Investing to Pay Off Mortgage - thoughts?

kinger101

Thrugelmir said:

Sailtheworld said:

Thrugelmir said:

kinger101 said:

DiggerUK said:

ian1246, I'm  definitely a "get real and clear the mortgage first" poster. But as the man said, 'stoopid is as stoopid duz'. Harsh, I know.
But as the woman  said, "those who don't learn from history are doomed to repeat it"

I am of course referring to the mis selling of endowment policies. The mis selling came about primarily because they were sold making out they would eventually provide the funds to clear the mortgage, usually, but not exclusively, associated with interest free mortgages.

They failed to deliver in  the tens of thousands. You're about to run the risk of making nearly the same mistake, with no chance of compensation. Just pay the damned mortgage..._ 

OP is going into this knowing that on average returns will be better than mortgage interest, 

Hence the eternal caveat of "past performance" etc etc. Watching the markets no one would know there's been a global pandemic the past few months. Corporate profitability generally is going to take a significant hit. 

Expecting the market to price in only what was in last night's News at Ten will just lead to perpetual bemusement.

Many investors don't price anything in. They just follow like sheep. 

Following like sheep will likely put you in the middle of the pack.  On average, not being a sheep will put you behind.
Most people (myself included) like to think they have some sort of an edge.  According to the AAA, 80% of driver think they're above average.

coachman12

How can you follow the sheep and still get into the middle of the flock( not a pack)please ?  And , as you "like to think you have some sort of edge", can you let us know how you how we can all get the magic "edge" please ?

83705628

coachman12 said:

How can you follow the sheep and still get into the middle of the flock( not a pack)please ?  And , as you "like to think you have some sort of edge", can you let us know how you how we can all get the magic "edge" please ?

/
Well if by sheep you mean investors and if by average you mean the market return via index funds then that statement is true.

kinger101

coachman12 said:

How can you follow the sheep and still get into the middle of the flock( not a pack)please ?  AInd , as you "like to think you have some sort of edge", can you let us know how you how we can all get the magic "edge" please ?

"Middle-of-the-pack" is synonymous with being in the centre.  I was not attempting to continue the sheep analogy, as it wouldn't make any sense.  By definition, anyone not investing sheepishly wouldn't be part of the flock.

The second point was regarding what is known as illusionary superiority bias.   Humans are prone to overestimating their abilities in any given task.  I expect you'll take this as a cue to direct another snide comment at me.  But it generally means that there's a tendency for an individual to think they're better than the other active investors who (on average) fail be beat the market.  Most will be wrong. 
 

coachman12

No snide remarks at all from me---you have said all that I thought was the case, thank you.

Sebo027

It would be reasonable to assume 7-10% annualized returns over a 20 year period. Across that time period you are far better off having invested more and serviced a low interest mortgage.

Thrugelmir

Sebo027 said:

It would be reasonable to assume 7-10% annualized returns over a 20 year period. Across that time period you are far better off having invested more and serviced a low interest mortgage.

Where would you suggest investing to achieve these levels of annualised return? 

Thrugelmir

coachman12 said:

How can you follow the sheep and still get into the middle of the flock( not a pack)please ?  And , as you "like to think you have some sort of edge", can you let us know how you how we can all get the magic "edge" please ?

Did you actively invest during the Dot.Com era (for example)? 

ian1246

Thanks for all the replies and interesting discussion guys.

I'm reasonably happy with the plan to split overpayments & investments by 50/50 - from where I'm standing the worst case scenario  when it comes time to move/upgrade, the markets are down we just won't sell the investments and instead, due to overpaying, should still have a substantial amount of equity in our existing property and hopefully able to get a good sized property with a good loan to value ratio (cheaper mortgage), and then later on down the road - once the markets have recovered, perhaps consider selling the investments to pay off a chunk of the additional mortgage borrowed as a result of the markets being down. Thats the worst case....

............ whilst the best case is the markets perform well and we get a significantly better return on our invested £££s vs. the return from overpaying the mortgage. Then when it comes time to move/upgrade, we can either decide to sell our investments and take out a smaller mortgage... or just go ahead and borrow a larger mortgage and keep the investments tied up for another decade or so. 

DireEmblem

Could you consider another tact, invest to cover your monthly mortgage payments?  You might need to save a little more, but based on historic averages, that little more will earn 7% a year, while your low mortgage interest rates should be under 2%.