# Sell shares to overpay mortgage?



## nest egg (14 Nov 2021)

Would be great to get advice on the following. I have approx.17.5k EUR worth of BOI shares bought a few years ago. Openly speaking, purchased them before I knew what I was doing. No surprises, they're worth less than was paid for them (-4.5k). The biggest loss is on the shares bought earliest on.

Not all doom and gloom, learnt a few things over the years and in 2021 have a ~10k gain on other shares sold, and therefore will owe the tax man ~2.8k in CGT after the annual allowance.

Cutting my losses on these shares is probably the best course of action, given they would need to make substantial gains in % terms for me to break even, and I have a tangible gain this year to consider.

Other relevant information 1) Maxing AVCs, 2) Mortgage of 405k @2.6%, ~45% LTV) 3) No other debt 4) Emergency fund in place, 5) Am reducing the mortgage with the shares sold above.

The prudent thing to do would be to make a bigger lump sum off the mortgage, using the proceeds of the BOI share sale, which is possible without penalty.

Options

*Sell the lot *> Save €1,500 in CGT this year & €500 annually in mortgage interest thereafter.
*Sell 7k's worth* bought first & have the biggest loss > Saves €1,200 in CGT & €180 p/a in mortgage interest. Take a punt on the remaining shares, reassessing the decision at least once a year
*Keep the lot *> Forego CGT saving & annual interest saving > Take a punt on the full 17.5k, reassessing at least once a year

More or less decided option 3 isn't a runner, unless anyone thinks BOI is seriously undervalued and/or has a very bright upside. Between 2 and 3, could be swayed either way.


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## Brendan Burgess (14 Nov 2021)

1) You should not borrow to invest in shares which is what you are doing when you buy shares while you have a mortgage. 

2) If you have liquid shares, you do not need an emergency fund, as you can sell the shares quickly if you need the money. 

3) If you sell the shares, you have the emergency fund sitting in cash.

4) Usually I would say clear the mortgage with the cash first. 

5) But as the CGT loss is useful to you and might not be useful to you in the future, I would use it now. 

So sell the shares in full and pay down the mortgage. 

Brendan


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## nest egg (14 Nov 2021)

Brendan Burgess said:


> 1) You should not borrow to invest in shares which is what you are doing when you buy shares while you have a mortgage.
> 
> 2) If you have liquid shares, you do not need an emergency fund, as you can sell the shares quickly if you need the money.
> 
> ...



Good perspective. What I could also do though therefore is keep a portion of my emergency fund in liquid shares, this is obviously riskier than keeping it in cash, so would need re-evaluation periodically, considering how stable the employment situation is. Whether using cash or shares, the net effort of this approach will be to paydown more of my mortgage than I was considering to do.


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## PebbleBeach2020 (14 Nov 2021)

I've bank shares myself. By not selling them now when you have a CGT tax liability in effect increases the cost of holding these shares. Its a no brainer, sell yr shares and minimise your CGT.


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## Paul O Mahoney (15 Nov 2021)

We sold Boi realised the loss, sold shares from her RSUs etc maximised last years AVC and the extra tax credit from that created a tax refund, which will cover the CGT of the share sales.

Its probably never going to happen again but it was nice to do all that and minimise tax


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## DublinHead54 (15 Nov 2021)

Brendan Burgess said:


> 1) You should not borrow to invest in shares which is what you are doing when you buy shares while you have a mortgage.


By following this logic you completely limit your potential returns......a balanced approach should be considered.


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## Brendan Burgess (15 Nov 2021)

Dublinbay12 said:


> By following this logic you completely limit your potential returns.



Hi Dublinbay

Yes, you limit your returns. But you also limit your risk  so it's a very balanced approach.

Brendan


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## DublinHead54 (15 Nov 2021)

Brendan Burgess said:


> Hi Dublinbay
> 
> Yes, you limit your returns. But you also limit your risk  so it's a very balanced approach.
> 
> Brendan



I don't think its balanced, it is very risk averse. Is your advice to the Op that he should not make AVC (tax benefit / exposure to stock market) and only overpay mortgage? 

There is a benefit to gaining exposure to the stock market whilst having a mortgage, it is not as black and white as you make out in my opinion


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## Brendan Burgess (15 Nov 2021)

If there is a big tax incentive to borrow to invest in the stockmarket, then it is usually right to so. So borrowing to invest in a pension is often right. 



Dublinbay12 said:


> There is a benefit to gaining exposure to the stock market whilst having a mortgage,



Think about it like this.

Say you own a house worth €600k with a €400k mortgage. 

Would you ask the bank for another €100k so you could buy shares? 

Brendan


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## Steven Barrett (15 Nov 2021)

Brendan Burgess said:


> 1) You should not borrow to invest in shares which is what you are doing when you buy shares while you have a mortgage.


This isn't correct Brendan. Borrowing money to invest in the stock market is getting a loan for the specific purpose of investing in the markets. This is not what they have done. They have borrowed with the specific purpose of purchasing a home, of which the loan is secured against. 

Giving the long term nature of mortgages, it may not be possible for people to clear off their debt for decades to come. There's a lot of life to live in that time and that has to be paid for. Limiting your assets to your pension, home and emergency fund is not good planning. It is alright to have debt, as long as it is manageable. Paying off the mortgage early shouldn't be at the expense of everything else. 


Steven
www.bluewaterfp.ie


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## Brendan Burgess (15 Nov 2021)

Steven Barrett said:


> This isn't correct Brendan.



Hi Steven

Could you explain the difference in the following two scenarios to me.

A) Steven has a house worth €600k, a €500k mortgage and €100k in shares.
B) Brendan has a house worth €600k, a €500k mortgage and €100k in shares. 

How we got there is just not relevant.  They are the exact same.

Brendan


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## Steven Barrett (15 Nov 2021)

They're not mutually exclusive Brendan. If that was the case, anything you purchase would be with borrowed money.


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## DublinHead54 (15 Nov 2021)

Brendan Burgess said:


> If there is a big tax incentive to borrow to invest in the stockmarket, then it is usually right to so. So borrowing to invest in a pension is often right.
> 
> 
> 
> ...



That is not a real life scenario. 

If I had a house worth 600k with a 400k mortgage secured against it and a 100k lump sum. I would assess my options to continue to service the debt which I assume I can given I met the criteria to get the mortgage. I would then assess my own personal situation and opportunities vs risk. I would not simply pay off the mortgage by default, and that should not be the default advice given to people. 

Right now with interest rates as low as they are, the opportunity cost of investing in shares can be worth it. If interest rates were 10% it would obviously be a different choice.


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## NoRegretsCoyote (15 Nov 2021)

Dublinbay12 said:


> I would then assess my own personal situation and opportunities vs risk. I would not simply pay off the mortgage by default, and that should not be the default advice given to people.


It depends on your income of course in the circumstances. With a €200k household income you can afford to take risks. With an €80k household income it would be pretty silly.

Once you are maximising tax-relieved pension contributions the default thing to do for most people with a lump sum is to pay down mortgage. There are lots of reasons to do otherwise but this should really be your starting point.


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## Brendan Burgess (15 Nov 2021)

Steven Barrett said:


> They're not mutually exclusive Brendan.



Of course, they are not exclusive. 
They are the same.

But people who would be horrified at the suggestion that they should borrow to invest, do that, by investing money in risky assets while they have borrowing.  

Brendan


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## Brendan Burgess (15 Nov 2021)

Dublinbay12 said:


> I would assess my options to continue to service the debt which I assume I can given I met the criteria to get the mortgage. I would then assess my own personal situation and opportunities vs risk. I would not simply pay off the mortgage by default, and that should not be the default advice given to people.



It is absolutely the correct advice to tell people to pay off their mortgage. 

A lot of people have a mortgage at 4% while they have their savings in a deposit account earning zero, "just in case." 

The OP is paying 2.6% on his mortgage. 

That is a risk-free, tax-free, guaranteed return on his investment. 

He should not invest it in shares where 

it's risky 
it's taxed 
So he needs to earn about 5.5% before expenses and tax just to match the 2.6%.  And that is giving him no premium for the risk involved.

Brendan


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## DublinHead54 (15 Nov 2021)

NoRegretsCoyote said:


> It depends on your income of course in the circumstances. With a €200k household income you can afford to take risks. With an €80k household income it would be pretty silly.
> 
> Once you are maximising tax-relieved pension contributions the default thing to do for most people with a lump sum is to pay down mortgage. There are lots of reasons to do otherwise but this should really be your starting point.



I agree that a 200k income with 80k outgoings vs 80k income with 80k outgoings would yield different decisions. 

The opportunity cost of returns in riskier asset classes should not be discounted until only after you have paid down your mortgage. There is potential for a balanced evolving personal finance management strategy that can be followed.


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## NoRegretsCoyote (15 Nov 2021)

Dublinbay12 said:


> There is potential for a balanced evolving personal finance management strategy that can be followed.


True.

But for a lot of people it just won't be worth it. 

Say you have €50k. Over 8 years at a mortgage of 2.5% you get an implicit after-tax return of 5%, so turning your €50k into €70k guaranteed.

Then assume an expected gross return of 10% for an ETF. After deemed disposal (if I understand right) you have made €78k or so after tax. And even with that kind of expected return there is a big range of outcomes for equities based on historical performance.

I am just not sure the return is worth the risk for most people.


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## Brendan Burgess (15 Nov 2021)

Dublinbay12 said:


> The opportunity cost of returns in riskier asset classes should not be discounted until only after you have paid down your mortgage. There is potential for a balanced evolving personal finance management strategy that can be followed.



You are making this sound complicated and something which requires financial advisors and deep thinking.

It is not complicated and it does not require financial advisors. 

You should not borrow at 2.6% to buy risky shares where the return will be subject to tax. 

If you have shares and borrowings, you should sell the shares and clear the borrowings. 

Brendan


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## Jim2007 (15 Nov 2021)

Dublinbay12 said:


> By following this logic you completely limit your potential returns......a balanced approach should be considered.


This is not remotely close to a balanced approach.  The OP has a massive exposure to high risk assets and high risk asset classes and he should do all he can to reduce that exposure ASAP.


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## Steven Barrett (15 Nov 2021)

Brendan Burgess said:


> But people who would be horrified at the suggestion that they should borrow to invest, do that, by investing money in risky assets while they have borrowing.
> 
> Brendan


But they are not borrowing to invest. They are not using their savings to pay down debt. It is not the same thing. As long as their debt is manageable, there is no issue with this.


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## Sarenco (15 Nov 2021)

Borrowing to invest and investing while carrying debt are economically the same thing.

It generally makes a lot of sense to invest through a tax-advantaged pension vehicle while carrying a mortgage.

Investing after-tax money in taxable investments while carrying a mortgage?  Not so much.  Our tax rates are so high that it totally changes the risk/reward dynamic in favour of paying down the mortgage.


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## cremeegg (15 Nov 2021)

Brendan Burgess said:


> If there is a big tax incentive to borrow to invest in the stockmarket, then it is usually right to so. So borrowing to invest in a pension is often right.
> 
> 
> 
> ...


If I could get that €100k at 2% fixed for 10 years, yes without hesitation.


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## Brendan Burgess (15 Nov 2021)

cremeegg said:


> If I could get that €100k at 2% fixed for 10 years, yes without hesitation.


I think you should hesitate. You need to think about it. 

The potential gains just do not justify the risks involved.

Most of the time, after ten years, you will be ahead and you can say "I told you so!" 

But there will be enough times where you have a big debt well in excess of your investment.

Brendan


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## DublinHead54 (15 Nov 2021)

Brendan Burgess said:


> You are making this sound complicated and something which requires financial advisors and deep thinking.
> 
> It is not complicated and it does not require financial advisors.
> 
> ...



Understanding market risk can be a complex subject and everybodys financial scenario is different. but you're blanket approach is an over simplification and can lead to incorrect advice in my opinion. 

Does your opinion extend to that people shouldn't make pension AVCs whilst carrying a mortgage? Would you offer that same advice to a 20 yr old and a 60 yr old? 

Nobody is borrowing at 2.5% to invest in shares, they are independent events. Or please send me a link to the bank that will let me have 100k against my house to invest in the stock market.


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## DublinHead54 (15 Nov 2021)

NoRegretsCoyote said:


> True.
> 
> But for a lot of people it just won't be worth it.
> 
> ...



My point was that a blanket 'don't invest whilst having a mortgage' statement is not correct as it doesn't work for everyone. You've agreed with that in your first sentence. 

Your subsequent points on returns are subjective and a guess. It could be -10% it could be a 40% return, that's the risk.

My suggestion is that it doesn't have to be so binary. Even in your example you're presenting it as pay off the mortgage or invest in stock market. My suggestion is both can be done and that's the balance, in addition everybody can get exposure to the stock market through tax efficient AVCs which totally changes the risk reward scenario.


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## Brendan Burgess (15 Nov 2021)

Dublinbay12 said:


> Understanding market risk can be a complex subject and everybodys financial scenario is different.



It is not that complex a subject, unless you want it to be.  Everyone's financial scenario is not that different.  Irrespective of your age or other financial circumstances, you should not borrow to invest in shares.  It is black and white. Talking of "balance" only complicates matters. Borrowing money to invest in shares is just not worth the risk.




Dublinbay12 said:


> Does your opinion extend to that people shouldn't make pension AVCs whilst carrying a mortgage?



No, that is a completely different issue because of the tax breaks on pension contributions.   It is often a good idea to make pension contributions while you have a pension. But where the mortgage is very high, paying down the mortgage is often a better use of money.



Dublinbay12 said:


> Would you offer that same advice to a 20 yr old and a 60 yr old?



The advice not to borrow to invest in shares (outside a pension scheme) applies irrespective of age.   Of course, a 20 year old has a longer horizon and potentially more time to recover. But at the same time, they probably don't own a house, so the advice to get the deposit together without borrowing is clear.   

Brendan


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## DublinHead54 (15 Nov 2021)

Brendan Burgess said:


> It is not that complex a subject, unless you want it to be.  Everyone's financial scenario is not that different.  Irrespective of your age or other financial circumstances, you should not borrow to invest in shares.  It is black and white. Talking of "balance" only complicates matters. Borrowing money to invest in shares is just not worth the risk.
> 
> 
> 
> ...



I disagree with your statements of fact and claim that anyone who invests in the stock market whilst carrying a mortgage is 'borrowing' from the bank. It's a misleading and potentially confusing statement. 

You've oversimplified in attempt to make a scenario black and white when it's not. 

There is still merit to invest in the stock market to benefit from risk adjusted returns alongside reducing any debt you had. 

At the end of the day, the cost of carrying debt is so low there's not much benefit of overpaying a mortgage.


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## Jim2007 (15 Nov 2021)

Steven Barrett said:


> But they are not borrowing to invest. They are not using their savings to pay down debt. It is not the same thing. As long as their debt is manageable, there is no issue with this.


I would never recommend this to a client.  High risk asset classes with little or dwindling returns supported by leverage is just nonsense - in any case such a suggestion would see the client heading for the door.  If you are going to do something like this the returns would have to be very rewarding and they are not.


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## Gordon Gekko (15 Nov 2021)

I think it’s pretty reasonable to argue that investing in shares whilst carrying debt is effectively borrowing to purchase the shares.

The point is that on average a personally-held share portfolio might deliver around 7% a year over time. But that’s subject to tax and management fees.

Let’s assume 3% dividend yield, so I’m losing 1.5% via income taxes. Let’s assume that the other 4% is subject to CGT, so another 1.33% of leakage. And let’s assume a 1% annual fee.

So if things go well, I might net around 3%, which happens to approximate the average mortgage rate. And I could lose money, i.e. there is no guarantee that I’ll make that 7%.

Or I could just pay down my mortgage and derisk.

The tax relief on a pension contribution changes the risk/reward equation completely.


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## Brendan Burgess (15 Nov 2021)

Dublinbay12 said:


> I disagree with your statements of fact and claim that anyone who invests in the stock market whilst carrying a mortgage is 'borrowing' from the bank. It's a misleading and potentially confusing statement.





Could you explain the difference in the following two scenarios to me.

A) Steven has a house worth €600k, a €500k mortgage and €100k in shares.
B) Brendan has a house worth €600k, a €500k mortgage and €100k in shares.

Would your advice to them be different because, in the past, Steven topped up his mortgage but Brendan already had a €500k mortgage?


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## Cardano93 (16 Nov 2021)

Gordon Gekko said:


> I think it’s pretty reasonable to argue that investing in shares whilst carrying debt is effectively borrowing to purchase the shares.
> 
> The point is that on average a personally-held share portfolio might deliver around 7% a year over time. But that’s subject to tax and management fees.
> 
> ...


You are saying 7% however you are ignoring compounding which is the key issue. 7% compounded will quadruple a portfolio in 20 years. Opportunity cost by paying mortgage off is therefore huge


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## DublinHead54 (16 Nov 2021)

Brendan Burgess said:


> Could you explain the difference in the following two scenarios to me.
> 
> A) Steven has a house worth €600k, a €500k mortgage and €100k in shares.
> B) Brendan has a house worth €600k, a €500k mortgage and €100k in shares.
> ...



Brendan your point is that nobody should invest in shares whilst carrying a mortgage, correct?

My argument is that this is not the only option for the following reasons. . 

1. People have different financial situations determined by size of mortgage, income, age and a host of different variables. 
2. Carrying debt today in the low interest rate environment is cheap. 
3. In majority of scenarios the lump sum or additional free cash flow is not enough to clear the mortgage. Fixed rates mean mortgage monthly payments remain the same despite overpayment.
4. Costs associated with break fees and switching to get best mortgage rates are not considered in your example. 
5. Tax benefits of AVCs to get stock market exposure. 
6. Risk - historical performance is not a guarantee of future performance but stock market over the last 10 years has returned well.
7. It's common practice to have a portfolio of assets with different risk profiles. 

I'm not disagreeing that reducing debt is a good strategyI. I'm saying it's not a sequential process and people can follow a balanced approach based on their own financial circumstances. 

To your question above we'd need to know a lot more about Steven and Brendan's financi situation can you ask them to fill out a money makeover?


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## DublinHead54 (16 Nov 2021)

Gordon Gekko said:


> I think it’s pretty reasonable to argue that investing in shares whilst carrying debt is effectively borrowing to purchase the shares.
> 
> The point is that on average a personally-held share portfolio might deliver around 7% a year over time. But that’s subject to tax and management fees.
> 
> ...



Why does everybody think you can only either invest in shares or pay down debt?!

It's called a portfolio for a reason.


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## Brendan Burgess (16 Nov 2021)

Dublinbay12 said:


> It's common practice to have a portfolio of assets with different risk profiles.





Dublinbay12 said:


> It's called a portfolio for a reason.



A portfolio of assets? 

A mortgage is a liability? 

Of course someone should have a balanced portfolio - different shares and different asset classes.

Adding debt to a portfolio increases potential returns but increases risk as well. 

There is no need for it.

Brendan


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## Brendan Burgess (16 Nov 2021)

Dublinbay12 said:


> 1. People have different financial situations determined by size of mortgage, income, age and a host of different variables.



This doesn't change anything.  The fact that people have different situations does not change the principle that one should not borrow to invest in shares. 

Brokers who want to get commission from your investments will often tell you that everyone is different. They are, but the fundamental principles remain the same.


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## Brendan Burgess (16 Nov 2021)

Dublinbay12 said:


> 3. In majority of scenarios the lump sum or additional free cash flow is not enough to clear the mortgage. Fixed rates mean mortgage monthly payments remain the same despite overpayment.



Sorry, but this makes no sense at all. 

Fixed rates mean nothing of the sort. 

If you have a fixed rate mortgage of €200k and you repay €100k, your repayments will halve. 



Dublinbay12 said:


> 4. Costs associated with break fees and switching to get best mortgage rates are not considered in your example.



We are setting out a general principle here.  The OP should pay down his mortgage.  It is generally correct to use cash to clear your fixed rate, even if there is a break fee. But even if the maths are wrong at the moment, then the principle remains the same and he clears the mortgage when the fixed rate ends. 

The cost of switching to another lender are not relevant to this decision.  He should of course, consider this separately.


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## Brendan Burgess (16 Nov 2021)

Dublinbay12 said:


> 5. Tax benefits of AVCs to get stock market exposure.



I am not sure why this is repeated many times. I have already explained that in some cases it makes sense to borrow to invest in a pension. In other cases, it doesn't. 

This thread is about a person who has money directly in shares.  



mojoask said:


> Other relevant information 1) Maxing AVCs,




 He should sell them and pay down his mortgage. 

Brendan


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## Gordon Gekko (16 Nov 2021)

Cardano93 said:


> You are saying 7% however you are ignoring compounding which is the key issue. 7% compounded will quadruple a portfolio in 20 years. Opportunity cost by paying mortgage off is therefore huge


Well it won’t, because of tax.

And debt is also recurring; you’ve seen those mortgage calculations where it says “borrow X, total repayments Y”, yeah?

Parking single stock punts like Tesla which could go either way, let’s just look at 2022 in isolation:

Let’s say I’ve a surplus €50k, my AVCs are maxed out, I have an emergency fund, and I have a mortgage which isn’t a tracker. I just don’t see why I would invest in equities rather than putting the €50k against the mortgage. I already have meaningful equity exposure via the pension. If things go well on the equity front, I might make 3% after taxes and costs. Or I can take a guaranteed return of 2.5% via the mortgage.

Then when the mortgage is cleared, I can divert all surplus cash plus the mortgage repayments into an equity portfolio.


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## DublinHead54 (16 Nov 2021)

Brendan Burgess said:


> A portfolio of assets?
> 
> A mortgage is a liability?
> 
> ...



A mortgage is a debt secured against an asset, they aren't independent. The debt from a mortgage is based on personal affordability to make monthly repayments over a long time horizon. There are options to pay that debt down faster, but you aren't adding to the debt / liability that you undertook from the outside by investing your free cash flow in the stock market. 

When you take out a mortgage it clearly shows the total cost of that debt over the lifetime, so you know when you borrow 500k, your debt is 500k + interest. Can you explain how you are then increasing your debt by investing additional free cash flow into the stock market? 

You are now introducing a different concept of Risk Tolerance, which I assume you must agree is unique to an individuals circumstances? 

In the scenario of a mortgage, nobody is adding debt to their portfolio to increase returns.


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## Gordon Gekko (16 Nov 2021)

The key point is the hurdle rate for a personally-held share investment with debt at 3%-ish bubbling away in the background.

Parking the other points around risk etc or better mortgage rates for lower LTVs, what’s the point?

I’m taking the guaranteed return every time, thanks. And if markets go up, I’m happy anyway because I prioritise AVCs over mortgage overpayments.


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## Cardano93 (16 Nov 2021)

Gordon Gekko said:


> Well it won’t, because of tax.
> 
> And debt is also recurring; you’ve seen those mortgage calculations where it says “borrow X, total repayments Y”, yeah?
> 
> ...


Sorry but that isn't correct. €17.5k invested for 20 years at 7% would be worth €67,700. After tax (based on 33% CGT) it would be a little over €51k. Putting that €17.5k off the mortgage now would save €29,240 over the same period. Crazy paying it off Mortgage.  Has the OP indicated his age or how long is left on Mortgage btw??


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## nest egg (16 Nov 2021)

Cardano93 said:


> Sorry but that isn't correct. €17.5k invested for 20 years at 7% would be worth €67,700. After tax (based on 33% CGT) it would be a little over €45k. Putting that €17.5k off the mortgage now would save €29,240 over the same period. Crazy paying it off Mortgage.  Has the OP indicated his age or how long is left on Mortgage btw??


Quite the discussion! Seems it's touched on a fundamental topic of whether it makes sense to invest when you're carrying mortgage debt.

To fill in the blanks, myself & my wife are 39, we have 26 yrs left on our mortgage, combined income of 200k, 2 young kids, approx 25-30k annually in after tax income to save/invest/overpay our mortgage (after maxing AVCs).


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## NoRegretsCoyote (16 Nov 2021)

Cardano93 said:


> Sorry but that isn't correct. €17.5k invested for 20 years at 7% would be worth €67,700. After tax (based on 33% CGT) it would be a little over €51k. Putting that €17.5k off the mortgage now would save €29,240 over the same period. Crazy paying it off Mortgage.


It's November 2001, exactly 20 years ago. You have a €100k mortgage with Bank of Ireland at 5% or so. Its share price is €138.

€50k falls into your lap. Do you: a) pay down the mortgage; b) by €50k of Bank of Ireland shares?


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## Cardano93 (16 Nov 2021)

Gordon Gekko said:


> The key point is the hurdle rate for a personally-held share investment with debt at 3%-ish bubbling away in the background.
> 
> Parking the other points around risk etc or better mortgage rates for lower LTVs, what’s the point?
> 
> I’m taking the guaranteed return every time, thanks. And if markets go up, I’m happy anyway because I prioritise AVCs over mortgage overpayments.


The hurdle rate for inflation is more important. achieving 2.6% on your capital (which is what you are saying by paying off debt at that rate) doesn't make sense when inflation is 5%.


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## Sarenco (16 Nov 2021)

The S&P500 returned an annualised 4.00% over the first 20 years of this century, with all dividends reinvested.

After all investment costs and taxes, an Irish investor would have done well to make an annualised return of much more than 2.00%.

Over the same 20-year period, Irish mortgage rates averaged 4.36%.

So, over that 20-year period the risk of investing in equities didn’t pay off - you would have been far better off paying down your mortgage.

IMO it rarely makes sense to invest in equities outside a pension while carrying a mortgage.

Simplicity is the ultimate sophistication - just pay down your mortgage.


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## Cardano93 (16 Nov 2021)

NoRegretsCoyote said:


> It's November 2001, exactly 20 years ago. You have a €100k mortgage with Bank of Ireland at 5% or so. Its share price is €138.
> 
> €50k falls into your lap. Do you: a) pay down the mortgage; b) by €50k of Bank of Ireland shares?


Good point however I wouldn't have recommend putting that 50k into any single stock (and the same applies now). Do the same exercise using S&P 500 index or a mixture of tech and value stocks that were around at that time and you will see the opportunity cost. I know what I would do.


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## Sarenco (16 Nov 2021)

Cardano93 said:


> Do the same exercise using S&P 500 index or a mixture of tech and value stocks that were around at that time and you will see the opportunity cost. I know what I would do.


I’ve just done that exercise (see my previous post) and paying down the mortgage came out well ahead.


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## Brendan Burgess (16 Nov 2021)

Sarenco said:


> Simplicity is the ultimate sophistication



May I plagiarise that? 

It's brilliant.

Brendan


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## Cardano93 (16 Nov 2021)

Sarenco said:


> I’ve just done that exercise (see my previous post) and paying down the mortgage came out well ahead.


Rates for S&P aren’t correct though.








						S&P 500 Returns since 2000
					






					www.officialdata.org
				



Also worth noting that OP’s rate is 2.6% and with current inflation along with the resulting increase in asset prices (particularly equities and commodities) this needs careful consideration. Each to their own but there is no way I’d ever dream of paying that down now, particularly if a long term investor. PS I’m obviously not a fan of Dave Ramsay and his way of thinking


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## DublinHead54 (16 Nov 2021)

Sarenco said:


> The S&P500 returned an annualised 4.00% over the first 20 years of this century, with all dividends reinvested.
> 
> After all investment costs and taxes, an Irish investor would have done well to make an annualised return of much more than 2.00%.
> 
> ...



Whilst using historical analysis is useful its not always that important when making forward looking financial decisions, and suffers from selection bias. Mortgage rates now are significantly lower than 4.36% reducing the hurdle rate, in addition there is an influx of low cost investment options that were not available previously, so the landscape today is different to 20 years previously.

Can I query your 4% number as looking at historical S&P annual returns the average is closer to 7% from 2000 to now.

Tax treatment / CGT and ETF deemed disposal is incredibly punitive for Irish retail investor. I favour maximising stock market exposure through AVCs before paying down a mortgage at the current costs. From remaining cash flow I try to maximise the CGT allowance through share investment and paying down mortgage. 

Ultimately it is almost a zero sum game. If you use free cash flow to pay down a mortgage 3 years ahead of the contracted terms (i.e. 27 years from now), you will increase your monthly free cash flow (mortgage payment) in 27 years time. You will then have to decide how to put that money to work for a shorter period of time. The alternate option is to put the current free cash flow to work in the stock market or other investment vehicles for the entire 30 years period whilst not overpaying your mortgage. At the end of the 30 years you end up mortgage free with an investment worth +/- x%. Or you can do a mixture of both 50% of free cash flow goes to mortgage etc. 

You end up with the same result of mortgage freedom the decision to make is how you want to get there. Given that a house is largely a dead asset i.e. you can't profit from it whilst living in it, there is no real benefit to paying off the mortgage slightly earlier than the contracted terms in comparison to the potential returns in the stock market. 

Obviously this changes dependent on length of mortgage, age etc and is why an individuals own circumstances are important and that blanket advice should not be applied.


----------



## RedOnion (16 Nov 2021)

Cardano93 said:


> Rates for S&P aren’t correct though.


What are they for a Euro based investor?


----------



## Steven Barrett (16 Nov 2021)

So you are overpaying your mortgage and getting the term down from 40 year to 25 years. 

That's a lot of living and a lot of expenditure in that time, including the other major cost in life, children's education. How are you supposed to finance that? All your money has gone into paying down your mortgage, which is still outstanding. You can't sell a room. Maybe rent one out?


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## DublinHead54 (16 Nov 2021)

RedOnion said:


> What are they for a Euro based investor?



Its the concept of investing in the stock market we should discuss rather than the specific investment over a x amount of time. 

Or it could be easily said a person who invested in Amazon 20 years ago would have beat the guaranteed return of paying down a mortgage. 

Equities are a risky asset class, hence they can outperform (even after exchange rate, fees, management charges) the guarantee return offered by paying down a mortgage. 

There is a place for that in every portfolio in my opinion.


----------



## Cardano93 (16 Nov 2021)

Sarenco said:


> I’ve just done that exercise (see my previous post) and paying down the mortgage ca
> 
> 
> Dublinbay12 said:
> ...


----------



## RedOnion (16 Nov 2021)

Dublinbay12 said:


> Equities are a risky asset class, hence *they can outperform* (even after exchange rate, fees, management charges) the guarantee return offered by paying down a mortgage


"can" is the key word here. There's nothing guaranteed about it.

I don't agree with a blanket approach being right for everyone either.

But sometimes people don't realise what they are doing.

If you ask the question: "Would you borrow at mortgage rates to invest, with investment returns subject to Irish taxation?". 

If the answer is yes, then work ahead. That's your risk appetite. 

But sometimes people say no. Then they go and invest (through whatever vehicle / asset class they choose) although carrying a mortgage debt. They're effectively doing what they said they wouldn't do.

Or they might not realise they already have substantial exposure to other asset classes (via their pension).

And then you get people doing silly things - there have been posts here before where people were investing in government bonds at rates far below their mortgage rate without realising what they're doing.

Then you have the psychological (and practical) aspects of having money for specific purposes - e.g. starting to put money into a savings account when a child is born to pay for their college fees. From a purely mathematical point if view it makes far more sense to pay the mortgage, but people like having 'pots', or don't realise the flexibility available in mortgage repayments with some lenders.


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## Cardano93 (16 Nov 2021)

One thing to note is you have all your eggs in one basket with that particular share, far from ideal and not something I would recommend


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## DublinHead54 (16 Nov 2021)

RedOnion said:


> "can" is the key word here. There's nothing guaranteed about it.
> 
> I don't agree with a blanket approach being right for everyone either.
> 
> ...



I agree 100% and hence why I've been referring to it as risk profile or as you put it risk appetite. 

I don't agree with the blanket approach or the notion that people financial situations aren't different. It leads to the notion that there is no need for an investment or financial advisor industry. 

My opinion is that there is an education aspect to it for each individual to understand options and then options need to be looked hollistically in the context of that persons circumstances and their situations to be re-evaluated on an annual basis.


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## Gordon Gekko (16 Nov 2021)

Do you think it would be smart to borrow at Irish mortgage rates with a view to investing in equities?

I don’t.


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## RedOnion (16 Nov 2021)

Gordon Gekko said:


> So do you think it would be smart to borrow at Irish mortgage rates with a view to investing in equities?


I don't either.


----------



## Cardano93 (16 Nov 2021)

Dublinbay12 said:


> Whilst using historical analysis is useful its not always that important when making forward looking financial decisions, and suffers from selection bias. Mortgage rates now are significantly lower than 4.36% reducing the hurdle rate, in addition there is an influx of low cost investment options that were not available previously, so the landscape today is different to 20 years previously.
> 
> Can I query your 4% number as looking at historical S&P annual returns the average is closer to 7% from 2000 to now.
> 
> ...


Excellent post


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## nest egg (16 Nov 2021)

Cardano93 said:


> One thing to note is you have all your eggs in one basket with that particular share, far from ideal and not something I would recommend


Totally agree, I shouldn't have bought them in the first place, or at minimum I should have liquidated them when buying the house, I'll chalk it down to experience.


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## Sarenco (16 Nov 2021)

Brendan Burgess said:


> May I plagiarise that?
> 
> It's brilliant.
> 
> Brendan


I'm afraid I can't claim authorship - the quote is usually attributed to Leonardo da Vinci.


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## Cardano93 (16 Nov 2021)

Gordon Gekko said:


> So do you think it would be smart to borrow at Irish mortgage rates with a view to investing in equities?
> 
> I don’t.


Yes I do actually. (Not on currently overpriced growth stocks btw). Given how low fixed mortgage rates are now I think it is a no brainer. Personally I could clear my mortgage in full now but I choose not to do it in order not to sacrifice better returns. As I said before, all down to personal risk tolerance. My mortgage is at 2.1% fixed (<50% LTV) and I feel it is very easy to beat that rate (including taxes, fees etc)  especially over a longer term. Sure even a reliable REIT is paying 5.5%-6% yield at the moment and after tax (when compounded and DRIPping) it will easily achieve a better return than paying down mortgage. A little bit of research will show there are loads of value stocks available with very low P/E and some also pay reliable dividends.

I also agree 100% with earlier posts from you and others regarding Pension and AVC's etc. - also a no brainer.


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## DublinHead54 (16 Nov 2021)

Sarenco said:


> Simplicity is the ultimate sophistication


but not always the smartest


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## Sarenco (16 Nov 2021)

Dublinbay12 said:


> Can I query your 4% number as looking at historical S&P annual returns the average is closer to 7% from 2000 to now.


I used the net total return of the index, expressed in EUR, over a slightly different time period.

Even if the annualised return on the index had been 7%, an Irish investor would have done well to make an annualised return of 4%, after accounting for all expenses and taxes.

That's still less than the average mortgage rate in Ireland of 4.36% over the period.

If anything, I'm understating the position.  The weighted average mortgage rate was actually quite a bit higher than 4.36% because rates were higher earlier in the period, when the principal outstanding on the mortgage was higher.

Whatever way you look at it the risk of investing in the S&P500, rather than paying down the mortgage, was not rewarded over the period.


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## Gordon Gekko (16 Nov 2021)

So if I offered you an investment with a cast-iron guaranteed return of 4%, you wouldn’t be interested?

Because I’d jump at it.


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## DublinHead54 (16 Nov 2021)

Sarenco said:


> I used the net total return of the index, expressed in EUR, over a slightly different time period.
> 
> Even if the annualised return on the index had been 7%, an Irish investor would have done well to make an annualised return of 4%, after accounting for all expenses and taxes.
> 
> ...



Sarenco, yes in the scenario you picked I'll not disagree, much like you could not disagree that if investing in Amazon 20 years ago would not have returned more than paying off the mortgage. Or if I invested in the S&P for the last 3 years, it would have outpaced any guaranteed return on a mortgage rate significantly.

But we weren't talking about a specific investment scenario.


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## Gordon Gekko (16 Nov 2021)

What about today?

You’ve €10,000…

Two choices:

a) Invest in shares

b) A guaranteed 4.25%


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## Gordon Gekko (16 Nov 2021)

Cardano93 said:


> Sorry you are being selective with dates and returns there. The S&P has gross return of 371% since 2000 which equates to a yearly average of 7.41%. €50k invested for 20 years would yield €156k after tax (€208k gross) vs a saving of €117k if paid off mortgage at rate 4.36%.
> 
> I'm not even gonna compare to investments in Apple, Microsoft, Amazon or Google.


What about tax?

You’re comparing gross with net?


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## flyingfolly (16 Nov 2021)

I was in this situation 2 months ago.

We had 170k saved up (120k in shares + 40k in savings + 10k in crypto) and 170k left on the mortgage. We thought about what would be the best thing to do, keep the mortgage at 2.85% or pay it off by selling all shares etc. In the end we sold it all and just cleared the mortgage due to the stress of having shares go up/down and the uncertainty of it all.

I'm still between minds as to whether is was the best option because the shares have since gone up another 10% or so, but its all just hindsight. If the shares go down 30% next year then I'll feel great about the decision. There are pros/cons to both sides but two big ones for me are:

1. Any days I feel really stressed I just think to myself, well I could just quit work and be fine. We have no mortage so work stress doesn't really matter any more
2. I can take on more risky investments now. I'm starting to re-invest money again now as we have 20k saved up again as an emergency fund, but now we have no debts, its easier to try some small risky investments with a long term view (we're in our 30's).

When we looked at it, we were happy to get the guranteed annual return of 5.7% by paying off the mortgage along with the peace of mind which was really a big one.


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## Sarenco (16 Nov 2021)

Cardano93 said:


> Sorry you are being selective with dates and returns there. The S&P has gross return of 371% since 2000 which equates to a yearly average of 7.41%.


Not really - I was quite specific about the timeframe used.

You’re right though - the annualised gross total return on the S&P500 from the start of 2000 to the end of last month, in dollar terms, was about 7.5%.

That would translate to a return of around 4.25% to an Irish investor, after all taxes and expenses (I’m assuming the investment is through an Irish domiciled ETF for simplicity) are deducted.  Again, that’s in dollar terms.

That is still materially less than the weighted average mortgage rate in Ireland over the same period.


----------



## DublinHead54 (16 Nov 2021)

flyingfolly said:


> I was in this situation 2 months ago.
> 
> We had 170k saved up (120k in shares + 40k in savings + 10k in crypto) and 170k left on the mortgage. We thought about what would be the best thing to do, keep the mortgage at 2.85% or pay it off by selling all shares etc. In the end we sold it all and just cleared the mortgage due to the stress of having shares go up/down and the uncertainty of it all.
> 
> ...



Congratulations. Question, when you sold the shares did you make much of a return IME was that 120k based on a 60k investment?

There is the view on this thread that you should never have invested in shares and just paid off the mortgage. Would be interesting to understand if you hadn't invested in shares would you still have just cleared your mortgage?


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## PGF2016 (16 Nov 2021)

flyingfolly said:


> We thought about what would be the best thing to do, keep the mortgage at 2.85% or pay it off by selling all shares etc.


The best thing to do financially might not be the best thing to do for you, your family and your life. Sounds like you got it right this time. Congrats.


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## Sarenco (16 Nov 2021)

Cardano93 said:


> No I'm referring to shares rather than ETF


Here's your original request -


Cardano93 said:


> Do the same exercise using S&P 500 index or a mixture of tech and value stocks that were around at that time and you will see the opportunity cost.


I carried out that exercise and showed that paying down the mortgage would have worked out better over the period than investing in an index fund that tracks the S&P500.

Of course you could point to a relatively small number of stocks that produced a return over the period that would have exceeded the weighted average Irish mortgage rate over the period.

But unless you have a crystal ball...


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## flyingfolly (16 Nov 2021)

Cardano93 said:


> Excellent point, interested to hear answer. That said, I assume given he is in his 30’s the initial sum wouldn’t have been invested for a very long period.


Correct. I made an extra 50k on the initial investment by putting money into GameStop and Tesla (should have held onto those shares longer as I sold two years ago!). So I made about 80% return in two years.


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## DublinHead54 (16 Nov 2021)

flyingfolly said:


> Correct. I made an extra 50k on the initial investment by putting money into GameStop and Tesla (should have held onto those shares longer as I sold two years ago!). So I made about 80% return in two years.



Thanks ff, so there is the evidence to support that investing in shares can beat the guaranteed return of paying down a mortgage. It shows that there is room to have riskier assets in a portfolio vs just following the approach of paying down debt. The case is only stronger for this given spot mortgage rates now are as much as half the average of the last 20 years as pointed out by @Sarenco, whilst the S&P 500 has posted (unadjusted) double digit returns over the last 5 years. 

I certainly would not have been in as strong a personal financial position if I had not invested in the Stock market (mostly ETFs) outside of a pension in my younger days. 

@Cardano93 made a good point regarding inflation, and @Brendan Burgess referenced those in their 20s that are unlikely to have a mortgage. Well it is for them the future is bleak if they don't utilize equity markets. Ireland needs to fundamentally overhaul taxation of investments, and align to the likes of UK and USA were wealth creation through investing is much more accessible.


----------



## nest egg (16 Nov 2021)

Dublinbay12 said:


> Thanks ff, so there is the evidence to support that investing in shares can beat the guaranteed return of paying down a mortgage. It shows that there is room to have riskier assets in a portfolio vs just following the approach of paying down debt. The case is only stronger for this given spot mortgage rates now are as much as half the average of the last 20 years as pointed out by @Sarenco, whilst the S&P 500 has posted (unadjusted) double digit returns over the last 5 years.
> 
> I certainly would not have been in as strong a personal financial position if I had not invested in the Stock market (mostly ETFs) outside of a pension in my younger days.
> 
> @Cardano93 made a good point regarding inflation, and @Brendan Burgess referenced those in their 20s that are unlikely to have a mortgage. Well it is for them the future is bleak if they don't utilize equity markets. Ireland needs to fundamentally overhaul taxation of investments, and align to the likes of UK and USA were wealth creation through investing is much more accessible.


Niall Ferguson's book, The Ascent of Money (highly recommended), makes a similar point. The opportunities available to people these days to invest in diversified portfolios at low costs have never been greater. Societies which fail to equip their citizens for this reality risk creating a bigger gap between the haves and have nots in the future.


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## RedOnion (16 Nov 2021)

Dublinbay12 said:


> Thanks ff, so there is the evidence to support that investing in shares can beat the guaranteed return of paying down a mortgage.


With respect, we're verging on confusing investing with gambling here.
@flyingfolly has previously posted about making 50k buying and selling Game Stop in the space of a week back in January. It was a high risk strategy, from which they came out on the right side.


----------



## flyingfolly (16 Nov 2021)

RedOnion said:


> With respect, we're verging on confusing investing with gambling here.
> @flyingfolly has previously posted about making 50k buying and selling Game Stop in the space of a week back in January. It was a high risk strategy, from which they came out on the right side.



I was just about to post this. I'm not sure my situation is a good justification for investing while having a mortgage. I pretty much gambled 15k using my mortgage debt (savings, but could be used to repay mortgage debt), so eh...not exactly the best idea. It worked out, but it might have not done.


----------



## RedOnion (16 Nov 2021)

flyingfolly said:


> I was just about to post this. I'm not sure my situation is a good justification for investing while having a mortgage. I pretty much gambled 15k using my mortgage debt (savings, but could be used to repay mortgage debt), so eh...not exactly the best idea. It worked out, but it might have not done.


Your situation is probably a better argument for paying down the mortgage to stop you trying it again!


----------



## flyingfolly (16 Nov 2021)

RedOnion said:


> Your situation is probably a better argument for paying down the mortgage to stop you trying it again!



Yea exactly, when I looked back I could see it was pretty much gambling so figured its safer to at least do that with no mortgage


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## Gordon Gekko (16 Nov 2021)

I was going to make a €10,000 AVC in 2016 but I had a funny feeling about Leicester City winning the league title so I backed them instead.

They defied all the odds and won the Premier League and now I don’t have a mortgage.

Clearly it’s better to back outsiders than to make AVCs.


----------



## DublinHead54 (16 Nov 2021)

RedOnion said:


> With respect, we're verging on confusing investing with gambling here.
> @flyingfolly has previously posted about making 50k buying and selling Game Stop in the space of a week back in January. It was a high risk strategy, from which they came out on the right side.



I don't believe we are if we are clear about the levels of risk. I've just said this is evidence of stock market returns beating mortgage returns. Obviously with the additional information it was a riskier short term trading / speculation strategy. 

I was trying to avoid getting into the debate of specific returns over selected periods etc and explain that it is possible for the stock market to our perform a mortgage. 

I still don't agree that investing in the stock market whilst having a mortgage is the equivalent of taking a loan to invest in the stock market. When you take a mortgage out you are taking it out on the basis of the loan amount plus the interest over the lifetime. 

I'm probably biased because I've had a positive experience investing over the years and not been bit hard by 07/08 or dot com bubble. Investing in the stock market has enabled me to get to a position to be able to get a mortgage. 

It still remains a part of my overall financial portfolio along with minimising the mortgage, AVCs and some riskier investments. It meets my risk appetite and tech stocks have been a hell of a ride over the last 8 years.


----------



## NoRegretsCoyote (17 Nov 2021)

Dublinbay12 said:


> I'm probably biased because I've had a positive experience investing over the years and not been bit hard by 07/08 or dot com bubble. Investing in the stock market has enabled me to get to a position to be able to get a mortgage.


I think this explains a lot. No one has their age on their avatar of course, but the most dedicated equities fans I see online tend to be in the 25-35 age group. I'm not that much older but I've seen two large stock market corrections in my adult life, including one where trusted corporate Irish names became worth actually nothing or close to it over the course of 18 months. I'm allergic to holding any specific stock in concentration and I am relaxed about equity performance only over a period of two decades or more.

Personally I've made close to half a million of a paper gain in property, some of which I could sell up and walk away from. Given that this was leveraged I've increased my equity by a factor of ten in less than a decade. So I can see the upside to property but (given my age) I still have close friends still nowhere near what they paid in 2006 for their apartment.

A lot of this does indeed come down to personal risk tolerance but what I see (and this is anecdotal) is an underestimation of equity risk by posters in this 25-35 age group. 

In the equation there are so many things that are _much_ more certain than equity returns. The tax regime isn't going to change radically, interest rates can only go up a few hundred basis points, inflation will not be in double digits, and you have have a reasonable idea of your own earning prospects. Equities can and do rise and fall by 30% in a 12-month period, and have seen nominal declines over a decade-long period.

I don't want to call an equity market overpricing (I've been wrong before) but mechanically the longer you are from the last bear market the closer you are to the next one. If you have no adult memory of this you are going to get a nasty surprise.


----------



## DublinHead54 (17 Nov 2021)

NoRegretsCoyote said:


> I think this explains a lot. No one has their age on their avatar of course, but the most dedicated equities fans I see online tend to be in the 25-35 age group. I'm not that much older but I've seen two large stock market corrections in my adult life, including one where trusted corporate Irish names became worth actually nothing or close to it over the course of 18 months. I'm allergic to holding any specific stock in concentration and I am relaxed about equity performance only over a period of two decades or more.
> 
> Personally I've made close to half a million of a paper gain in property, some of which I could sell up and walk away from. Given that this was leveraged I've increased my equity by a factor of ten in less than a decade. So I can see the upside to property but (given my age) I still have close friends still nowhere near what they paid in 2006 for their apartment.
> 
> ...



I agree with the sentiment on age certainly but I'm not promoting a strategy of only investing in equities. What I have been stating is that there is scope to consider a balanced portfolio based on an individual's needs, circumstances, risk appetite and current economic variables. 

I too have seen two large stock market corrections and come out the other side. For me the differiantor is that I am professionally trained in risk management and portfolio management. After working in this area day to day it has become second nature, which I sometimes forget is not the case for those not working in the industry. 

In my observation the age brackets is quite unique to Ireland and UK post financial crisis whereas I've observed in the US a much more open and aggressive approach to individual stock ownership Vs property.

So I approach my own finances like I would expect any professional portfolio manager controlling billions of assets. I have a risk tolerance and I have financial goals with a timeline. yield is increasingly hard to come by in low risk assets and given cheap debt the stock market has rocketed in the last 5 years. I'm far from trading large pots of cash on short term price movements but I have benefitted from putting a portion of my portfolio into equities and have benefitted. I obviously could have had a negative return and that was built into my risk appetite. That's why I disagree that investing in Equities (or other) when carrying a mortgage is the same as borrowing to invest. Yes they can argue economically it is the same but in practice it's not. 

I've been a landlord, and recently exited property, and most of my share portfolio to purchase a family home. I've now longer term goals of pension and paying down mortgage, but I can afford (luckily) to continue to invest in Equities when the opportunity arises whilst overpaying mortgage and making AVCs, not everyone is as fortunate. 

You might find your property strategy would have been frowned upon here and you told to sell to clear debts in case of a price crash. But you set your risk tolerance and went for it. It's not conceptually different to the points I am making.


----------



## Gordon Gekko (17 Nov 2021)

I reckon I could borrow around €400,000 at 1.95%.

Should I do that and invest in a diversified equity portfolio?


----------



## DublinHead54 (17 Nov 2021)

Gordon Gekko said:


> I reckon I could borrow around €400,000 at 1.95%.
> 
> Should I do that and invest in a diversified equity portfolio?




Why are you trolling?


----------



## Gordon Gekko (17 Nov 2021)

Dublinbay12 said:


> What's your financial goal?
> 
> P.s I see your trolling


Financial freedom.

The ability to choose to work rather than needing to.

The ability to control my own destiny in terms of medical care or nursing homes.

The ability to help our kids to have a good standard of living if they choose more of a vocational career such as teaching or nursing rather than a remunerative one.

Freedom and choice basically, and not just for me.


----------



## SPC100 (17 Nov 2021)

Sarenco said:


> The S&P500 returned an annualised 4.00% over the first 20 years of this century, with all dividends reinvested.
> 
> After all investment costs and taxes, an Irish investor would have done well to make an annualised return of much more than 2.00%.
> 
> ...



To add some balance, https://www.thebalance.com/rolling-index-returns-4061795 looks at 20 rolling twenty-year returns from January 1979 – December 2016. The range of outcomes was 6%-18%


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## RedOnion (17 Nov 2021)

Cardano93 said:


> Well Gordon If you are a thirtysomething in forever home with Low LTV, good reliable income, emergency cash reserves, maxed out AVC/pension, fully insured, possibly yes.


I meet those conditions.  I'd be interested in seeing your thoughts on why I should possibly do an equity release to invest.


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## NoRegretsCoyote (17 Nov 2021)

SPC100 said:


> January 1979 – December 2016. The range of outcomes was 6%-18


The 1980s was a period of high-ish inflation (so lower real returns) and higher interest rates (so lower equity premium).


----------



## RedOnion (17 Nov 2021)

Cardano93 said:


> I said possibly, not should. Anyway I am not going to say why when there is approximately a dozen posts on this thread from me giving exact reasons.


I still don't see any valid reason from you.

The only relevant post I can see is:


Cardano93 said:


> My mortgage is at 2.1% fixed (<50% LTV) and I feel it is very easy to beat that rate (including taxes, fees etc) especially over a longer term.


Or have I missed something excellent advice somewhere?


----------



## RedOnion (17 Nov 2021)

Cardano93 said:


> Well congratulations Gordon


Firstly, I'm not @Gordon Gekko . He's more handsome than me.



Cardano93 said:


> Have maxed out pension pot: value €2m (Current maximum permitted pension fund by Revenue)


I'm maxing AVC; I don't have 2m there yet (but I can see why if I had, that would strengthen your argument a teeny tiny little bit). I've c. 400k, and there's 40k being added to it annually.

I don't have a mortgage, it's fully paid off.

So, I think borrowing money to invest would be an absurdly ridiculous thing for me to do. Let me know if you need help seeing why.


----------



## RedOnion (17 Nov 2021)

I do love a laugh!

You grew an investment of 300k into 3m in 4 years, and you won't accept that it was luck?!! 

Before you posted that I thought you were just trolling.


----------



## Gordon Gekko (18 Nov 2021)

Even a blind pig occasionally finds an acorn


----------



## PGF2016 (18 Nov 2021)

Cardano93 said:


> Ah here now that isn't fair and quite frankly is slightly insulting. I gave my opinion of opportunity cost to the OP and after being requested to justify reasons why, I used my personal experience as an example.
> For the record I continue to carry out through research and analysis on all my current investing and only commit when I am fully convinced of an upside. Making a comment like you did is not on.


You're not the only one who does research. You've done very well in a short time span. It's more than likely that luck played a large part of your result. If you can do it consistently over many, many years then maybe you're one of the few who can predict the future. In the mean time I, for one, think luck has played a large part in your result.

But well done all the same. Use your resources wisely and don't get greedy.


----------



## Gordon Gekko (18 Nov 2021)

Cardano93 said:


> Ah here now that isn't fair and quite frankly is slightly insulting. I gave my opinion of opportunity cost to the OP and after being requested to justify reasons why, I used my personal experience as an example.
> For the record I continue to carry out through research and analysis on all my current investing and only commit when I am fully convinced of an upside. Making a comment like you did is not on.


With the greatest respect, your strategy is insane.

Like the blind pig who found the acorn, you claim to have turned €300k into €3m in the space of 4 years.

I note that your username is a cryptocurrency. Again, with the greatest respect, you talk about ‘through (sic) research and analysis’. I have my doubts.

If your claims are indeed true, you should have the self-awareness to recognise that your proverbial numbers came up, but that as a general strategy, carrying mortgage debt to invest is not advisable.

In order for an investment to grow tenfold over four years, there has to have been a very high probability of it going to zero.


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## Sunny (18 Nov 2021)

Cardano93 said:


> Sorry Red (and Gordon)
> 
> I was in a similar situation to you in my late thirties in 2017 however had a lump sum of €300k and a mortgage of similar size. I decided to invest the lot and it has worked out extremely well. I'm not going to accept that this was luck either as I did have the conviction at the time and still hold the assets I bought over the period 2017-2018. I did have some losers (certain bank and energy/oil stocks) however I have held on to them all too and do not intend selling for a very long period. Asking me to "let you know if I need help seeing why" isn't necessary as that initial investment is now worth over €3M, further diversified and growing.
> 
> If you want a summary of those investments let me know and I will help you seeing why being mortgage free with no exposure to equities outside of pension fund at your age is an obvious opportunity cost.





Go on then, give us the summary of those investments.......


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## Leo (18 Nov 2021)

Cardano93 said:


> I gave my opinion of opportunity cost to the OP and after being requested to justify reasons why, I used my personal experience as an example.


And it may well be a valid opportunity cost were a 10 fold increase in equities investments over that time period the norm. 

The problem is, that is far removed from the norm and the majority, even with the added investment of significant time will see a modest return.


----------



## skrooge (18 Nov 2021)

You grew an investment of 300k into 3m in 4 years. Some think this was luck some think this was good strategy. Over 100 posts on here mean opinions differ widely. But for this to be a good strategy it needs to be repeatable with similar results. 

Everyone free in November 2025 for one half to tell the other I told you so?


----------



## PGF2016 (18 Nov 2021)

Cardano93 said:


> 100k worth of various Pharma stocks including Lilly, Regeneron, Pfizer, Mylan (Now Viatris), Allergan (Now Abbvie), Biomarin, Curis & Novartis.
> Current Value €375k with dividend yield of just under 1%
> 30k worth of Tesla stock (200 x shares pre-split)
> Current value: €1M no yield
> ...


As others have said your numbers have come up. Well done. But the game is not over yet. Just like Cardano going down €100k overnight your 3 big winners could go to zero. Is it time to cash out of those and de-risk?


----------



## Gordon Gekko (18 Nov 2021)

skrooge said:


> You grew an investment of 300k into 3m in 4 years. Some think this was luck some think this was good strategy. Over 100 posts on here mean opinions differ widely. But for this to be a good strategy it needs to be repeatable with similar results.
> 
> Everyone free in November 2025 for one half to tell the other I told you so?


Therein lies the issue.

In the modern world, everyone thinks that they are entitled to an ‘opinion’, and that their opinion is as valid as the next person’s.

Perhaps it’s a function of the “everyone’s a winner” nonsense that has become pervasive with a little bit of the deemed equality that social media provides layered on?

A fool’s opinion is not as valid as an expert’s.

This is why we have architects arguing with epidemiologists on social media.

I have no doubt that there are massively qualified investment professionals contributing to these pages. Yet the modern world pits their ‘opinions’ against that of bedwetting cryto-scamartists and fantasists whose idea of research and analysis is skim-reading an article on their iPhone whilst sitting on the porcelain throne.


----------



## DublinHead54 (18 Nov 2021)

RedOnion said:


> I meet those conditions.  I'd be interested in seeing your thoughts on why I should possibly do an equity release to invest.



I don't believe the suggestion was to take an equity release. The debate started on the premise that if you hold a mortgage and use excess cash flow to invest in equities rather than overpaying mortgage then it is equivalent of borrowing to invest. 

Releasing equity from your home for the purpose of investing is something entirely different and certainly not what I was advising.


----------



## RedOnion (18 Nov 2021)

Dublinbay12 said:


> I don't believe the suggestion was to take an equity release.


It was in fact suggested by the poster to whom I was responding.


----------



## SPC100 (18 Nov 2021)

Well done on your past investments! That is truely amazing. I'm jealous of your results!

Two points:

1. I'd agree with suggestions to diversify a good bit out crypto and Tesla to minimize potential future loses. There are many reasons why either of them could drop a lot or even to 0.

You have already won the game of life, you should bank enough of that prize money to ensure you can enjoy that win for the rest of your life. Even after banking that more safely you still have enough funds that if you can repeat your feat you can win the game of the universe.

In short, I'd vote for more aggressive diversifying ASAP.

2. the financial literature would say you are either warren Buffett or a very lucky winner. As you do research you must understand that you can't simply throw out decades of financial research papers. Mathematically you can see that there will be some big winners and some losers expected based on probability over any time period, but research shows there are very few long term big winners in the world.

You can decide you have warren buffet level skill, say one in a billion people type skill, and you have the midas touch. Or you can be more humble and accept that you were very lucky to be one of the rare but expected statistical outcomes of billions of people investing in the markets over the last 4 years.


----------



## Gordon Gekko (18 Nov 2021)

Dublinbay12 said:


> I don't believe the suggestion was to take an equity release. The debate started on the premise that if you hold a mortgage and use excess cash flow to invest in equities rather than overpaying mortgage then it is equivalent of borrowing to invest.
> 
> Releasing equity from your home for the purpose of investing is something entirely different and certainly not what I was advising.


Two people:

1) No mortgage and releases €200k of equity to invest.

2) €200k mortgage, inherits €200k, and invests it

What’s the difference?


----------



## DublinHead54 (18 Nov 2021)

RedOnion said:


> It was in fact suggested by the poster to whom I was responding.



My apologies, I was catching up and thought we were still on the original point.


----------



## DublinHead54 (18 Nov 2021)

Gordon Gekko said:


> Two people:
> 
> 1) No mortgage and releases €200k of equity to invest.
> 
> ...



Person 1 is going from 0 debt to 200k debt (incremental debt gain). Person 2 still only has 200k debt (no incremental debt gain).

So it is entirely different, the original premise was you 'save' more by paying of your mortgage, in your scenario your proposing an increase in debt.


----------



## Sarenco (18 Nov 2021)

Cardano93 said:


> The intelligent Investor by Ben Graham is my constant reference


Ben Graham is widely considered to be the father of value investing.

Tesla and crypto currencies are not value plays in any language.

Look, your bets clearly paid off but that doesn't make you an investing genius.  It just means you got lucky.


----------



## DublinHead54 (18 Nov 2021)

Fantastic result @Cardano93! You took some risks and they worked out, fairplay! I am not sure why some people are so begrudging that they have to claim it was luck or that you couldn't have done adequate research.


----------



## Sarenco (18 Nov 2021)

Dublinbay12 said:


> So it is entirely different


Why?

In both cases, the person ends up with €200k in debt and €200k in investments.

What's the difference?


----------



## Gordon Gekko (18 Nov 2021)

Dublinbay12 said:


> Person 1 is going from 0 debt to 200k debt (incremental debt gain). Person 2 still only has 200k debt (no incremental debt gain).
> 
> So it is entirely different, the original premise was you 'save' more by paying of your mortgage, in your scenario your proposing an increase in debt.


You’re looking at the change in positions rather than the positions.

Person 1 has €200k of mortgage debt and €200k of investments.

So does Person 2.

The flipside is that Person 2 could become Person 1 by repaying the mortgage.

If you have personal investments and you are carrying debt of any kind, you are effectively borrowing to invest which, with our tax code, doesn’t really make sense.

A few crypto or Tesla warriors won’t disprove that.


----------



## Sarenco (18 Nov 2021)

Dublinbay12 said:


> I am not sure why some people are so begrudging that they have to claim it was luck or that you couldn't have done adequate research.


Because nobody applying the principles advocated by Ben Graham would ever invest in Tesla or cryptos.

It's not begrudgery to say that somebody got lucky - in this case it's a statement of fact.


----------



## Gordon Gekko (18 Nov 2021)

Ben Graham’s book is legendary, but reading it and then punting Tesla and cryptos is hardly the definition of research.

The poster got lucky, great, but the hubris to not recognise that is likely to result in tears further down the line.

There is no shame in admitting to being a spoofer who got lucky in the right place at the right time. Some of the most successful people I know have the self-awareness to do just that.


----------



## DublinHead54 (18 Nov 2021)

Sarenco said:


> Why?
> 
> In both cases, the person ends up with €200k in debt and €200k in investments.
> 
> What's the difference?



Are you serious?!.....I suggest you go back to the start of the thread and reread what started the conversation. The discussion was using free cash flow to invest in equities vs paying off your mortgage, there are those who believe investing in equities when having a mortgage is the same as borrowing to invest. 

My opinion is it is not, and then we moved onto a discussion of risk returns. In this highly hypothetical situation Gordon presented, there is an incremental debt increase for person 1, thats the difference, its irrelevant where they end up as there is a fundamental change from the starting position, do you not agree?


----------



## Gordon Gekko (18 Nov 2021)

Fair play to you.

The phrase about pigs finding acorns isn’t actually calling you a pig, nor were you called a fool, nor were you called a spoofer.

If I said “one swallow doesn’t make a summer”, would you accuse me of calling you a bird?


----------



## Sarenco (18 Nov 2021)

Dublinbay12 said:


> there are those who believe investing in equities when having a mortgage is the same as borrowing to invest.


It's not a "belief" - it's a fact.


Dublinbay12 said:


> My opinion is it is not


Well, your "opinion" is nonsense in that case.

It's like being of the opinion that the earth is flat.


----------



## aristotle (18 Nov 2021)

Cardano93 said:


> I continue to seek out value investments however when higher risk opportunities arise (eg China examples I referred to earlier), I do consider the fundamentals together with cost and upside and if convinced will invest. I can afford to do so given my current capital.



I would be interested in what kind of stocks you are looking at? I have some cash I am willing to take a punt with.

That is some result with your investments.


----------



## DublinHead54 (18 Nov 2021)

Sarenco said:


> Because nobody applying the principles advocated by Ben Graham would ever invest in Tesla or cryptos.
> 
> It's not begrudgery to say that somebody got lucky - in this case it's a statement of fact.



Ben Graham wrote a book.....and it wasn't the bible.

You are envious are dismissive of Cardanos success by claiming it is luck. I am not sure if this is because you are envious of his financial gains or because he hasn't followed exactly the rules of some investment book you read. The notion that his success can only not be luck if they can repeat it is also nonsense.

I know I know Ben Graham wrote a book that many consider the best book on investment....but do you really think this book is handed out on day 1 on the job as an investor? I can tell you its not, further more you don't need to repeat a strategy over 20 years for it to be a monetary success....see every Hedge fund. If you believe you can only be successful in the stock market by being a genius and following the rules exactly of a book on one strategy, you are mistaken. 

Luck is putting 300k on a horse at 10/1 because it shares the name with your favorite singer and it winning. Picking a portfolio of stocks that over 3 years has had significant return is not luck, nor does it make him a genius. You don't need to be a genius to make money in the stock market.

It was risk, Cardano made riskier investments and it worked out, but its disrespectful to call it luck. I don't even think many of his investments were unexpected for anybody that pays attention to the markets over the last 10 years. He wasn't picking obscure unknown companies, he was picking the darlings of the tech world. Even his investment in Cardano, it was founded by the co-founder of ethereum.

Ultimately you should be looking at this from a risk basis.

After all doesn't every person on this thread have the same goal of enhancing their financial position? So not sure why people feel the need to be so dismissive, all it does is encourage people to step away from the forum and leave an echo chamber of four posters with the same view.


----------



## DublinHead54 (18 Nov 2021)

Dublinbay12 said:


> do you not agree?



Well?



Sarenco said:


> It's not a "belief" - it's a fact.
> 
> Well, your "opinion" is nonsense in that case.
> 
> It's like being of the opinion that the earth is flat.


Ahh Sarenco, I see what you are doing. Lets ignore the question and make an irrelevant statement to discount the point. 

The _fact_ is using free cash flow whilst having a mortgage is not the same as borrowing to invest in equities, because when you take out a mortgage you take it out at the total cost (loan amount + interest = total cost). By investing in Equities you do not increase the cost of your mortgage. Can you show me a mortgage document that does not quote the total cost of the mortgage inclusive of the interest before you sign the contract?

Now that is a fact. /end

P.s based on previous you will feel the need to support your argument by making up scenarios that fit your argument but are not real world scenarios, please don't.


----------



## RedOnion (18 Nov 2021)

Dublinbay12 said:


> because when you take out a mortgage you take it out at the total cost (loan amount + interest = total cost). By investing in Equities you do not increase the cost of your mortgage. Can you show me a mortgage document that does not quote the total cost of the mortgage inclusive of the interest before you sign the contract?
> 
> Now that is a fact. /end


And if you repay the mortgage early what happens to that interest?


----------



## Sarenco (18 Nov 2021)

Dublinbay12 said:


> You are envious are dismissive of Cardanos success by claiming it is luck. I am not sure if this is because you are envious of his financial gains or because he hasn't followed exactly the rules of some investment book you read. The notion that his success can only not be luck if they can repeat it is also nonsense


It has nothing to do with envy.  

Cardonos himself told us that his investment decisions are grounded in the principles espoused by Ben Graham - I didn't bring it up.


Cardano93 said:


> The intelligent Investor by Ben Graham is my constant reference


Ben Graham was the father of value investing.  Tesla is the ultimate growth stock and nobody would ever invest in Tesla by applying the principles advocated by Graham.

Cardonos clearly liked Tesla's technology and took a punt on the stock.  And that decision has obviously paid off big time.

But that decision had nothing to do with a fundamental analysis of the stock price, as per Graham's methodology.  

Or to put it another way, he got lucky.


----------



## Sarenco (18 Nov 2021)

Dublinbay12 said:


> The _fact_ is using free cash flow whilst having a mortgage is not the same as borrowing to invest in equities, because when you take out a mortgage you take it out at the total cost (loan amount + interest = total cost). By investing in Equities you do not increase the cost of your mortgage. Can you show me a mortgage document that does not quote the total cost of the mortgage inclusive of the interest before you sign the contract?


Sorry but that is just pure waffle.

We have already explained to you why investing while carrying debt is the same thing as borrowing to invest.  I'm sorry if you cannot understand the examples that have already been provided.


----------



## NoRegretsCoyote (18 Nov 2021)

Cardano93 said:


> I said my risk tolerance is now much lower


Which is an admission that you got lucky.

If you were that good you would surely take your €3m, re-allocate according to same principles, and have €30m in four years.


----------



## Sarenco (18 Nov 2021)

Cardano93 said:


> Those fundamentals i.e. advanced technology and development have proved to be true.


Fundamental analysis is employed by a value investor to determine whether a stock is overvalued or undervalued.

Liking a company's technology does not constitute fundamental analysis.

You took a punt on Tesla and it paid off - good for you.  

But it had nothing to do with a fundamental analysis of the stock price.


----------



## Gordon Gekko (18 Nov 2021)

I’m not sure where people’s blindspot comes from in relation to mortgage debt.

Perhaps it’s a form of mental accounting?

Yes, mortgage debt is secured against real property, but if you have other personally-held assets, that doesn’t really matter. Investing whilst carrying debt is effectively borrowing to invest.


----------



## DublinHead54 (18 Nov 2021)

RedOnion said:


> And if you repay the mortgage early what happens to that interest?



I regret that what seems to often happen is that a poster will change the topic slightly and then that becomes the discussion......

The original two points being discussed here was that using cash to invest in whilst having a mortgage is the equivalent of borrowing to invest. The second point was the ability of investing in the market to beat the interest saved on paying down the mortgage. 

It was always accepted that paying off or overpaying reduces the balance and interest owed. But what is a fact is that when you take out a mortgage, you take it out at a rate and are told over the lifetime the total cost. So the cost to you is loan + interest, correct? 

In my view if I take 100 euro from my pocket and buy an equity whilst having a mortgage my debt does not increase. Thoughts? 

Ultimately there are those that have their own approach to managing their financials and I have my own methods, just like there are many investment strategies. In how I view risk in the current economic landscape alongside my own specific situation, I believe it is beneficial to invest some of my portfolio in the stock market (currently predominantly via AVCs) and then in individuals stocks directly. This appears to have worked for me in the last 10 years, as it has for other posters here.


----------



## PGF2016 (18 Nov 2021)

Cardano93 said:


> Those fundamentals i.e. advanced technology and development have proved to be true.


Having advanced tech and development doesn't guarantee Tesla like performance. I still believe there's a large element of luck involved in your Tesla investment and your crypto gains. 

But your overall approach is to be commended. Mostly conservative with a few punts (in my opinion) that turned out very well. Congrats.

You're an outlier though and I would still be of the opinion that most should not 'borrow to invest'.


----------



## Steven Barrett (18 Nov 2021)

Gordon Gekko said:


> You’re looking at the change in positions rather than the positions.
> 
> Person 1 has €200k of mortgage debt and €200k of investments.
> 
> ...


This word effectively is popping up a lot. Which is not the same as actually. 

Your view of the argument:

€200,000 mortgage. I save up €200k and invest it in shares. You say that is effectively borrowing to invest because I am not using the savings to pay down debt. The cost is therefore the interest on the loan. 

My view of the argument:

€200,000 mortgage. I get a second loan for €200k and invest it in shares. My debt to a bank is now €400,000. My mortgage is secured against my home and my other €200k is secured against 


Steven
www.bluewaterfp.ie


----------



## DublinHead54 (18 Nov 2021)

Sarenco said:


> It has nothing to do with envy.
> 
> Cardonos himself told us that his investment decisions are grounded in the principles espoused by Ben Graham - I didn't bring it up.
> 
> ...



So investing in growth stocks is a punt and if it works out its just luck? All those equity analysts that are recommending buys and sells on growth stocks are just punting and getting lucky? An entire industry might as well just pack up and go home.

You seem to be very wedded to one methodology and if somebody doesn't follow it exactly or misspeaks you use that to discredit their success. What Cardano said was he used Graham as a reference along with the huge online data, he didn't say he used Grahams methodology to pick Tesla. 

You do know that Grahams methodology is not a guarantee, his methodology would suggest that there is value in buying bank shares that traditional trade below book value but you'd find it a hard sell trying to get people to invest in those businesses.


----------



## skrooge (18 Nov 2021)

All this wonderful and dispassionate financial advice. I'm trying to come up with a middle ground that we can all agree on... If I take a little from the hawks and a little from the doves I think I've come up with the perfect compromise..... How about equity endowment mortgages.... 

There everyone happy and nothing to worry about


----------



## DublinHead54 (18 Nov 2021)

Gordon Gekko said:


> I’m not sure where people’s blindspot comes from in relation to mortgage debt.
> 
> Perhaps it’s a form of mental accounting?
> 
> Yes, mortgage debt is secured against real property, but if you have other personally-held assets, that doesn’t really matter. Investing whilst carrying debt is effectively borrowing to invest.



In reality it isn't and your examples have proven that....

However, the point that is now proved by 3 posters is that you can beat the guaranteed return of overpaying a mortgage.


----------



## PGF2016 (18 Nov 2021)

Dublinbay12 said:


> However, the point that is now proved by 3 posters is that you can beat the guaranteed return of overpaying a mortgage.


But that's not what those who disagree are saying. Of course it's possible to beat the guaranteed return of overpaying a mortgage. But the argument is that for most people that doesn't happen and overpaying is probably the best / least risky course of action. A few outliers doesn't disprove that.


----------



## DublinHead54 (18 Nov 2021)

Sarenco said:


> Sorry but that is just pure waffle.
> 
> We have already explained to you why investing while carrying debt is the same thing as borrowing to invest.  I'm sorry if you cannot understand the examples that have already been provided.



I'm sorry you haven't explained it, I am astonished that you think you have explained anything. You have not explained anything, all you've done is make up unrealistic examples that can't be replicated in the real world and refused to answer questions after being asked twice!

Please explain how using free cash flow to invest in equity, incrementally increases a mortgage debt given that a mortgage is contractually agreed as the loan amount plus interest over the lifetime?


----------



## Gordon Gekko (18 Nov 2021)

Steven Barrett said:


> This word effectively is popping up a lot. Which is not the same as actually.
> 
> Your view of the argument:
> 
> ...


Effectively is just a word to appease any pedants out there.

It would be the same to inherit €200k, clear one’s mortgage, then remortage for €200k and invest that in shares as it would be to just use the inheritance to buy the shares.


----------



## DublinHead54 (18 Nov 2021)

PGF2016 said:


> But that's not what those who disagree are saying. Of course it's possible to beat the guaranteed return of overpaying a mortgage. But the argument is that for most people that doesn't happen and overpaying is probably the best / least risky course of action. A few outliers doesn't disprove that.



I have to disagree with you that these people including myself are outliers. The absolute size may put them as outliers, but the percentage returns are not outliers. 

You don't have to be a genius to invest wisely, the posters here have been talking about investing in household names or industry stalwarts with billions in revenue, not some penny stock. 

In the last 5 years everybody who invested in an S&P 500 the stock market would have beat the return on their mortgage , so beating the guarantee is not an outlier. 

What was put out there was that it was statistically unlikely that you can beat the guaranteed return, but that just shows that statistics can suffer from confirmation bias. @Sarenco selected statistics to support their side of the argument and I just picked a statistic to prove mine. 

What you correctly point out and what has been my point all along, is that it is about *Risk*. Fundamentally Equities are a riskier asset class than rates and you expect a return premium over the risk free rate for taking that risk, thats how the market works. If Equities offered a return less than the risk free rate then nobody would invest in them. 

This is why individuals have a risk tolerance / risk appetite and to go back to the very original point....you should not offer just blanket advice not to invest when you have a mortgage. There are many other inputs that should help an individual form a decision on whether to invest or not. However, most posters on here go for a simple risk averse approach and pay down the mortgage. That isn't because of lending to invest, they just have a low risk tolerance or a simple approach to managing their finances. 

However, you can't deny that some investors on here that have higher risk tolerance, have achieved greater returns and some have not. Thats the way it should work......


----------



## Sarenco (18 Nov 2021)

Cardano93 said:


> Looks like your investing principles are based on Rory Gillen's 3 steps rather than Ben Graham's. Or maybe Dave Ramsey??


None of the above. 

I just invest through boring old index funds - I don't attempt to pick stocks.


----------



## DublinHead54 (18 Nov 2021)

Gordon Gekko said:


> Effectively is just a word to appease any pedants out there.
> 
> It would be the same to inherit €200k, clear one’s mortgage, then remortage for €200k and invest that in shares as it would be to just use the inheritance to buy the shares.



I'd love one of those mortgages which doesn't cost anything to put in place or clear. Can you give me the name of your solicitor that does it for free? Would you clear the mortgage if the interest rate was 0%?

I honestly can't believe you only make decisions in either ors.....


----------



## Gordon Gekko (18 Nov 2021)

Dublinbay12 said:


> I'd love one of those mortgages which doesn't cost anything to put in place or clear. Can you give me the name of your solicitor that does it for free? Would you clear the mortgage if the interest rate was 0%?
> 
> I honestly can't believe you only make decisions in either ors.....


Ah, our old friend pendantry.

“effectively”


----------



## Sarenco (18 Nov 2021)

Cardano93 said:


> It all comes down to risk and reward


It does indeed.

But here's the thing - tax changes the risk/reward analysis.  To the point that I would argue that paying down a mortgage is a better "investment", on a risk-adjusted basis, than investing in equities outside a pension vehicle.

Incidentally, if I won the lottery and somebody told me I was very lucky, I wouldn't regard that as begrudgery - it's just a statement of fact.


----------



## Gordon Gekko (18 Nov 2021)

Cardano93 said:


> I agree with this 100%. Similar argument can be made for taking a reliable job in civil service with ok pay and guaranteed pension vs starting your own business. Former is quite boring with little or no upside when the latter will take more work to succeed, has huge upside but could also completely fail. *It all comes down to risk and reward. *Each to their own.
> 
> Looks like some of the posters here would also begrudge a successful entrepreneur - obviously that success was because they were lucky


You’re just showing that you’ve no concept of risk, risk-adjusted returns, or risk/reward.



			https://www.schroders.com/en/sysglobalassets/digital/us/pdfs/schroders-10y-rtn-forecasts-dec-2020.pdf
		


Take a look at Schroders’ forecasts for the next 10 years; they reckon 4.3% pa from equities.

Even if we look at longer term averages of, say, 7%, as Sarenco rightly highlights tax is the game-changer.

My mortgage is currently at 2.5% so throwing money against that is probably close to a 5% guaranteed return before tax (because I’m servicing it from after-tax income).

Imagine an investment that guaranteed 5%?


----------



## Sarenco (18 Nov 2021)

Cardano93 said:


> You continue to ignore compounding Gordon. Maybe you should have a look at changing that profile name of yours, it definitely doesn’t suit you


But paying off a mortgage has a similar compounding effect…


----------



## DublinHead54 (18 Nov 2021)

Cardano93 said:


> Looks like some of the posters here would also begrudge a successful entrepreneur - obviously that success was because they were lucky



Bono said it well

_"In the United States, you look at the guy that lives in the mansion on the hill, and you think, you know, one day, if I work really hard, I could live in that mansion. In Ireland, *people look up at the guy in the mansion on the hill and go, one day, I'm going to get that b@stard.* *It's a different mind-set.*"_


----------



## DublinHead54 (18 Nov 2021)

Gordon Gekko said:


> Ah, our old friend pendantry.
> 
> “effectively”



No seriously, can you pass on the solicitors details? 

Sorry for being 'pedantic' and using real life considerations to critique your comments, I'll try to stay in the hypothetical.


----------



## Gordon Gekko (18 Nov 2021)

Dublinbay12 said:


> No seriously, can you pass on the solicitors details?
> 
> Sorry for being 'pedantic' and using real life considerations to critique your comments, I'll try to stay in the hypothetical.


The figure of €200,000 has been thrown around. For a remortgage, you’re probably talking about 0.5% which could be made-up quite easily when making the investment.

It’s absolute pedantry.

Sure investing vs paying down the mortgage will incur stamp duty or the 1% insurance levy.


----------



## Gordon Gekko (18 Nov 2021)

Cardano93 said:


> You continue to ignore compounding Gordon. Maybe you should have a look at changing that profile name of yours, it definitely doesn’t suit you


Oh I see…so mortgages and debt don’t compound?


----------



## DublinHead54 (18 Nov 2021)

Sarenco said:


> It does indeed.
> 
> But here's the thing - tax changes the risk/reward analysis.  To the point that I would argue that paying down a mortgage is a better "investment", on a risk-adjusted basis, than investing in equities outside a pension vehicle.
> 
> Incidentally, if I won the lottery and somebody told me I was very lucky, I wouldn't regard that as begrudgery - it's just a statement of fact.



Yes I already made the point of the importance tax plays and have constantly referenced the many factors that need consideration. Glad to see you are coming around to that. 

Again I need to stress that I have mandated for a portfolio, yourself and others seem to focus on a rhetoric that you can either only pay down your mortgage or invest, there can't be a balance. My rhetoric is that there is a balanced portfolio approach that considers many factors, but apparently this was too complicated. 

I'm not sure why you are still going on about luck, and really not sure why you believe that picking stocks by any other means than value investing is equivalent to random selection. You do understand there are not only other methods of stock picking, but there are also other factors that impact a stock price and not just an equation somebody wrote 75 years ago.


----------



## Gordon Gekko (18 Nov 2021)

Cardano93 said:


> I’ve already provided a DETAILED example of compounding comparisons for investment and debt over a 20 year period. Using MODERATE returns based on S&P 500 historical data, investment beats mortgage overpayment CONSIDERABLY.


With long-term returns of around 7%, tax at a blend of 33% and 52%, and investment costs of, say, 1%, please enlighten me as to how investment beats overpaying an average mortgage rate of circa 3% “considerably”…


----------



## Sarenco (18 Nov 2021)

Cardano93 said:


> Using moderate returns based on S&P 500 historical data, investment beats mortgage overpayment considerably.


And i’ve already shown that had you invested in an index fund that tracks the S&P500 you would not have beaten the weighted averaged Irish mortgage rate over the first 20 years of this century, after taking account all expenses and taxes.  So the risk wasn’t rewarded.

I’m afraid we’re going around in circles at this stage…


----------



## DublinHead54 (18 Nov 2021)

Gordon Gekko said:


> The figure of €200,000 has been thrown around. For a remortgage, you’re probably talking about 0.5% which could be made-up quite easily when making the investment.
> 
> It’s absolute pedantry.
> 
> Sure investing vs paying down the mortgage will incur stamp duty or the 1% insurance levy.



So when considering to switch mortgage rate, I shouldn't factor in the costs associated? That is too pedantic?


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## Gordon Gekko (18 Nov 2021)

Dublinbay12 said:


> So when considering to switch mortgage rate, I shouldn't factor in the costs associated? That is too pedantic?


Yes, it’s too pedantic in the context of
this discussion.

It’s also why I deliberately and repeatedly used the term “effectively” to minimise the risk of someone  screaming “BUT IT’S NOT EXACTLY THE SAME” and waving his or her arms in the air frantically.

If you can’t see that, we’ll just continue to go round in circles.

It would be like me saying “but there’ll be 0.5-1% stamp duty on investing the money versus 0% on paying off the mortgage”.

They’re immaterial details relative to the big picture.


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## DublinHead54 (18 Nov 2021)

Gordon Gekko said:


> With long-term returns of around 7%, tax at a blend of 33% and 52%, and investment costs of, say, 1%, please enlighten me as to how investment beats overpaying an average mortgage rate of circa 3% “considerably”…



_forecasts....you appear to be using a forecast as a certainty, a tad unfair especially given that Schroders own forecasted 10 year returns for 2020 were significantly under the actual return of the market. However, Cardano doesn't need forecasts or modelled returns, his investments actually beat the market. just pure dumb luck eh but he still beat the market. The other point on using forecasts, Schroders is using a methodology to model the entire market, Cardano is not investing in the entire market, he is investing in specific industries. So it should be entirely obvious that investing *can* significantly beat a mortgage rate or there simply wouldn't be an equity market. Obviously anybody with the size of portfolio as Cardano should be reviewing the economic outlook for the markets they are invested in, but that doesn't make his statement incorrect. _



Sarenco said:


> And i’ve already shown that had you invested in an index fund that tracks the S&P500 you would not have beaten the weighted averaged Irish mortgage rate over the first 20 years of this century, after taking account all expenses and taxes.  So the risk wasn’t rewarded.
> 
> I’m afraid we’re going around in circles at this stage…



_confirmation bias........you've already been shown that if you invested in the S&P500 for the last 5 years you would have beaten the weighted averaged irish mortgage rate of the last 5 years. (I am purposely using my own form of confirmation bias here to prove the point)_


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## Gordon Gekko (18 Nov 2021)

This is becoming funny actually…

Yes, the Schroders work is a forecast, but you do realise that there is a lot of data out there for how markets typically perform from certain levels, yes?

You, and others, seem wedded to the idea that recent memory is typical.

You also seem incapable of understanding risk. If I can lock in a guaranteed return of 5% today, it would be foolish of you to gloat over outperforming me by, say, a couple of percent. Mine was the smart move.


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## DublinHead54 (18 Nov 2021)

Gordon Gekko said:


> Yes, it’s too pedantic in the context of
> this discussion.
> 
> It’s also why I deliberately and repeatedly used the term “effectively” to minimise the risk of some pedantic moron screaming “BUT IT’S NOT EXACTLY THE SAME” and waving his or her arms in the air frantically.
> ...



They might be immaterial in your fictitious world of people getting 200k on a daily basis and banks offering 200k remortgages at a drop of a hat. In the context of the OP and for the majority of people and the current level or mortgage rates we are talking about much smaller numbers and the margins do matter. 

So should I or shouldn't I consider ancillary costs when switching mortgage?

At least you have finally admitted it isn't the same.


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## RedOnion (18 Nov 2021)

Cardano93 said:


> Maybe I should have typed this in Braille....
> 
> _*"Back of envelope calculations based on 7% return over 20 years which is similar to recent performance over same period for S&P500 below (NASDAQ would be higher but I'm being conservative)
> 
> ...


Since we're going back to your advice to me...

Firstly, your maths is a good bit off.  You haven't factored in the cost of interest on the 400k I borrowed to make that investment.

Then if we look at what you actually recommended I invest in:
- 300k in dividend paying value stocks, 
 - 80k in REITs (again, income paying)
- 20k in Crypto (I'm going with the fruity option!)

But somehow, that's going to generate the same CAGR as the S&P500 over the past 20 years, but at CGT rates rather than income tax?

Getting past that, when I pointed out that the approach was ridiculous in my circumstances, you justified it by providing your own returns based on a completely different strategy!


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## Gordon Gekko (18 Nov 2021)

Cardano93 said:


> Maybe I should have typed this in Braille....
> 
> _*"Back of envelope calculations based on 7% return over 20 years which is similar to recent performance over same period for S&P500 below (NASDAQ would be higher but I'm being conservative)
> 
> ...


Where do I start?

- The 7% includes dividends which aren’t taxed at 33% last time I checked

- What about currency? You’re jumping from Dollars to Euros and back again…

- Gordon Gekko wasn’t an employee so who was going to sack him?

- You have no visibility of my investment, income, or debt profile; but as it happens, I overpay the maximum permitted mortgage amount, 10%, and then invest the excess in a diversified portfolio of global equities. I’m happy enough with that approach and thing it’s the correct one (versus not doing the 10% and investing it instead)


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## Gordon Gekko (18 Nov 2021)

Dublinbay12 said:


> They might be immaterial in your fictitious world of people getting 200k on a daily basis and banks offering 200k remortgages at a drop of a hat. In the context of the OP and for the majority of people and the current level or mortgage rates we are talking about much smaller numbers and the margins do matter.
> 
> So should I or shouldn't I consider ancillary costs when switching mortgage?
> 
> At least you have finally admitted it isn't the same.


I never claimed that it was ‘exactly’ the same…that’s why I repeatedly used the term effectively.

You’re just being pedantic and failing to acknowledge that legal costs and investment costs such as stamp duty or 1% levies are probably comparable in monetary terms.

It’s foolish to keep going on about them.


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## DublinHead54 (18 Nov 2021)

Gordon Gekko said:


> This is becoming funny actually…




Gordon, I don't appreciate that you tend to lean towards insults to try and belittling comments to strengthen your argument. The fact you've had to start with a comment like that I don't really want to engage further but feel it is necessary to straighten out a few points.



Gordon Gekko said:


> Yes, the Schroders work is a forecast, but you do realise that there is a lot of data out there for how markets typically perform from certain levels, yes?



You do realise you have just contradicted yourself? You've said forecasts are ok because there is historical data to show how markets perform from certain levels, then a sentence later you mock people for using historical data to infer future performance....contradiction.

All that other data out there doesn't tell you what is going to happen in the future, they can't predict covid. So please enlighten us how you can be so certain that recent performance in the stock market won't continue? How are you so sure that Shroders quants are right? Are you basing your opinion on the first result from Google? if you delve a bit deeper you'll see a different view across AMs, who do you trust the most? who is right? who has the best model? 

It is a fair assumption that Stock markets won't continue the returns we've seen in the last 5 years, but even in the evidence you are using they were wrong before. Who would have thought the stock market would be sitting at all time highs in the middle of a pandemic?! 

Moral of the story don't hang your hat on a piece of information you've scrolled whilst sitting on the can. 



Gordon Gekko said:


> You, and others, seem wedded to the idea that recent memory is typical.


Yes because calling out confirmation bias and the issue of relying on historical performance to infer future performance makes me wedded to recent memory. 



Gordon Gekko said:


> You also seem incapable of understanding risk. If I can lock in a guaranteed return of 5% today, it would be foolish of you to gloat over outperforming me by, say, a couple of percent. Mine was the smart move.



I am not really sure where to start on this point, you've introuduced this 5% return in another post not directed to me, and because I didn't respond I don't understand risk? Nice to know I wasted 15 years as a risk manager on a trading desk, if only I had passed those industry exams....oh wait. 

If you can lock in a guaranteed 5% today then there are other assets (riskier) that will pay a premium above this to entice the investment. You didn't make the smart move, you made the move that suited your risk appetite and goals. If you were a firm and had a goal of 10% ROTE, put all your money in a guaranteed 5% would not be the smart move, would it?


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## Gordon Gekko (18 Nov 2021)

Cardano93 said:


> A Lion doesn’t concern itself with the opinion of sheep


A British & Irish ‘Lion’? Brendan M, is that you?

Or a ‘lion’ that lives on the open plains of Africa, sleeps for 20 hours a day, and then gets up to do fundamental analysis of Tesla and cryptocurrencies?


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## Sarenco (18 Nov 2021)

Cardano93 said:


> A Lion doesn’t concern itself with the opinion of sheep.


You've a rather high opinion of yourself, don't you?

I've already explained that even an annualised return of 7% wouldn't have beaten paying off a mortgage at the weighted average rate over the period.



Sarenco said:


> Even if the annualised return on the index had been 7%, an Irish investor would have done well to make an annualised return of 4%, after accounting for all expenses and taxes.
> 
> That's still less than the average mortgage rate in Ireland of 4.36% over the period.
> 
> ...


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## Gordon Gekko (18 Nov 2021)

Dublinbay12 said:


> Gordon, I don't appreciate that you tend to lean towards insults to try and belittling comments to strengthen your argument. The fact you've had to start with a comment like that I don't really want to engage further but feel it is necessary to straighten out a few points.
> 
> 
> 
> ...


I literally don’t know where to start…


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## DublinHead54 (18 Nov 2021)

Gordon Gekko said:


> - You have no visibility of my investment, income, or debt profile; but as it happens, I overpay the maximum permitted mortgage amount, 10%, and then invest the excess in a diversified portfolio of global equities. I’m happy enough with that approach and thing it’s the correct one (versus not doing the 10% and investing it instead)



When are you exiting your Global Equity portfolio?

Given you've just preached about global equity growth of 4.3% for the next 10 years vs a 5% guaranteed return on the mortgage (costs being too immaterial to factor in). I fully expect you to be making the *smart move*_? _


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## Gordon Gekko (18 Nov 2021)

Let’s try and approach this a different way…

What’s the risk-free rate right now here in the Eurozone? Probably German government debt at 0%-ish.

I think it’s pretty smart to invest in equities versus that risk free rate.

But someone with a mortgage at 2.5% has their own risk-free rate of around 5%.

It makes far less sense to take on equity risk in the hope of making 7% on average with that risk-free rate available.

It’s just not enough of an equity risk premium.


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## DublinHead54 (18 Nov 2021)

Gordon Gekko said:


> Let’s try and approach this a different way…
> 
> What’s the risk-free rate right now here in the Eurozone? Probably German government debt at 0%-ish.
> 
> ...



So Gordon, as you have a mortgage when are you exiting your equity portfolio given your (Shroders) bearish outlook?


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## Gordon Gekko (18 Nov 2021)

Dublinbay12 said:


> When are you exiting your Global Equity portfolio?
> 
> Given you've just preached about global equity growth of 4.3% for the next 10 years vs a 5% guaranteed return on the mortgage (costs being too immaterial to factor in). I fully expect you to be making the *smart move*_? _


I don’t know…maybe never.

I think ‘preaching’ is a little strong. I’m just of the view that markets won’t do as much over the coming years as they have done over recent years.

My personal investment plan is pretty simple; I’m switching mortgage providers, continuing to max-out my AVCs and invest 100% in equities, increasing my mortgage overpayments to 20% a year, and then investing the surplus cashflow in equities.

EDIT: dublinbay12, I’m overpaying the maximum permitted amount from cashflow and investing the surplus, so cashing anything in to overpay isn’t an option. But then I’m just a sheep, what would I know?


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## DublinHead54 (18 Nov 2021)

Gordon Gekko said:


> I don’t know…maybe never.
> 
> I think ‘preaching’ is a little strong. I’m just of the view that markets won’t do as much over the coming years as they have done over recent years.
> 
> ...



Wait so you follow a balanced approach that suits your individual needs and risk appetite?

If only somebody had suggested that as the best course of action on page 1....

Apologies for being pedantic but you've called out Cardanos spurious research yet you seemed to have pulled the first source from Google. So interested to know how much time you've spent and given your negative outlook Vs your guaranteed 5% to get confident to keep your portfolio. 

I'm just surprised that you're now saying you invest your surplus in equities given your previous statement.


Gordon Gekko said:


> Let’s say I’ve a surplus €50k, my AVCs are maxed out, I have an emergency fund, and I have a mortgage which isn’t a tracker. I just don’t see why I would invest in equities rather than putting the €50k against the mortgage. I already have meaningful equity exposure via the pension. If things go well on the equity front, I might make 3% after taxes and costs. Or I can take a guaranteed return of 2.5% via the mortgage.


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## Gordon Gekko (18 Nov 2021)

Dublinbay12 said:


> Wait so you follow a balanced approach that suits your individual needs and risk appetite?
> 
> If only somebody had suggested that as the best course of action on page 1....
> 
> ...


How is there any conflict?

I max out the overpayments!


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## DublinHead54 (18 Nov 2021)

Gordon Gekko said:


> How is there any conflict?
> 
> I max out the overpayments!



It's a contradiction! You made it so you explain it! 

This is of course after you said it's pedantic to bring costs and penalties into it.


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## Gordon Gekko (18 Nov 2021)

Dublinbay12 said:


> It's a contradiction! You made it so you explain it!
> 
> This is of course after you said it's pedantic to bring costs and penalties into it.


Explain to me how it’s a contradiction…

I invest any surplus over and above the maximum permitted mortgage overpayment.

It would be a contradiction if I wasn’t maximimising the overpayments.

As for your “it’s the first thing you found on Google” point…a) nonsense b) consensus that returns from here may not be as good as they’ve been…hardly contentious


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## DublinHead54 (19 Nov 2021)

Gordon Gekko said:


> Explain to me how it’s a contradiction…
> 
> I invest any surplus over and above the maximum permitted mortgage overpayment.
> 
> ...



Gordon "Do as I say but not as I do" Gekko.

Explain how you haven't contradicted yourself multiple times. I've already explained a few of the instances to you.

It's a bit astounding after you accused me of being pedantic for bringing in the ancillary costs into the discussion because they are immaterial. Then you proceed to use it as your defense for investing in equities.

I'm sure you've spent hours of detailed research, and definitely didn't just Google it today. So please enlighten us as to why you chose Schroeder's opinion? It's interesting you discounted everybody else's research here as "scrolling the internet on the toilet". So please enlighten us to what makes your research better?

After all this back and forth we've finally closed the loop. You are doing what I suggested from page 1 of this forum a balanced approach.

It's also good to see you don't actually live in the abstract unrealistic scenarios you've been posting about and you still invest in Equities whilst carrying a mortgage.

Can't believe it took all these posts to get there.

As Sarenco would say, I hope you get Lucky Gordon.


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## Gordon Gekko (19 Nov 2021)

I genuinely have no idea what your point is. Gas stuff.

My position has been consistent throughout but I’ll spell it out for you one last time:

- Because of tax and Irish mortgage rates, it makes sense to overpay one’s mortgage (unless it’s a low tracker) before investing personal monies. It’s what I believe and what I do personally. Only when I’ve overpaid the maximum allowed amount (i.e. 10%, soon to be 20%) do I invest the surplus in equities

- My own (pretty uncontentious) view is that markets are unlikely to do as well over the next few years as they’ve done over recent years. It’s a popular opinion, and Schroders are simply one of hundreds that I could have chosen. I’m fine with that and remain fully invested through our pension accounts and personal accounts. But I do think that it skews the ‘mortgage/investing’ argument even more in favour of loan overpayments

Simple as that. Tales of ‘Billy down the road who made a million quid punting Tesla and we’re all clowns’ don’t really bother me. I prefer to look at the logic, the maths, and the probabilities.


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## NoRegretsCoyote (19 Nov 2021)

Gordon Gekko said:


> Explain to me how it’s a contradiction…


You are not making an absolute priority of reducing mortgage and are instead using spare cash to pick a basket of equities.

If you think spare cash is unambiguously better spent in reducing mortgage then the breakage fee on your mortgage shouldn't be material here either.

I've no problem with what you are doing. It makes sense in your circumstances and I would probably do the same! But it's hard to square with your position earlier in the thread.


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## Gordon Gekko (19 Nov 2021)

NoRegretsCoyote said:


> You are not making an absolute priority of reducing mortgage and are instead using spare cash to pick a basket of equities.
> 
> If you think spare cash is unambiguously better spent in reducing mortgage then the breakage fee on your mortgage shouldn't be material here either.
> 
> I've no problem with what you are doing. It makes sense in your circumstances and I would probably do the same! But it's hard to square with your position earlier in the thread.


Your point makes no sense given the facts.

- The breakage fees ARE material

- The lowest mortgage rates are only available on fixed rate mortgages with caps on what can be overpaid; I’m seeking out the best one with the most flexibility around overpayment

- Large overpayments are being made

- And the maximum permitted overpayments happen to fit nicely with what I want to do

- And most importantly, if there was no cap on overpayments, I wouldn’t invest, I’d just lob everything at the mortgage


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## DublinHead54 (19 Nov 2021)

Gordon Gekko said:


> I genuinely have no idea what your point is. Gas stuff.
> 
> My position has been consistent throughout but I’ll spell it out for you one last time:
> 
> ...



You realise you've just repeated what I've been saying all along! This is unbelievable!!


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## Gordon Gekko (19 Nov 2021)

Dublinbay12 said:


> You realise you've just repeated what I've been saying all along! This is unbelievable!!


Let’s just leave it at that. I have no idea what you’re saying or what your point is.


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## DublinHead54 (19 Nov 2021)

I'm not disputing your (Shroeders) view on the market it makes entirely logical sense as a forecast. But I'm not sure what the point is? You've provided that as support to not investing in equities over paying down your mortgage yet you are investing equities over paying down your mortgage. 

I'd just like to highlight you've completely dismissed Tesla as a punt but I assume you're aware that Shroeders had a buy rating on Tesla? 


Gordon Gekko said:


> You’re looking at the change in positions rather than the positions.
> 
> Person 1 has €200k of mortgage debt and €200k of investments.
> 
> ...





Gordon Gekko said:


> Ben Graham’s book is legendary, but reading it and then punting Tesla and cryptos is hardly the definition of research.
> 
> The poster got lucky, great, but the hubris to not recognise that is likely to result in tears further down the line.
> 
> There is no shame in admitting to being a spoofer who got lucky in the right place at the right time. Some of the most successful people I know have the self-awareness to do just that.



So you admit you are investing whilst carrying debt? Something you've effectively said is going to lose money


Gordon Gekko said:


> Investing whilst carrying debt is effectively borrowing to invest.




Well Gordon you already said that factoring costs and penalties was too pedantic in this conversation. Now you've flipped your stance


Gordon Gekko said:


> Yes, it’s too pedantic in the context of
> this discussion.


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## DublinHead54 (19 Nov 2021)

Gordon Gekko said:


> Let’s just leave it at that. I have no idea what you’re saying or what your point is.


Absolutely let's leave it, you've more flip flops than a beach shop.


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## Gordon Gekko (19 Nov 2021)

Dublinbay12 said:


> I'm not disputing your (Shroeders) view on the market it makes entirely logical sense as a forecast. But I'm not sure what the point is? You've provided that as support to not investing in equities over paying down your mortgage yet you are investing equities over paying down your mortgage.
> 
> I'd just like to highlight you've completely dismissed Tesla as a punt but I assume you're aware that Shroeders had a buy rating on Tesla?
> 
> ...


This is just nonsense…what you’re arguing or saying makes no sense. I’ve said no such thing. I’ve consistently advocated for favouring mortgage overpayments over personal investing. You’re just showing a total lack of understanding of how the mortgage market works here in Ireland.

You also don’t seem to understand materiality…my break fee is a five figure sum. Whereas legals for a remortgage or stamp duty for an investment are small.


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## Brendan Burgess (19 Nov 2021)

I think that the OP has probably got enough insights so far and the quality of the discussion has deteriorated too much with offensive comments being made.

Brendan


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