Investments v Mortgage interest

hedger

Im lookin for some opinion on my circumstances. I fear for the stock market for the rest of the year so I am contemplating doing the following

Ive a £160,000 interest only mortage (fixed rate at 6.24%, 1 year to run) with offset facility and early redemption figure of £5,000

Ive enough to offset the full mortgage by cashing in my investments (taking a 20% hit in the process) hence saving me £870/mnth interest payments. with this "freed up" income I can then either dip feed back into stock market (I havent lost all hope!) or start paying down my mortgage. when the stock market shows some sign of recovery (late 2010 seems to be the consensus) I would consider piling back in using the offset account capital.

make sense to ya's?

gozomark

hedger wrote: »

late 2010 seems to be the consensus

if thats the consensus, you can be sure it will happen before then, or much later. Investing with the consensus is exactly what gets private investors into buying and selling at the wrong time.

If you mean thats when the economy will show signs of recovery, then expect the stockmarket to recover somewhat ahead of that

hedger

gozomark wrote: »

if thats the consensus, you can be sure it will happen before then, or much later. Investing with the consensus is exactly what gets private investors into buying and selling at the wrong time.

If you mean thats when the economy will show signs of recovery, then expect the stockmarket to recover somewhat ahead of that

Im not asking when you think the recovery will happen. Im asking if what Im doing makes sense to people

gozomark

Im not asking when you think the recovery will happen - thats good, because I didn't tell you :-)

whether it makes sense depends on when you think the recovery will happen. If you think the economic recovery will start in 2010, then selling equities now probably doesn't make sense. If you think it will be delayed until 2011, then it probably does

Reaper

Given your view of the market it is a sensible thing to do, particularly if it lets you sleep soundly at night.

I previously predicted 3500 would mark the bottom of the market so I wouldn't do it, however it is very clear I am in the minority with almost everybody else round here expecting it to go lower.

As nobody really knows you just have to take a view yourself. Your view is it will go lower so you should act on it. However as Gozomark says you have to be careful not to miss the upturn. The stock market won't rise when there are signs of recovery, it will rise when people think it has reached bottom. They are two very different things.