S&S ISA 10 - 15 year performance guess

msallen

GreenSnake wrote: »

You still have a mortgage debt, but you're putting money into the stock market?
That's a gamble.
Not saying it won't pay off, but it's a gamble.

Did your IF A calculate your mortgage interest payments until debt cleared?

Assuming you have some level of faith in the historical average of equity returns being ahead of bank interest rates (and if you don't you won't be investing anyway), and you apply the same to the likely relationship to mortgage rates, then it makes sense (in most cases) to invest rather than overpay your mortgage.

Of course some people prefer the psychological boost of paying off their mortgage, but that is not a prudent decision from a purely financial POV.

GreenSnake

msallen wrote: »

Assuming you have some level of faith in the historical average of equity returns being ahead of bank interest rates (and if you don't you won't be investing anyway), and you apply the same to the likely relationship to mortgage rates, then it makes sense (in most cases) to invest rather than overpay your mortgage.

Of course some people prefer the psychological boost of paying off their mortgage, but that is not a prudent decision from a purely financial POV.

At the moment, with interest rates low and equities doing well, then yes, borrowing to invest (which is what you're actually advising, indirectly) works well.

But a stock market crash, with an interest rate rise and a job loss could see you in trouble.
I agree it's unlikely, but I'd sleep better knowing that I won't be on the streets if I lose my job etc.

I am on the cautious side though. I don't want to risk living in an dirty bedsit in Blackpool, with junkies upstairs and a girl sucking off taxi drivers in the room next door. That's what happened to a guy a know. Makes me cautious.

Fatbritabroad

GreenSnake wrote: »

At the moment, with interest rates low and equities doing well, then yes, borrowing to invest (which is what you're actually advising, indirectly) works well.

But a stock market crash, with an interest rate rise and a job loss could see you in trouble.
I agree it's unlikely, but I'd sleep better knowing that I won't be on the streets if I lose my job etc.

I am on the cautious side though. I don't want to risk living in an dirty bedsit in Blackpool, with junkies upstairs and a girl sucking off taxi drivers in the room next door. That's what happened to a guy a know. Makes me cautious.

Not I dont know. You could always get a job as a taxi driver

GreenSnake

Fatbritabroad wrote: »

Not I dont know. You could always get a job as a taxi driver

At least he never had any problems getting a taxi.

mollycat

GreenSnake wrote: »

At the moment, with interest rates low and equities doing well, then yes, borrowing to invest (which is what you're actually advising, indirectly) works well.

But a stock market crash, with an interest rate rise and a job loss could see you in trouble.
I agree it's unlikely, but I'd sleep better knowing that I won't be on the streets if I lose my job etc.

I am on the cautious side though. I don't want to risk living in an dirty bedsit in Blackpool, with junkies upstairs and a girl sucking off taxi drivers in the room next door. That's what happened to a guy a know. Makes me cautious.

Never saw the thread taking the "Jeremy Kyle" route!! :eek:

AnotherJoe

GreenSnake wrote: »

You still have a mortgage debt, but you're putting money into the stock market?
That's a gamble.
Not saying it won't pay off, but it's a gamble.

Did your IF A calculate your mortgage interest payments until debt cleared?

It’s a gamble either way but on the face of it you are making an argument to pay off mortage ahead of any investments or even pension, since that involves investments as well.

Whilst mortage rates are low, lower than inflation in most cases, taking your time paying the mortgage off and investing long term has the odds far in your favour

GreenSnake

mollycat wrote: »

Never saw the thread taking the "Jeremy Kyle" route!! :eek:

Well the guy told me they were taxi drivers calling in.
But they could well have been IFAs, spending their hard earned 2% fees.

Thrugelmir

msallen wrote: »

Assuming you have some level of faith in the historical average of equity returns being ahead of bank interest rates

What is the historical average on which you are basing your conviction?