Investments v mortgage

megadishu

I put 80K into investments in 2006. To date they have only just reached their original level of 80K.

We have a mortgage of £110K. If I put the investments into the mortgage then in brings our mortgage right down. At present doing this means I can significantly save money each month and from what has happened over the past few years I will save far more money to add onto my nest egg rather than keeping investments.

I know that nobody can predict the stock market but I do not see that investments are going to fly up in value. I have a mix of investments most medium safe ...

Any advice ... Am I missing something very basic. As if I had done this over the past 2 years I would have added 10K onto my investments by now ....

Thank you.

Help!

LongTermLurker

Investments are for the long term and 4 years is short term. However, given the balance and the fact that you've now broken even, I would consider either paying off up to 72% of my mortgage or, better still, offsetting it. With offsetting, you get the best of both worlds - ready cash and rapidly paid off debts. The downside is the temptation!

However, I wouldn't pay off the whole £80k - you need some accessible cash, and the rule of thumb is 3 - 6 months income.

Maybe a good balance would be to pay off £50k of mortgage, invest £10 - 20k and save £10 - 20k.

DiggerUK

LongTermLurker wrote: »

However, I wouldn't pay off the whole £80k - you need some accessible cash, and the rule of thumb is 3 - 6 months income.........

megadishu,
I have been questioning if it is necessary to have a rainy day fund if all debts are clear. Not sure why we still have 6 months in easy access. Old habits die hard it seems.

In your case I would hang on to a rainy day fund, and clear as much of your mortgage as you can. As repayments should drop you could then make extra payments with the spare.
Life gets sweet when the mortgage is gone, Digger Mansions is a happy house mortgage free.
Best of fortune.

LongTermLurker

DiggerUK wrote: »

megadishu,
I have been questioning if it is necessary to have a rainy day fund if all debts are clear. Not sure why we still have 6 months in easy access. Old habits die hard it seems.

Are you retired or do you work? Do you rely on a non-guaranteed income? What happens if that income dries up? Any of us could be made redundant on Monday, and where would the loaf of bread come from then? OK, there's JSA, but maybe that'll dry up after 6 months.

What happens when you need a set of tyres or service for your car? What about if your engine blows? Maybe a 0% credit card will help, or a loan, but that takes time to arrange.

I think only a fool goes through life without a piggy bank.

megadishu

I was worried I was missing something very very obvious and just wish I had thought about this last year but then my investments were down.

We also have a mortgage that we can take money out easily - took out huge mortgage paid it down to a reasonable level ....

Do not think I have missed something ....

Do appreciate the feedback!

LongTermLurker

megadishu wrote: »

I was worried I was missing something very very obvious and just wish I had thought about this last year but then my investments were down.

Better not to have sold at a loss - paper losses are fine until you sell, then they become real. If you sell now, at worst you've wasted 4 years, but imo life's a balance between keeping debts down, living for now and saving/investing for the future. However you cut it, I think the best thing you could do is split it 3 ways as in my last paragraph.