Sell shares to overpay mortgage?

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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.
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Your situation is probably a better argument for paying down the mortgage to stop you trying it again! :)
 
RedOnion said:
Your situation is probably a better argument for paying down the mortgage to stop you trying it again! :)
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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 :)
 
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.
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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.
 
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.
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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.
 
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.

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.
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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.
 
Dublinbay12 said:
What's your financial goal?

P.s I see your trolling
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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.
 
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%.

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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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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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.
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I meet those conditions. I'd be interested in seeing your thoughts on why I should possibly do an equity release to invest.
 
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.
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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.
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Or have I missed something excellent advice somewhere?
 
Cardano93 said:
Well congratulations Gordon
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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)
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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.
 
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.
 
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.
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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.
 
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.
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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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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.
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Go on then, give us the summary of those investments.......
 
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.
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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.
 
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