Stocks & Shares ISA vs the mortgage

StockportGerbil

Folks :-
I've acquired a couple of stocks & shares ISAs and a mortgage. Half the mortgage is repayment and the other half is interest only with the expectation / hope that in 11 years time the ISAs will have enough in them to pay off the remains of the mortgage.

In these days of relatively high interest rates and less than sparkling stock market performance is it more sensible to cash the things in and stick all the money in the mortgage?

If sticking with ISAs is a good idea, how do I determine the performance of these things against similar products? The literature and web site of one of the providers (Windsor Life) is hopeless. The other one is run by Henderson / NPI / AMP / probably something else today and there is some info on the web site, but I'm struggling to make sense of it or even find my product!

Thanks

Kev

MarkyMarkD

In these days of relatively high interest rates

Eh? Mortgage rates haven't been this low for years.

StockportGerbil

OK - compared with 15 years ago the rates are low, but I think I've received 3 letters this year from the mortgage company saying they've upped the mortgage rate....

dunstonh

The rates are generally considered to have topped out now and the long term view is that they will decrease.

No-one has a crystal ball as to what is going to happen in the future.

My personal view is that now is a very good time to be buying equities (in a wide spread of areas and not just one fund). Any time after a stockmarket crash has historically been a good time to buy and not sell.

It's all down to risk, timescale and personal opinion. Also, saying you have an ISA isnt very helpful as there are thousand of funds out there ranging from zero risk funds, low risk corporate bond, fixed interest funds through medium risk managed funds upto high risk specialist and overseas funds.

You could be investing in low risk corporate bond funds for all we know which tend to average 4-7% a year and getting less than the mortgage. Or you could be in the top performing stockmarket funds earning 14-20% a year.

Reaper

In these days of relatively high interest rates and less than sparkling stock market performance is it more sensible to cash the things in and stick all the money in the mortgage?

As already said interest rates are not high. Although everyone says "5 rate rises" they were all only 0.25% and started from rock bottom. As for selling up - I did just that a few months ago. The market seemed to be going nowhere and I was concerned by oil prices heading to permanent new highs so I mostly sold up and put the money in my offset account - a useful device as I can always get it back again and reinvest. With hindsight I think I was wrong to worry. While I haven't reinvested if I were considering selling up now I think I'd hold off at least until Christmas. Of course nobody really knows, we can just give opinions.

If sticking with ISAs is a good idea, how do I determine the performance of these things against similar products?

There are excellent free graphs available at Money Extra. You might need to register (free) to make full use of them. You can look at the performance of your shares or funds over whatever period you want and compare them to other shares/funds or market indexes. You can also set up a portfolio - enter your funds and then you get instant valuations whenever you want and you can link through to the graphs. I believe there are other sites that do this too but as Money Extra does everything I want I have never felt the need to look.

deemy2004

OK - compared with 15 years ago the rates are low, but I think I've received 3 letters this year from the mortgage company saying they've upped the mortgage rate....  :(

Rates are still near historic lows, don't be fooled into a false sense of security 4.75% is not high, especially when rates are rising all aroudn the world

Robert_Sterling_3

In 1980 if you borrowed £30,000 from the Halifax the mortgage rate was 17% i.e. SVR +2% extra for borrowing more than £20,000.