What to do with Money?

B

bigbd

Guest
Hello everyone,
Got a question which i could do with a little bit of friendly advice on. Ive got cash in my bank account at the moment which i am in 6 different minds as what to do with it.
Here is my story, Im 27 and have come into a nice bit of money. I recently sold my old house and bought another house and made a very handsome profit on it after i put my 10% off my new mortgage. In terms of work between my wife and myself we are making good money so i am quite comfortable with my mortgage as it stands but am wondering should i take all this money and bang it off my mortgage r should i invest. Ive been looking at properties home and abroad(to buy and to leaseback) but from reading on here i am a bit weary of these type of properties, I may be wrong and any other ideas would be welcome. My mortgage is just over 400k and i have just over 200k in my account clear of all taxes. Im married with 1 child and my initial idea was to buy a house for our child and rent it out or to buy something foreign and maybe put half off my mortgage and keep up repayments.
Would love your help and any possible advice you guys could give me.
 
Congrats you're doing very well for your age. Most people don't even have a mortgage at that age.

You seem a bit property focused. Maybe you should consider shares/funds/trackers too. Is this the best time to be sinking more into property? It sounds like you don't have that much equity in your PPR so banging a bit off it and keeping some as a cash contingency fund might be worth it.

If you don't have a pension yet now would be a good time to start one as the earlier you build up a decent fund the less will need to be put in later. There are very favourable tax rules for pension contributions.

With that much cash to play with I'd spread it around several things to balance out your risk.
 
Thanks General. I now bout the current climate with property but just taught why not pay it off and get mortgage out of the way but am starting to go away from that idea as i can afford my mortgage as is and if there is a way for me to use that money to make me money i would be willing to do it. The only reason i was thinking of another home here was purely to rent it out and hopefully see it appreciate over time. Dont now to much bout shares.
 
Paying off the mortgage is not a bad idea by any means. You'll see real benefit with reduced term or reduced payments. With semi-decent deposit accounts (Northern Rock) out there now you could equal/almost equal this and still have access to the cash. Personally given the choice between those two options only I'd repay the mortgage.

There's a real peace of mind dividend to paying off the mortgage that should be factored into the decision.

Lot's of people don't know about buying shares, but you don't have to risk it all. You could start dabbling with it, more to build up experience and knowledge until you feel comfortable with it.
 
Congrats on being so financially sound and also being very level headed about it. My thoughts would be would you consider clearing down your Mortgage within an acceptable level so that you continue to make use of the Mortgage Interest Relief that you receive as a married couple and also as GeneralZod said there is great comfort in knowing your mortgage is almost gone. In relation to buying a second property for your child it is one thing I aspired to do but then as the law of nature works along comes child number 2 which completely puts everything on the back burner as you can't realistically aim towards providing a home for each of your children and if you can well done to you. If I was in your position I would clear almost all of it off of my mortage, keep some aside for a rainy day and then perhaps look at investing what is currently your mortgage repayments into one of the many High Interest Accounts etc. already recommended on AAM recently, that way if the property market does fall you have some savings together to consider buying a second property then.
 
My advice:
1. Keep a rainy day fund
2. Maximise your pension contributions for 2006 assuming this is not already done (15% of relevant earnings)
3. Pay the rest off the mortgage

Reasons:
1 - Everyone should have this anyway
2 - You'll get tax back on this, plus at your age this money will have plenty of time to grow
3 - A question you should ask yourself here is if you owed 200k on your mortgage, would you borrow another 200k to invest in other things? By not paying this off, this is effectively what you are doing.
 
Fully understand your point Lex. Ive got a rainy day fund in a seperste deposit account which is enough to cover me over for a while should i have any problems.
My problem is do i settle for the 4.5% r whatever d exact amount is that i would get from paying off my mortgage r should i look to make a decent investment while im in a sound financial position..
 
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