advice on investment

[ujjwaldey8165]

I am in a kind of financial dilemma and wanted some inputs.

I have got some spare cash - and my choices are either to invest ( stocks and bonds etc) or repay the mortgage.

What do you suggest I should do ( and why, please)

Ujjwal

 

[SarahLee]

I'd suggest that you consult an independent financial advisor.
Without knowing more information about your financial position than you'd want to post on a public forum it's impossible to say - plus a financial advisor will have far more information on the most up to date investments.

As a starting point though, I'd ask yourself the following questions :

- What's the current interest rate on your mortgage (and is it fixed for any period of time)?
What's the projected return on the investments you're considering?
Compare the 2 to work out which is the most cost efficient option.

- How risk averse are you?
If you pay off your mortgage that's a known quantity. You know exactly how much you're saving.
If you invest in stocks, even if the current projections are good, there's always a chance that you may lose money on an investment. On the other hand you could make loads!

Bonds are a safer option because you can have a guaranteed return from them, but again you'd need to compare this return to the interest you'd be saving on your mortgage.

- Also consider your cash flow position. By paying off some of your mortgage you reduce your outgoings immediately - with an investment you may have to wait to see any benefit.

 

[ujjwaldey8165]

Thanks Sarah.The situation is rather simple:

The mortgage is base rate plus 1.5%. Its great now, but some time soon the base rate is going to go up. When? by how much? Big uncertainity. There is a a small cost to repay early, but thats in the wash

Investment will be in a mix of stock and bond OEIC. The returns last 12 months was great across sector and geography. But what will happen in the next 3 years? Will £ devalue further? Will the euro tank? Will the corporate bonds yeild higher due to rising interest rates? Again, who knows?

So having thought about it a lot, I have come to the conclusion that there is too much uncertainty in the next 3-5 years.

Given that, and that there is nothing unusual in my financial situation; what should I do.

BTW : IFAs say the same thing, and charge a hell of a lot for that pleasure. I was wondering is there is more common-sense answer to the question

 

[sheddy]

From personal experience .... IFA's will invest you money for you until it's all gon.

 

[icnoble]

This is a good site to look at

http://www.h-l.co.uk/

Corporate bond funds have done well, mine is up 30% in the last 12 months.

My wife invested in these funds on 12th December

Aberdeen Emerging Markets Up 13%

Jupiter China up 9%

M & G American up 16%

Not bad in 3 months. These funds are within her sipp and I monitor them weekly. My next investment is Jupiter Japan, again I will monitor carefully.

You could also consider shares. Barclays is a good bet for future growth.

 

[lawrie29]

IFA will recommend an investment, because they will get a commision form it.
Repay the mortgage. It is costing you money, so any investment you make will have to net off the 2% your currently pay.
It gives you a load of security, and getting 2% on money at the moment (on anything more than a few grand) is not realistic without risk.
Either that, or use it as a deposit for a buy to let...but still a risk.

At least with no mortgage you can save the monthly mortgage payments into an investment plan. Or some glass.....or a new body........


And agree with the above, bank shares look good going forward, RBS shares were 10p at their lowest last year, hit 40p recently, 300% increase!

 

[alpina]

ujjwal..........simple mate.

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Buy Cameras

 

[ujjwaldey8165]

Thanks guys. I am getting around to the idea that I use off the ISA limits for this year and the next; and pay off mortgage with the rest.
As you say Lawrie, I can then save every month and build up a portfolio.
I did think of a 2nd property, and I think its not a bad time now to do that, but could be a step too far for now. In any case, the election results might affect the sentiments on the economic outlook very strongly.

Ian thanks for the advice. i was thinking of using a discount broker ( BestInvest) rather than a IFA. Certainly they are better value for money.

Andy...good idea, buying Cameras . But which one Andy. the one I lust after now is a X-Pan. Lets see if I can swap it for my Mamiya 6.

 

[Marcel]

I know nothing of investments, IFA's, or even bank accounts with a positive balance.

However, if it were me, I'd go for paying the mortgage off every time...purely for security and peace of mind.

 

[david1701]

see a decent money man, personal recomendation from someone with some bloody sense is the best way to find one

 

[ujjwaldey8165]

I know nothing of investments, IFA's, or even bank accounts with a positive balance.

However, if it were me, I'd go for paying the mortgage off every time...purely for security and peace of mind.

And to be honest, it often is the best option, but not always.

In the past, I have paid off my mortgage from the profit of the stock market. If the spread between the mortgage rate and the stock market is big enough, its a game worth playing. Even now, for example, I can lock in money at a fixed interest rate for 2 yrs at 4%. If I hadn't had to pay tax, i would make a cool 2% spread. But the tax man makes the game not worth playing....

But the economics of the property market in UK is slightly different to that India ( which is what i know of), so there we are.....

 

[ujjwaldey8165]

see a decent money man, personal recomendation from someone with some bloody sense is the best way to find one

I know, but unfortunately I know very few folks in Uk..so finding a good IFA is a bit of struggle for me....

anyway, part of the fun is in the journey, even if its not always a profitable one. I remember, the first time I got into the stock market ( in india) , I lost my shirt....