is the key when making investments and I would consider an Advisor where this is explained fully to you with the potential downside explained. If the Advisor just asks are you "low", "medium" or "high" or are you "cautious" , "balanced" or "Speculative" then he/she hasn't gone into eough detail in my opinion.

Ask what the Advisor will be charging for the advice and compare this. Personally I think anything more than 3% up front is excessive.

Using a good quality IFA could make all the difference going forward.

I,_Brian

emmie wrote: »

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.

IMO, the best investment you can make is in your own debt - ie, reducing it.

The stock market is extremely volatile at present, and while it is low at the moment, we have by no means seen the end of stock market falls and individual companies going into administration.

I think the fact that you really don't understand investing means you are in danger of going forward with something advised rather than what you are most comfortable with.

Personally speaking, I was in a similar situation last month, and I choose to overpay my mortgage instead. There's much more peace of mind in that, and investing in stocks which could go lower can bring unnecessary worry.

2c.

I,_Brian

purch wrote: »

If the OP follows this "advice" probably in 12-24 months time they'll have the same debt secured against an asset that has reduced in value, and a lump sum worth less than it is now.........

The OP is looking at a 10 year cycle - whatever happens in 12-24 months is therefore irrelevant in those terms because the asset still has plenty of growth potential.

purch

The OP is looking at a 10 year cycle

Very easy to say now............very difficult to follow through when it all goes "pear shaped".