Sell and buy... sell, buy and invest... or let and buy?

DanP1

Alexland said:

DanP1 said:

Yes, our ETF investments are in stock and share ISA. In order to be as tax efficient as possible, we might end up opening a Junior stock and share ISA for our son too.

We have settled on holding a long established quality focused investment trust that produces reliable smoothed dividends and some capital growth in our S&S ISAs as it's reassuring to know the growing income (around 1% each quarter) is available to pay our mortgage and bills in the event we ever lost our jobs. We then hold global tracker funds and ETFs in our pensions/LISAs. For the S&S Junior ISA have a look at Fidelity as they have no platform charges on child accounts if you stick to traditional funds.

Thank you, I will have a look at Fidelity for the S&S Junior ISA.

May I ask which is the investment trust you mention? Around 1% growing income each quarter sounds interesting.

We currently have tracker funds and ETFs both in our S&S ISA and pension. Your diversification approach makes a lot of sense.

Alexland

DanP1 said:

May I ask which is the investment trust you mention? Around 1% growing income each quarter sounds interesting.

Murray Income Trust a diverse selection of high quality mostly UK companies with good prospects at reasonable prices. Helps me sleep at night knowing our S&S ISAs generate a basic level of income regardless of employment in advance of being old enough to get access to our pensions and LISAs. Also provides some home UK bias to our overall portfolio which if valuations are to be trusted could be a good thing for medium term returns. Still do your own research - your milage may vary.

https://www.murray-income.co.uk/

steampowered

Personally I would go with Option 2. 

It makes sense to have enough of a deposit to get a competitive interest rate, but beyond that I would fill your boots with mortgage money and invest it.

In this era of record low mortgage interest rates (you can now get a 0.99% 10 year fix!!!!) it makes complete sense to make the most of investments rather than keeping the mortgage down below say 60-70% LTV. Especially tax efficient investments like pension contributions and stocks & shares ISAs.

This is especially true if you are a higher rate taxpayer, or if you are earning the sorts of salary where the High Income Child Benefit Tax Charge kicks in but can be minimised through increasing pension contributions.

If your goal is to retire early, you are much more likely to achieve that through compounding returns on your investments to create a larger and larger pot, than you are by keeping a low mortgage. 

Canuck01

Borrow as much as you can on your overpriced property and invest it in a bubbling stock market what can possibly go wrong?

Albermarle

Canuck01 said:

Borrow as much as you can on your overpriced property and invest it in a bubbling stock market what can possibly go wrong?

There is no indication in any post that their property is overpriced . In fact a £200K property with a possibility to move to a bigger  £300K property , would indicate they are in an area with middle level pricing , so any price correction is unlikely to be large if it comes. In any case their current property has no mortgage at all.

Regarding a bubbling stock market and pumping more into 100% equity index funds , then that could be time to pause for thought though .

Chickereeeee

Definitely option 1.

Well, we were in a similar  situation a few years back, and that is what I wish we had done, anyway.

DanP1

Chickereeeee said:

Definitely option 1.

Well, we were in a similar  situation a few years back, and that is what I wish we had done, anyway.

May I ask what makes you regret your decision?

Thank you very much for sharing, it's very much appreciated.

steampowered

Canuck01 said:

Borrow as much as you can on your overpriced property and invest it in a bubbling stock market what can possibly go wrong?

The Op is 35 years old. At least 20 years to go until retirement, even if they retire very early. 

That's plenty of time to ride out any market crashes that might (and will) occur during that timeframe, all the while accruing dividends.

Trying to time the market as you are suggesting is a fool's errand. The statistics are clear: you are better off putting in a lump sum than you are drip feeding.