Invest or pay off debt

Wicksy0515

Hi all.
My structured income product has come to an end and I need advice on which route to take with the £30k coming back to me.

Initial thoughts were to plough the whole lot into the Neil Woodford fund since this appears relatively safe and gives an income of around 4% but I am now wondering whether or not it would be more prudent to pay off my car loan instead which is currently costing me almost £500 per month. I think I will need around 25k to settle the outstanding debt.

Which option makes sense to the wise owls on this site? - thanks in anticipation of your replies.

Wicksy

sinizterguy

If your investment will return higher than your debt, then invest.

Otherwise, pay off debt, and take that money and invest in monthly.

You could use a combination of the two if you feel more comfortable, but it is a decision you have to make.

You do lose out on some 'potential growth' of your investment (if in the stock market), but the above will give you quicker return.

Also, consider that you may have to pay tax on your investment income, depending on personal circumstances.

Wicksy0515

Thanks Snitzerguy,

If I decide to pay off the debt I will definitely be reinvesting the monthly amount saved.

eskbanker

sinizterguy wrote: »

Also, consider that you may have to pay tax on your investment income, depending on personal circumstances.

I'd imagine that someone driving a car worth more than £25K is fairly likely to be a taxpayer!