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    • kber
    • By kber 12th Jan 18, 10:55 AM
    • 1Posts
    • 0Thanks
    Property mortgage or shares?
    • #1
    • 12th Jan 18, 10:55 AM
    Property mortgage or shares? 12th Jan 18 at 10:55 AM
    Have a cash lump sum of 200,000. Options:

    Add 200,000 to S&S portfolio (diversified low cost global index trackers) with reasonable long-term growth assumptions 5-6%. At drawdown plan to take 3.2% income p.a. Pros: Potentially best long-term return. Cons: Sequence of returns risk early in drawdown.

    Pay off BTL mortgage and when mortgage is no longer tax allowable expense will receive additional 8,000 income, approx. 4% p.a. return on investment. Pros: locks in additional income with reasonable degree of certainty. Have let property for over 10 years through various economic cycles and rental income has been consistent. Even if rental income fell 20%, return on 200,000 would be 3.2%. Cons: Probably lower long-term return.

    Any thoughts on which way to go appreciated.
    Last edited by kber; 12-01-2018 at 5:38 PM.
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    • IanSt
    • By IanSt 12th Jan 18, 12:07 PM
    • 260 Posts
    • 194 Thanks
    • #2
    • 12th Jan 18, 12:07 PM
    • #2
    • 12th Jan 18, 12:07 PM
    Personally if I felt my income was safe then I'd put it all into investments, but if both options feel right to you then maybe do 1/2 of one and 1/2 of the other.

    My preference is based on that you look to have enough investments to cope with any future temporary market dip - even dips that could take a few years to recover.
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