Would you go for short term cash? Poll Discussion

wiggers

zoltix, your figures are correct if you don't actually pay any interest during the 10years but let it accumulate, as in my first example of 10k at 20%. My calcs for the second example were based on the principle sum staying constant (50k) and paying 10% interest each year, as you would with an interest-only mortgage. No compounding.

Pitchshifter, the only bad thing about getting into debt is if you don't make provision for paying off the principle and the interest. Hence a repayment mortgage is a good debt because the monthly repayment is caculated to pay it off in a fixed period. (Provided, of course, the repayments are well within your means.) Going shopping every week and spending twice your residual income on credit is bad debt because there's no provision for repayment.

Of course, with any debt you need to ensure that the total interest you do pay is minimised, either by waiting until you have the cash available, or by getting the best deal you can or, as you suggest, making beneficial parallel investments.

bunking_off

Wiggers is quite right. Always take the £100k in 10 years. Assuming you've got any equity in your home, you simply take out an additional (say) £55k on your mortgage now and use that cash to have whatever fun you please. At an interest rate of (say) 5.5%, assuming you pay nothing off it in the meantime, in 10 years that £55k debt will have risen to £95k. You then get the £100k, pay off the mortgage and are back where you started, gloating at people who settled for £10k when you got 5 times as much.

Pitchshifter

That Liam bloke on Big Brother doesn't have such dilemas, after being in the house about 1 week, he's won £100,000! Lucky sod. If I was him I'd get out quick and pocket the cash. The less time on that show the better.

juliaw

The cast-iron guarantee is worrying me. Is anyone else old enough to remember Equitable Life's cast-iron guarantees, and what happened to people's investments?

Wayne1_2

This is simple. Sell the guarantee to another bank for £55,000 now. It’s called discounting - someone will give you a smaller amount now knowing that they are going to get a larger amount later. The maths for this one is £55k at 6.25% pa.

ldobingw

I would take tha 10K now. You never know what is around the corner, so you may not be around to benefit later. If you invest it wisely, or put it into your property, it will make you interest and lets face it what will 100K buy you in 10 years time. A car maybe?

november

100K in 10 years for me. By that time the children will be well grown and fled the nest. We could pay off the mortgage with plenty spare, buy a camper van and go off to have some much deserved R&R.

pwaring

I'm fairly young so I suspect I'd take the 100,000 in ten years and hope that it will be enough to pay the deposit on a property when I get it.

OzzMosiz_2

ldobingw wrote: »

I would take tha 10K now. You never know what is around the corner, so you may not be around to benefit later. If you invest it wisely, or put it into your property, it will make you interest and lets face it what will 100K buy you in 10 years time. A car maybe?

That will never happen. Wages will not be going up that much, so expect asset inflation to deflate.

I'd take the 100K, cos like one poster said, you could get 50K now if you got a loan and the interest on top means the 100K would pay it off in 10 years (i'd wait)

missylou_2

Hi,

Although I have immediate pressing concerns would consider that my problem.

However ten years from now, when my son will be pursuing his own career aspirations, at my expense!, I would prefer to have the money then as is when would be most advantageous to our family budget,