invest lump sum or pay off mortgage

jamesd

Rollinghome, your post is odd, since the person who wrote about buying when things look black is me and I've never worked in the financial services industry, so I'm hardly selling anything. Though I'm in very good company, since it's what Warren Buffett also says. He seems to have done quite well from it.

It's also pretty odd that you'd recommend a site run by an IFA who apparently operates it to make commission from product providers, while objecting to sales people here, where it's actually prohibited to make sales approaches in posts, unlike over there.

You're post is strange in another way as well. I roughly doubled my net worth in the 2009-2010 tax year and did it in part by greatly increasing my pension contributions in the 2008-9 tax year and buying while the prices were low that year. And by buying more outside the pension in early 2009-10 tax year while prices were also low. I also borrowed money at 0% on credit cards and invested that. That doubling of my net worth is enough to pay for the flat I'm in the process of buying.

You're certainly right that I'd have suggested buying after the initial 15% drop. It's what I did with my own money. And continued doing all through the low price period that continued that year. Quite deliberately, knowing that prices were low and might get even cheaper, as they did. Here are a couple of example prices for some fairly popular index tracker funds from 24 June 2008:

BGI world index: 2.278
BGI UK index: 5.172

And from 26 November 2008:

BGI world index: 1.851
BGI UK index: 3.878

From 18 June 2010:

BGI world index: 2.555
BGI UK index: 5.31

Now it's true that I'd liked to have done all of my buying at the 26 November prices and be 38% and 37% up on it all but I'm not really unhappy about being 12.2% and 2.7% up on the June 2008 prices either. Of course markets still haven't fully recovered, so aside from the usual ups and downs, the odds favour me making more gains as the world recovery continues. And the same for anyone else who buys now.

It's almost as though you're trying to prevent people from making money from investments for some reason.

How did you do during the recession and initial part of the recovery of the markets, one of the best money-making opportunities in stock market history for those who were willing to buy when most people were too worried to do it?

lazysloth

thanks all. definitely food for thought. appreciate all the advice. going to see another adviser - a one man band this time - to test out a contrasting approach.

jamesd

lazysloth, seems like a good plan, the fees were a bit high for the first one, though not so much if you're in London, where costs are higher.