MSE predictions for 2010

JonnyBravo

Harry_Powell wrote: »

Good luck with that JB.

Though I'm surprised TBH that you're pursuing a MFW strategy. From the lurking I've done over there, the MFW crowd seem to be very timid lot financially and tend to have very limited knowledge about investing. I didn't get the impression that you were one of these. There are so many investments and even savings plans that will beat mortgage interest rates, that I can't understand why anyone would want to lose money by overpaying their mortgage.

They don't seem to understand that if they had a £100k mortgage and £100k in savings, then they're effectively mortgage free anyway, but their savings can earn them money on top of the interest they pay for their mortgage, plus it's more liquid so if they see a financial opportunity, they can quickly take it. I can understand people overpaying to reduce their mortgage for advantageous reasons, such as improving their LTV, but once they get to 60%, I there is no financial advantage to continuing.

I know I'll be keeping my mortgage running to the day I retire.

Agree with all of what you say but of course you are talking about generalities and not individual circumstances.

The mortgage I'm going to end up paying off by the end of the year is my "residential" mortgage. ie the money I borrowed to buy the house I live in. I have enough to pay it off now but I'm not doing that as it is currently on a 0% loan not tied to this property. This ends before the end 2010 and will be when I clear it.

I will then be left with a loan tied to this house (the one I live in) but it is my "rental mortgage" in that it is the money I borrowed for my rental property (which has no money borrowed against it) and declared as such on my tax forms.

Yes I invest in lots of other places, shares, pensions ISA's etc. No I'm not naive and I'm not worried if I'm hanging around with a financially timid crowd - I don't use them as financial advisors!

Real life is often slightly more complicated/involved than the soundbite "one size fits all" approach.

Harry_Powell

JonnyBravo wrote: »

Yes I invest in lots of other places, shares, pensions ISA's etc. No I'm not naive and I'm not worried if I'm hanging around with a financially timid crowd - I don't use them as financial advisors!

Real life is often slightly more complicated/involved than the soundbite "one size fits all" approach.

You must have a decent amount of disposible income JB, and so can afford to spread the excess across various different investments. A lot of the MFW seem to have limited income and are pouring their money into a single asset (their home).

smartn

Harry_Powell wrote: »

Good luck with that JB.

Though I'm surprised TBH that you're pursuing a MFW strategy. From the lurking I've done over there, the MFW crowd seem to be very timid lot financially and tend to have very limited knowledge about investing. I didn't get the impression that you were one of these. There are so many investments and even savings plans that will beat mortgage interest rates, that I can't understand why anyone would want to lose money by overpaying their mortgage.

They don't seem to understand that if they had a £100k mortgage and £100k in savings, then they're effectively mortgage free anyway, but their savings can earn them money on top of the interest they pay for their mortgage, plus it's more liquid so if they see a financial opportunity, they can quickly take it. I can understand people overpaying to reduce their mortgage for advantageous reasons, such as improving their LTV, but once they get to 60%, I there is no financial advantage to continuing.

I know I'll be keeping my mortgage running to the day I retire.

I think if you look at how much would have been saved by overpaying the mortgage compared to 'investing' over the last ten years you would be surprised.

In general stock market investments have not done very well at all, so to me it makes total sense to pay down a debt where your are effectively guaranteed a tax free rate of return way above simple saving and over the last ten years way above the average return from stock market investment.

JonnyBravo

Harry_Powell wrote: »

You must have a decent amount of disposible income JB, and so can afford to spread the excess across various different investments. A lot of the MFW seem to have limited income and are pouring their money into a single asset (their home).

It's all relative I'm sure my disposable income looks like loose change to some but yes I'm aware I have more than most. I've avoided answering the thread discussing how much they spend on "entertainment/themselves" a month that is in the MFW forum at the moment for fear of appearing profligate!

However, you seem to be missing the bigger picture. How many people are even savvy enough to be paying off their mortgage early? Not many I'd wager.
The average citizen has no plan to repay any debts early, has very little in the way of savings and is in a poor position for later life. Whilst some of them undoubtedly could improve their returns by diversifying their investments I'd argue they are still ahead of the curve and should be encouraged.
We all have different goals. Different folks, different strokes.

:cool: