Advice would be appreciated

Annie_pips

Hi everyone, new to this although I do browse a lot!
Would appreciate any advice as the FA we used initially has gone on to other things. 5 years ago we had 50000 to invest (inheritance). We put 7000 x 2 into isas now matured at 7429.88 each and the rest (36000) into Life with profits fund now showing a value of 41146.20.
We owe 63000 on our mortgage, our salaries are not great, should we pay a chunk off? Should we re-invest? Any advice would be greatly appreciated.
Thanks in advance.

dunstonh

Are the ISAs in situ awaiting re-investment or have they been switched into an alternative fund?

5 years ago was unlucky timing as that was just before the worst of the crash. However, you have come out on top, albeit with a below par return.

Going forward, its a choice rather than specific advice. There are advantages of getting money into ISAs every year as they are a use it or lose it allowance and the benefits of having your money in a tax free environment can be great, especially in retirement years.

Investments typically outperform mortgages over the long term but would have periods of lower performance, you went through the worst period in recent history.

I am going to guess the ISAs were guaranteed equity bonds (due to maturity date as investment ISAs don't normally mature but are open ended). These are quite poor investments and there are better ways of building your own GEB at a lower cost.

With Profits has virtually died a death now. Only NU and Pru have products that are potentially viable but its really only a niche fund now rather than the mass produced fund it was years ago.

Products today are cheaper than 5 years ago and the investment options are better.

I would invest (and I do) rather than pay off the mortgage. ISAs are too important to me to miss out on and returns, despite the crash have outperformed lending rates. There are no guarantees of course.

I have found over the years (and this is a generalisation) that people who use capital to repay the mortgage do not replace that capital by regular saving/investing. Once its gone, its gone. Whereas those that keep the mortgage going and invest end up clearing the mortgage through normal means and have the investments at the end as well.

Annie_pips

Thank you. It all seems a bit of a minefield. Yes the isas are still in situ. I take your point about paying off the mortgage even with the best intentions in the world, replacing the capital - it probably wouldn't happen. I think we just feel the return has been poor but at least we haven't lost which we are thankful for.
Appreciate your comments, thanks again.

Robert_Sterling

I would have been inclined to pay off the mortgage about 5 years ago unless there was a substantial early redemption charge.
I would still be inclined to do that now.

dunstonh

The returns havent been good as the investments werent ideal. Similar risk investments in the same period invested with better quality would have performed much better even at sector average returns, let alone above average.

The failing was not the concept of investing but the method utilised.

Annie_pips

At the time we had a pension linked mortgage (used to have endowment) but we have since changed to repayment. Our circumstances have changed over the years jobwise that is. We aren't clued up when it comes to investing etc so we really need to take advice but then again no-one can give us guarantees so you've just got to do what you think is right at the time.