what to do with 60k

grumiofoundation

Mickey666 said:

So you WOULD suggest taking out a mortgage to fund pension contributions in some circumstances?

Probably in quite a lot of circumstances taking out a mortgage to fund pension and/or SandS ISA contributions would be a good idea from a purely financial perspective over say a 20 year timescale. 

Of course this is a decision the majority of people would not be happy to take as you have to consider the risk involved, the work involved, the self control required and (as you have said) your quality of life and how secure/anxious either option would make people feel (whether or not some of those feelings of security/anxiety are 'correct'). 

kinger101

Mickey666 said:

kinger101 said:

I'd rather be in a position where I use pension equity to pay off mortgage debt than home equity to provide pension income.

I'd rather be in neither position and fortunately I'm not. 

But it raises an interesting point about home equity.  I tend towards the view that any money I die with is money I might just as well have never had in the first place.  Homes, however, are a rather unique asset in the sense that we all need somewhere to live so anyone owing their own home will have a significant sum tied up in it.  So what's so bad about home equity loans if they mean a more comfortable and fulfilling retirement?

My feeling is that many of these sorts of issues are not simply a question of maths, there has to be a 'philosophy of life' angle to them as well.  As an example, early retirement is probably a bad life-choice if the objective is to accumulate as much wealth as possible, so why do so many people do it?  I'd suggest it's because life is not all about money and there must surely come a time when enough is enough.  I guess we all have different definitions of 'enough' but I've seen people put lifetime ambitions on hold because they're too busy working when they could financially retire tomorrow and go out and fulfill those ambitions.  It takes all sorts I suppose.

I tend towards that view that any money I die with will be useful to surviving spouse then offspring, but otherwise, converting my home equity to retirement income might seem sensible.  I suspect many of the people taking home equity loans to fund their retirement are doing this out of necessity rather than a pragmatic view that it has no value in the afterlife.
But real-estate equity and pension equity have some degree of interchangeability as we both seem to agree.  I know which one gives me the best return.

kinger101

coachman12 said:

kinger101 said:

Mickey666 said:

Yes, nothing wrong with some differing views.

However, would those offering advice on how to invest 60k instead of paying off the OPs mortgage also suggest that those of us who are mortgage-free should borrow £60k by taking out a mortgage on their home so that they could also follow the same investment advice?

After all, that would be the logical conclusion of their advice.

It's not a logical conclusion at all.  For one, there is the cost of arranging mortgage finance. But every year a considerable number of people who made inadequate retirement provision have to do just that via equity release.  

My mortgage rate is currently 0.89% interest.   At the moment, anything I put into my pension gets either a 41.67%, 46.55% or 77.08% instant uplift depending on the various timing aspects related to tax and NI.  So if I've extra money lying around, it will go into my pension.

I'd rather be in a position where I use pension equity to pay off mortgage debt than home equity to provide pension income.

It's OK , Mickey, in spite of your logical conclusion, just listen to what the previous  poster tells you to do----it is expected of you on these Forums.

It is possible for two people to have different viewpoints and argue them without resorting to hostility.  It is only expected that people disagree politely on these forums. Something I wish you would understand.

coachman12

kinger101 said:

coachman12 said:

kinger101 said:

Mickey666 said:

Yes, nothing wrong with some differing views.

However, would those offering advice on how to invest 60k instead of paying off the OPs mortgage also suggest that those of us who are mortgage-free should borrow £60k by taking out a mortgage on their home so that they could also follow the same investment advice?

After all, that would be the logical conclusion of their advice.

It's not a logical conclusion at all.  For one, there is the cost of arranging mortgage finance. But every year a considerable number of people who made inadequate retirement provision have to do just that via equity release.  

My mortgage rate is currently 0.89% interest.   At the moment, anything I put into my pension gets either a 41.67%, 46.55% or 77.08% instant uplift depending on the various timing aspects related to tax and NI.  So if I've extra money lying around, it will go into my pension.

I'd rather be in a position where I use pension equity to pay off mortgage debt than home equity to provide pension income.

It's OK , Mickey, in spite of your logical conclusion, just listen to what the previous  poster tells you to do----it is expected of you on these Forums.

It is possible for two people to have different viewpoints and argue them without resorting to hostility.  It is only expected that people disagree politely on these forums. Something I wish you would understand.

Oh, I understand alright 
PS----What happened to the Ignore Button you promised ? If I knew you to have no sense of humour, I'd think you were just a little tease 

Mickey666

kinger101 said:

Mickey666 said:

kinger101 said:

I'd rather be in a position where I use pension equity to pay off mortgage debt than home equity to provide pension income.

I'd rather be in neither position and fortunately I'm not. 

But it raises an interesting point about home equity.  I tend towards the view that any money I die with is money I might just as well have never had in the first place.  Homes, however, are a rather unique asset in the sense that we all need somewhere to live so anyone owing their own home will have a significant sum tied up in it.  So what's so bad about home equity loans if they mean a more comfortable and fulfilling retirement?

My feeling is that many of these sorts of issues are not simply a question of maths, there has to be a 'philosophy of life' angle to them as well.  As an example, early retirement is probably a bad life-choice if the objective is to accumulate as much wealth as possible, so why do so many people do it?  I'd suggest it's because life is not all about money and there must surely come a time when enough is enough.  I guess we all have different definitions of 'enough' but I've seen people put lifetime ambitions on hold because they're too busy working when they could financially retire tomorrow and go out and fulfill those ambitions.  It takes all sorts I suppose.

I tend towards that view that any money I die with will be useful to surviving spouse then offspring, but otherwise, converting my home equity to retirement income might seem sensible.  I suspect many of the people taking home equity loans to fund their retirement are doing this out of necessity rather than a pragmatic view that it has no value in the afterlife.
But real-estate equity and pension equity have some degree of interchangeability as we both seem to agree.  I know which one gives me the best return.

A lot depends on individual circumstances of course, but in general I'd say that offspring are best served by setting them up well before own death.  If you die at around 80, offspring are likely to be around 50 and shouldn't really be relying on an inheritance by then.  True, the grandkids could benefit, but that's really the offspring's responsibililty.

Surviving spouse is somewhat different of course, but they should also be sharing the benefits of a lifetime of wealth creation while they are alive rather than simply passing it on when they die.

I suspect you're right about equity-release often being used out of necessity to fund retirement though I don't think I'd ever want to do that.  I think of it more as a 'bonus' after a good living pension has already been provided by various other means.