Mortgage free by September 2014 (or before!)

SmileyG_2

StuartGMC wrote: »

SmileyG
Found your thread at last! Best wishes for the journey.

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We found last year (in my thread for about mid-Sept 08) that it is very important to also look at the policy which is now becoming easier as they are often online in PDF so you can compare before you buy. One was a horror in terms of 6months before some legal aspects were covered!

We went with DirectLine (remember not in comparison sites so you'll need to go to them) which includes annual travel insurance and Experian credit check etc. Combined buildings and contents was a good price, hoping they will lift valuation on contents with CPI etc (something Zurich should have been doing automatically but didn't).



As I've noted, it really is a difficult time to gauge the markets on funds or individual equities. If you are in the short-term game then realising your gains since March is sensible; we're in long term and were in October 2008 50% down but now only 10% down (with the drop today). I anticipate a very bumpy ride through to Spring 2010 but guess you have your strategy worked out?

Personally, I don't have time to watch individual equities nor sufficient invested to get a good spread on the portfolio so we're invested across 7 different funds.

Where do you do your research?

StuartGMC

Research? Same place as you!
trustnet as well as fool.co.uk and interactive investor

Other than the shares in one company, my other three holdings are in investment trusts. Around 46% is currently Cash ISAs. It’s what I call a sleep easy portfolio. The cash element gets topped up monthly and when the cash % exceeds a certain limit I look to reinvest it in equities.

Each performs a different role.

Number 1 gives me UK International exposure, Number 2 gives me UK Equity Income (it seems to track the Index, but has a >5% yield). Number 3 is very defensive Equity Income fund with a high yield (almost 6%).

There are companies in these trusts that I would also like to invest in, but if I think the market is due for a reversal, then I won’t invest at these levels. I am also invested 37% in a fixed rate cash ISA; this money needs a new home when it matures in December. I have two options, re-invest it a lower rate or use it to pay down the mortgage.

It’s what I call a “sleep well” portfolio; it’s done this since 2001, and with luck the same approach could take me through to retirement after MF day.

SmileyG

SmileyG_2

September has been a good month to date.
1) My overpayment of £250 has left my account today, reducing the mortgage balance to £55,801.:T
2) Investments have picked up in the last 14 days, raising the total to £12,300 (+£550 since 01/08/2009):T
3) My estimated value for the endowment will increase at the end of September. My revaluations are always conservative as there is no clear indication of its true value. The important valuations come around 2013-14, when I will be looking for monthly surrender values.
4) Overall current deficit is now -£24376 (+£1159 since 01/08/2009):T:T

This also means a predicted interest saving of £486.46 since Jan 2009 until my MF date of September 2014, My £250pm overpayment is more than covering the mortgage interest (£242.42).

Continuing improvement on the investment front means that overpayments plus the endowment plus my investments could leave me with a contingency of £911, which could now see me mortgage free three months early. As I wrote last month, this assumes that interest rates stay unchanged (most unlikely!). I am still targeting a contingency of £2500 before I review my overpayments.

No major financial shocks since the beginning of the month. Although the sale of shares at the end of August cost me a potential gain of £80 on my investments. My portfolio was overweight with shares, and like house prices, I still think the market is due a correction. Some commentators think the market is 20-25% overvalued on forward earnings, so at least a 15% correction is possible. It's hard to believe that given the rise in the FTSE100 today, but the current rate of recovery in the stockmarket is worrying.
Note to oneself: Bookmark this post and re-visit it in 12 months!

Hpoe everyone else is still foccussed and heading towards their intended MF date.

Keep believing and prepare for success!!!

SmileyG

StuartGMC

SG
It is so difficult to call the markets (except in hindsight) and those who have missed out on the gains unlike you and I, are perhaps most likely to try to down play? No doubt things will bounce around, but we've only got about 38% in UK the rest is elsewhere in the world (via UK funds). As we have intention to leave our funds in place for about 15yrs then I'm happy to look long term, but obviously alter balance of funds as we progress forward. In fact once MF we'll be looking at much more to save and invest each month (only £300 per month to funds now) so that may really focus my attention.

Presently we're nearly back to breakeven, and hanging in for profits in future (sometime).

Well done on your progress and attention to detail in the planning, enjoy the ride!

SmileyG_2

Update for September....

1) My regular monthly payment of £351 has left my account today, reducing the mortgage balance to £55,691.:j

2) For the month of September, my investments have continued to rise in the last 14 days, raising the total to £12,375 (+£625 since 01/08/2009); now I’m getting nervous..:eek:.. (see below)

3) The value of my endowment has increased substantially on my previous estimate of £19,125 :T(see below)

4) Overall current deficit is now -£21,839 (+£ since 01/08/2009):D
(See post #2 for numbers)

Well, I took a deep breath and phoned my endowment provider for a valuation of my endowment policy and it was much better news than in May
Current valuation was put at £21,476, which was £2251 higher than the estimated value that I placed on it. Furthermore, the 6% maturity value has improved to £33,100, £2,500 higher than the figure that they gave me in May.
They were able to provide me with all these figures over the phone, so from now on I think I will get an updated illustration every three months. It’s a crucial figure, because they also told me that the valuation fee is also the surrender value and there are no penalties for surrender. As soon as the endowment and the investments will pay down the mortgage, the mortgage can go!

So new projections for September 2014:
Outstanding mortgage at September 2014: £49,119 (scheduled to run to November 2020)
To be paid by: Endowment (£33,100) and Investments (£16,019)

Again the stock market defies the logic, although it retreated today. I still have Cash ISAS of 46% of total investment, so that will cushion any falls; I’m comfortable with this ratio. The increase in the endowment valuation gives me a risk contingency which means that September 2014 is very much on.
Next event is my mid month overpayment on 15th October.

Keep the faith and prepare for success!!!

SmileyG

StuartGMC

Superb position to be in; and I agree whilst the markets may be a bit overvalued now, and drop say 10-15% (they could drop further of course) the units I bought since October 2008 and now have all really turned in massive growth so are still cheaper than selling and buying again as timing is I think going to be very difficult to spot.

Roll on 15 Oct :beer:

setmefree2

SmileyG wrote: »

Update for September....

1) My regular monthly payment of £351 has left my account today, reducing the mortgage balance to £55,691.:j

2) For the month of September, my investments have continued to rise in the last 14 days, raising the total to £12,375 (+£625 since 01/08/2009); now I’m getting nervous..:eek:.. (see below)

3) The value of my endowment has increased substantially on my previous estimate of £19,125 :T(see below)

well done :T:T

SmileyG_2

My October update.......
1) My overpayment of £250 has left my account today, reducing the mortgage balance to £55,441.
2) My Investment fund is now £12,473 (+£723 since 01/08/2009)
3) My value for the endowment is £21,476 (@ 01/10/09)
4) Overall current deficit is now -£21,468 (+£4067 since 01/08/2009)

This also means a predicted interest saving of £534.02 since Jan 2009 until my MF date of September 2014, My £250pm overpayment is more than covering the mortgage interest (£239.32)!

Following the revaluation of the endowment there is a chance that the option of clearing the mortgage in September 2013. To do this I would need the following:
· Four more overpayments of £250.
· Endowment value of £30,170 at September 2013
· Investment value of £19,611 at September 2013
· No increase in current Interest rates (unlikely!)

This will pay off an anticipated mortgage balance of £48,923, with £192 to spare.
It seems that to counter a potential rise in interest rates, it may be wise to overpay the mortgage. It will be interesting to see how the strategy works.
Keeping the MFW faith .....
SmileyG

StuartGMC

Keep the faith indeed but do keep in the markets too.

Have you posted your portfolio? Sorry if I missed it looking back over the last few posts.

setmefree2

SmileyG - well done on all your progress

SmileyG_2

StuartGMC wrote: »

Keep the faith indeed but do keep in the markets too.

Have you posted your portfolio? Sorry if I missed it looking back over the last few posts.

Other than the shares in one company (16%), my other three holdings are in investment trusts. Around 47% is currently fixed and variable Cash ISAs. It’s what I call a sleep easy portfolio. The cash element gets topped up monthly and when the cash % exceeds a certain limit I look to reinvest it in equities.

Each invetment trust performs a different role.

Number 1 (21.5%)gives me UK International exposure, (2.5% yield)
Number 2 (8.5%) gives me UK Equity Income (it seems to track the Index, but has a >5% yield).
Number 3 (7%) is very defensive Equity Income fund naged by Neil Woodford with a high yield (almost 6%).

There are companies within these trusts that I would also like to invest in, but if I still think the market is due for a reversal, then I won’t invest at these levels. I am also invested 37% in a fixed rate cash ISA; this money needs a new home when it matures in December. I have two options, re-invest it a lower rate or use it to pay down the mortgage.

It’s what I call a “sleep well” portfolio; it’s done this since 2001, and with luck the same approach could take me through to retirement after MF day.