Pay your mortgage off early or invest?

I pay double mortgage payments at the moment so I can be mortgage free in a couple of years. I spent my formative years in care (before being adopted by a family in a council house) so owning my own house was always a huge dream for me and to be able to do it whilst I'm still fit and healthy is a massive bonus. I'll (maybe) start ploughing money into investments/pensions etc once the extra money is freed up.

Having watched both my father and my father in-law work hard all their lives and then die within 3-4 years of retiring has made me re-evaluate what I should do and when. Do I spend the spare cash on nice holidays and fun things with my son whilst he's still at home or save it until I'm 70 only to then sit in a wing back chair and wet myself whilst a care home spends it for me? Difficult to answer really.
 
Kreeeee said:
Completely agree. Short term investing and market timing is a fools game.

I will never sell my stock investments and will draw down by taking out loans against the stock for ridiculously low rates.
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I see what you did there :D

Totally respectable and makes complete sense. I just hesitate recommending it as folk lack discipline. You only have to browse the stocks and shares forum to see folk losing big money.
 
I over paid my mortgage and had it cleared by my early 30s, being mortgage free is great. Every penny you earn is yours and you can live a stress free life, without the axe hanging over your neck.
 
jon86 said:
Huh? Being mortgage free means that you don't have to pay income tax and NI?
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It means you don't have to worry about much and all your money is for you, not the hedge fund managers. Your paying tax, which is a total none issue unless you're like 20 and still have not come to terms that you have to contribute to society.
 
Geodude97AD said:
It means you don't have to worry about much and all your money is for you, not the hedge fund managers.
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I am genuinely curious why you're equating paying a mortgage to giving your money to hedge fund managers. Banks may be owned by hedge funds, but then again, so could your supermarket(s), your energy suppliers, your petrol station owner (if not shopping from a locally owned company), your entertainment supplier (Netflix, Amazon, Disney, Sky, etc), your car manufacturer, etc etc. Are you not going to give any money to those companies as well?
 
Geodude97AD said:
I over paid my mortgage and had it cleared by my early 30s, being mortgage free is great. Every penny you earn is yours and you can live a stress free life, without the axe hanging over your neck.
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Yeah, I would always advise paying off mortgage before investing - as others have pointed out, thats exactly how lots of people got in to dire straits with endowment policies. If you are going to invest then buy low and sell high - e.g. time it right, don't keep piling money in to a high market as it will definitely drop at some point.

Or if you are going to invest monthly, put half in each month and keep half back to push in when it does drop so you maximise both sides of the equation.
 
andybird123 said:
I have a FTSE100 tracker
So looking at the last 3 years FTSE 100, it's been above 7000 most of the time, but we've had dips to 6000 a few times, so I've put 10k in when it dipped, I've not put anything in when above 7000

I've also got nearly 2 bitcoin, over 1.5 bitcoin I built up when it was under £10k, when it started to rise I stopped buying, recently when it dropped to £26k I bought some more. I put much less in to this area because it's higher risk, but just on the offchance it goes to Megabucks it'll be a nice bonus retirement retirement fund. Or on the flip side it's money I can afford to lose without affecting my way of life.

I buy dips. I sell when it's high and I want to take advantage of my CGT allowance. I retired at 38 and live off investments and savings. My net worth increases each year by more than I spend yet I now pay hardly anything in income tax

A lot of people treat investing like a replacement for a mortgage and pay in money every month likes it a savings account, which is imo the wrong strategy. Timing the dips is more profitable.

But, I paid off my mortgage first so that my house is never at risk and my actual monthly requirements are much lower.

I might be caught out and miss a big increase while I had some money set aside in savings, but then the next time it dips I'll be ready to catch that one instead. Over 10 years I can basically guarantee my funds have all increased though, where as someone who has put a fixed amount every month might need to cash out during a dip and not make back what they put in.

I keep in savings 2-3 years worth of expenditure so that I can always have money to take care of me while I wait on a dip to be over before cashing out something else.

I tried day trading, made £9k in the first week and lost £15k the next so gave up on that!
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I did the same when the FTSE dumped after COVID. You make money buying the dips thats for sure.
If you trickle in you probably dont have the ability to take advantage of some great opportunity.
Its the DCA (Dollar cost average) people apply to crypto as well. It masks the bad buy decisions since they dont look at the individual trades.

If your into crypto a bit and investing take a look at grid trading (Huobi is good although partially limited, some other exchanges do it as well). I do this now with a lot of my crypto and its pretty surprising the return you get.
The risk? Its that one of the pairs (or the crypto itself if you use stable coins in the pair) falls outside your range.
Simply, you take x of an asset, say BTC. You decide on a high and low point and how many trades (grids) you want, the x is divided by the number of trades and then listed spread across the low to high range. As each of those points is hit it will buy or sell automatically and be ready to reverse the transaction.
Worked example, you want to grid trade 1 BTC, with 10 grids. YOu set low at $30000, and high at $40000. It will buy every $1000 at $30000, 31000, 32000... right up to $39000 (ie 10 grids) and it will sell those same buys $1000 higher, at $31000, 32000... upto $40000. For this example each trade would be 1/10 = 0.1 BTC
What you can then do is draw down the income (its not auto reinvested) and either create a new trading bot, or hold it for another purpose.
Hope that makes sense.
 
Mercenary Keyboard Warrior said:
I did the same when the FTSE dumped after COVID. You make money buying the dips thats for sure.
If you trickle in you probably dont have the ability to take advantage of some great opportunity.
Its the DCA (Dollar cost average) people apply to crypto as well. It masks the bad buy decisions since they dont look at the individual trades.

If your into crypto a bit and investing take a look at grid trading (Huobi is good although partially limited, some other exchanges do it as well). I do this now with a lot of my crypto and its pretty surprising the return you get.
The risk? Its that one of the pairs (or the crypto itself if you use stable coins in the pair) falls outside your range.
Simply, you take x of an asset, say BTC. You decide on a high and low point and how many trades (grids) you want, the x is divided by the number of trades and then listed spread across the low to high range. As each of those points is hit it will buy or sell automatically and be ready to reverse the transaction.
Worked example, you want to grid trade 1 BTC, with 10 grids. YOu set low at $30000, and high at $40000. It will buy every $1000 at $30000, 31000, 32000... right up to $39000 (ie 10 grids) and it will sell those same buys $1000 higher, at $31000, 32000... upto $40000. For this example each trade would be 1/10 = 0.1 BTC
What you can then do is draw down the income (its not auto reinvested) and either create a new trading bot, or hold it for another purpose.
Hope that makes sense.
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It does make sense, however it would chew through my CGT allowance pretty quickly and I need my CGT allowance across all of my investments so it wouldn't neccesarily gain me much if I actually start taking a 20-28% hit on my other investments.
 
touch said:
Ask the lads in the investing thread. Everybody in there times their investments right every single time.
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I think you have to use a BS filter on there ,i openly invested some big amounts right before the invasion ,they are only just going green now ,time is my only weapon tbh i cant time the market to save my life.
 
Freefaller said:
It's a personal choice, there's no right or wrong really it depends entirely on your circumstances. If I were single and a lot younger I'd be probably focussing more on over paying a little to lower my LTV and make future affordability easier.
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Think that covers my opinion on it. It depends on your age and position in life. If you have the cash flow, the debt doesn't matter when it's cheap and your investments make more. If not, and you're getting to a point where you will have less cash flow, paying off your mortgage makes sense
 
I'm going more in S&S ISA at the moment. Actually none in overpay.

Mortgage rate is 1.93pc for 5 more years
Its a joint mortgage, so issues there if I over paid and we broke up
My S&S ISA is tax free, accessible and hopefully (bar any really bad news) going to do well this year
I have a fixed rate bond with a few k (5k) I got this yer that's 4.75pc (so higher than mortgage by far)



I see no sense in paying it off. Next year my div yeild from half my ISA will pay one month's mortgage if I wanted to.

Totally get why people pay off mortgage though. Feels real. Very tangible.
 
Hagar said:
Rule one in life, pay off your mortgage. Being mortgage free in your fifties opens up much more to life. Unless you are still trying to climb higher on the property ladder.
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Right, kinda, depends ;)

For a normal person its probably the most sensible.

One of the risks in not paying off a mortgage for those who rely on their work income is that your liquid assets will be assessed in regards any support.
Your house wont be.

If you own your house and have little in the bank as long as you can meet the current outgoings, you will likely get some support.
If you have a mortgage still, but have a load in S&S and investments this can mean your going to need to draw on them to live as your far more likely to not get any support.

I'm, now under 100 days away from paying mine off.
There is a pretty reasonable chance my job may go this year due to a global reorganisation and as such knowing that I only need to pay the survival costs post April is far more appealing than having a mortgage as well to pay off.
Its my house, no one can take it away once its paid off.

Its all about risk and appetite for that.

Saying that, no matter what you should always have 3-12 months money for emergencies before you consider paying extra off the mortgage. 3-12 based on how quickly you reasonably could walk into a job, in a recession.
Your more likely to have issues with losing and finding a job in a recession. Don't base how easy it is to find another job on the good times, base that on the bad times.

Investing has always been the lowest cost way to home ownership, when it works, but when it doesn't its the easiest way to lose a lot more.
 
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Hagar said:
Rule one in life, pay off your mortgage. Being mortgage free in your fifties opens up much more to life. Unless you are still trying to climb higher on the property ladder.
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Problem is health can seriously get in the way at 50s.

Until last year I was kind of investing/saving obsessed. Not going on nicer holidays because I could be saving.
Had a health scare that's all. OK now. But showed how planning everything too far in advance is a risk in itself.

Is easy to think you should be saving everything. But have to live for now a bit

Also. Don't want to spend everything now have poor health, unable to work at 50.


Or just spend everything and hope state picks up the tab. When means tested pension comes in. Maybe investing will be the worst investment! That's kind. Of my. Nightmare. That I spend all my time being responsible. But not rich. Then come "retirement" someone who's spent it all away ends up with same! :D
 
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