Shares v Mortage

Fryup_2

Hi

Ive £3,500 sat in shares not doing anything really, owe £43 k on a mortgage that I am currently overpaying and hope to be clear in 3 years, do I cash my shares in and pay this as a lump sum of ?

Thanks

coolb999

It all depends on how much interest you are paying. You could re-mortgage fi you are not on a fixed term.
In shares its normally good if you get a good price, you sell it and then buy another share at a good price and again sell it at a better price.
But if you do not want all this hassle and with the market being at its top, it is worth selling and paying off a part of your mortgage.

SillySod

Are you consistently getting dividends (minus tax) on those shares that exceed your mortgage interest rate?

If yes (unlikely or you would have mentioned the income), then stick with them.

If not, then I suggest you sell and use the proceeds to pay off your mortgage. That 3.5K as an overpayment will *definitely* earn you your mortgage interest (and no tax to pay), while there is a (slim?) chance that as shares they could earn you more. Do ya feel lucky, punk?

And don't forget the psychological baggage of having this question hanging over your head, and even the mere paperwork of an additional asset is (for me at least) a burden (financial "clutter"). Dump em.

[To be fair, I speak as someone still holding on to useless shares, but am unable to use them to pay off debt and I do intend to start actively building a share portfolio soon, at which point they will be dust.]

edinburgher

If the OP is very lucky, he's paying what, 1.5% as a best case scenario?

Unless my maths is rubbish, that's £645 of interest a year (and it's unlikely he has such a good rate).

Which shares will pay £645 divis on £3,500 invested? :rotfl:

Edit: in case I'm misreading (long day) and you're saying that he should keep (for example), 3% divi shares if he's paying 2% on the mortgage? Even in this scenario, the return is pretty small all things considered.

SillySod

edinburgher wrote: »

If the OP is very lucky, he's paying what, 1.5% as a best case scenario?

Unless my maths is rubbish, that's £645 of interest a year (and it's unlikely he has such a good rate).

Which shares will pay £645 divis on £3,500 invested? :rotfl:

Edit: in case I'm misreading (long day) and you're saying that he should keep (for example), 3% divi shares if he's paying 2% on the mortgage? Even in this scenario, the return is pretty small all things considered.

The point is, where is his 3.5K better placed? If (an unlikely if as he says they are doing pretty much nothing) his shares are earning him more than his mortgage is costing, then he should keep the shares. Added bonus: no effort required.

If the 3.5K is better placed by paying off the mortgage, then of course it will not cancel out his whole mortgage interest. But it will be (even if just marginally, and from a purely financial point of view) the better option.
- Downside: the required effort to sell shares.
- Upside: not having the shares to think about.

edinburgher

So that was what you meant!

If you can find me shares that 'consistently' return more than 18% in divis, I'll quit my job tomorrow morning and come learn at your feet

To be honest, considering the context and phrasing of the original question, it seems unlikely that Fryup has accidentally discovered the fountain of yield.

Ive £3,500 sat in shares not doing anything really

When did you purchase them? Have they grown? If so, by how much? Do they form part of any long term plan, or were they just a punt?

coolb999

edinburgher wrote: »

So that was what you meant!

If you can find me shares that 'consistently' return more than 18% in divis, I'll quit my job tomorrow morning and come learn at your feet

To be honest, considering the context and phrasing of the original question, it seems unlikely that Fryup has accidentally discovered the fountain of yield.



When did you purchase them? Have they grown? If so, by how much? Do they form part of any long term plan, or were they just a punt?

I have loads of shares. With my experience of over 15 years in investment.
I regularly get about 10% a yeAr return, but I don't always hold my money in 1 share. I sell when I think it's right and buy them when I think it's right. I normally spread my investment and also have a mortgage which I think I would not like to pay off even though I have enough money to pay it off. Because mortgage is only 3% interest. However I would say that it is a good idea to buy and sell shares if you have at least 15-20 k to invest as you need to spread to minimize the risks.

longtermplanner

I would say clear your mortgage. Yes I know you could get a better yield on blue chip shares than you are paying on a mortgage. But you are talking about such small amounts of money in shares that at the moment they obviously aren't of a lot on interest to you. Given that, and the fact that your shares could fall in value, I would take the money and put it towards your current admirable goal - clearing your mortgage.

When the mortgage is gone, then you can look at investing the money you had been paying to the mortgage into shares. But for now, keep it simple!

edinburgher

I have loads of shares. With my experience of over 15 years in investment.
I regularly get about 10% a yeAr return

10% return isn't the same as 18% yield, you're muddying the waters further

coolb999

edinburgher wrote: »

10% return isn't the same as 18% yield, you're muddying the waters further

I used to get over 20% from 1999 to 2007. But since then 10% is excellent considering I do not take much risk. I Do a lot of research and glad-fully do not listen to others about which share to buy without doing a research. If you want to invest the hint is to spread your investment (i.e petroleum, telecommunication. Banks, gold, technologies, miners, etc).

If you have say £50000 -- spread £10000 in five different industries and you will hardly see all of them going down in 1 go.

As said I minimum get 10% profit from buying and selling plus I get dividends (2-4%). At times I go get even 20% plus. Last year I bought bp and barcl at 423.5p and 255.0p and sold them recently at 497.0p and 297.0p with having 2000 and 4000 shares , my profit was well over 20 % including dividends.

But I have the money siting now in the bank while I get 3% interest and I don't know how long it's going to sit there for. So my average will come down to the target of 10%.
But I will buy shares when I think the time comes to buy a right share. I most probably buy after a company declares a bad profit or a bad revenue or I buy when I think the share will go a lot higher than it is today.

I have always made profits on all my shares with the exception of one which I just got my money back ( but still gained dividend) it was tesco.

So good luck guys with your experience. And don't think I need to advertise which share you should buy because I will mention the ones I am currently holding and that's not fair guide because it's my view.

There is nothing like get rich quick. And people who invest all their money in one share is too risky and have risk of loosing the money.

The other thing I invest in is properties. I currently started buying from 2009 and have 3 properties. I am glad to say that they have all given my over 20% profit plus on my investment.

edinburgher

Well that's super, but I'm not sure how it's at all relevant to the conversation