Question
My wife and I have a endowment policy maturing in December 2013 and is estimated to pay out £18,000.
We have a mortgage for £25,000 that is on a base rate of 2.5%. This is our only debt.
Is paying the mortgage off the best option or do I add to our 5,200 standard life shares?Answer
There is no right or wrong answer, it depends on whether you want to play safe or take risk.
Paying down your mortgage would be playing it safe and equivalent to a 2.5% annual return at current rates. Choosing to invest the money instead could result in a higher return or loss, depending on how it performs.
It boils down to which you are most comfortable doing.
Another option could be to reduce your mortgage and then set up a monthly investment with the money you save via lower mortgage repayments.
Finally, if you do choose to invest, maybe consider an alternative investment to Standard Life so you don't have all your investment eggs in one basket – assuming you don't already hold other investments. That way, should Standard Life shares dive in price for some reason your won’t be fully exposed.
My wife and I have a endowment policy maturing in December 2013 and is estimated to pay out £18,000.
We have a mortgage for £25,000 that is on a base rate of 2.5%. This is our only debt.
Is paying the mortgage off the best option or do I add to our 5,200 standard life shares?Answer
There is no right or wrong answer, it depends on whether you want to play safe or take risk.
Paying down your mortgage would be playing it safe and equivalent to a 2.5% annual return at current rates. Choosing to invest the money instead could result in a higher return or loss, depending on how it performs.
It boils down to which you are most comfortable doing.
Another option could be to reduce your mortgage and then set up a monthly investment with the money you save via lower mortgage repayments.
Finally, if you do choose to invest, maybe consider an alternative investment to Standard Life so you don't have all your investment eggs in one basket – assuming you don't already hold other investments. That way, should Standard Life shares dive in price for some reason your won’t be fully exposed.
Read this Q and A at http://www.candidmoney.com/askjustin/915/repay-mortgage-or-buy-shares
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