Re-mortgage to invest in stockmarket?

danm

Thrugelmir wrote: »

Nor committing a £100k to a low cost S&P 500 tracker fund.

Interest rates are low for a reason. Not least that global growth appears to be slowing.

I agree . I wasn’t suggesting the OPs original plan was any greater but so often the views I have seen is that you should not pay off your mortgage (for the very reason that the OP suggests)

Interesting from a behavioural perspective that many would not pay off the mortgage (implying leverage is good) but would at the same time suggest not taking leverage to invest.

Albermarle

Interesting from a behavioural perspective that many would not pay off the mortgage (implying leverage is good) but would at the same time suggest not taking leverage to invest.

Which kind of proves the point that human psychology plays a big part in financial decisions rather than just pure rationality , whatever we like to think.

Thrugelmir

danm wrote: »

Interesting from a behavioural perspective that many would not pay off the mortgage (implying leverage is good) but would at the same time suggest not taking leverage to invest.

Easy to say when it's not your money. A number of years of good investment returns induces a state of complacency. With investors tend to become over confident in their own abilities.

PEHsaver

I choose to invest into index funds rather than overpay the mortgage as my rate is only 2%. I am hoping that over the next 10 years my investments will average 7-8% return and vastly overtake the amount owed on the mortgage.

at this point I could pay off the mortgage balance and continue to invest more aggressively given no mortgage payment , to be decided depending on interest rates at the time.

This is a month on month payment into funds though , I would never dump in £100K with one transaction.

In your position I would keep the paid for property and invest all rental income.

Thrugelmir

PEHsaver wrote: »

I am hoping that over the next 10 years my investments will average 7-8% return and vastly overtake the amount owed on the mortgage.

Do you hold an adventurous portfolio?

Alexland

It's certainly not a 'no brainer' and it really depends on a careful review of your circumstances. Most people do well over long periods running an affordable amount of leverage. When you are young in your 20s it's normal to get highly leveraged with a big mortgage on what seems an expensive first time property. As you get older you start becoming more conservative until at retirement you just want a steady income and no debt. Running leverage feeds into your overall financial risk and net worth volatility position. Make your choices carefully after assessment of the worst case scenarios.

EthicsGradient

I know just where you need to go for advice

https://twitter.com/jkass99/status/1159619530898862081

Thrugelmir

Alexland wrote: »

Most people do well over long periods running an affordable amount of leverage.

When the Nikkei crashed 50% and didn't recover. Capital was permanently lost.

There's a heavyweight book "This Time Is Different: Eight Centuries of Financial Folly" - Reinhart and Rogoff. Financial crisis occur somewhere in the world more often than one imagines.

Malthusian

If the OP had 100k mortgage outstanding, and an established emergency fund; and had asked the forum how they should invest 100k they had just come into; I don’t think many responses would have been to pay the mortgage off!

Only because they would assume that the OP had a source of income to pay off the £100k other than their inheritance.

If they didn't they would have already been posting threads entitled "Help, I'm broke and in arrears with my mortgage", and when they got their £100k windfall they almost certainly wouldn't ask what they should do with it.

In this case we cannot yet assume that the OP has a source of funds to pay off the mortgage independent of the funds they are considering investing.

Thrugelmir wrote: »

When the Nikkei crashed 50% and didn't recover. Capital was permanently lost.

Only by people who weren't properly diversified.

For anyone who did not overweight Japan it simply dragged down their still-better-than-cash returns.

Thrugelmir

Malthusian wrote: »

Only by people who weren't properly diversified.

For anyone who did not overweight Japan it simply dragged down their still-better-than-cash returns.

Global equity trackers are weighted by market capitalisation.