QUALITY INVESTMENTS TRUMP EARLY HOME LOAN PAYOFF

Just posting this to get people thinking. Again nothing new here. But this is from a well known Financial Adviser. Not suggesting this is or isn't my view.

Quality investments trump early home loan payoff | Bruce Brammall Financial

PS: Bruce is also a huge fan of index funds from memory:
How did your SMSF perform in FY16? | Bruce Brammall Financial

 

Thanks for sharing

I agree, however results will be dependent on the skill of the investor, what they purchased.

Not all investors make money some actually lose money, or worse get stuck with inferior assets and end up having to pay back bank debt most of their life, a noose around their neck. In this case best to just pay off your home mortgage, stick to the day job and plod along.

MTR

 

@austing - I am curious.
You have mentioned previously that you bought and paid off your own home around age 22 if I remember rightly. Can I ask - when you upgraded your home and got another mortgage (assuming you did need another mortgage) did you invest in shares as well as paying off your home? Or did you stop buying investments and sink money into the new home loan to pay it off again before going back to investments?

 

Upgraded home a number of times. Lost a lot of money in the process. Had it drummed into me by parents that renting is dead money. Whenever we moved to a new city or wanted a change in lifestyle a new PPOR (and new mortgage) was purchased. Trouble is that we thought we would be there a lot longer than usually panned out. So sold at a loss at times due to high transaction costs and only holding for a shorter than expected period. Rinse and repeat that's how stupid I was. Finally woke up and then just decided to rent UNTIL we knew we would definately be in the one location for many years. A few PPORs were kept as IPs.

First home was about the only sensible thing I did with property ownership. It tended to go downhill after that. Thanks to my father helping in part with the loan on first home (paid him back) and having two jobs it was paid off reasonably quickly. It was in the burbs and nothing flash. Purchased the land at 18 then build a house on it at 19 from memory. Property was a bargain at that time through luck with the cycle. Didn't have a clue about investing then. Might have paid the bank loan off quite early but I think I still owed my father money for awhile. Too long ago to remember exactly.

After that I invested in shares / funds whilst still having a mortgage on PPOR and IPs until wife's work prevented share ownership for a decade. During that time it was only IPs.

Believe me much of my earlier life was a disaster Investing wise. For every success I would go out and sabotage it by doing something stupid. But thank Christ I made most of my worst mistakes when I was younger. As for property the only positive thing I could say about it from my efforts was that it was forced savings. Nothing like a pile of debt hanging over your head to keep you focused.

So my life in investing has seen more mistakes than you could imagine. Which I why I post here I suppose. That is, to help prevent others from doing a lot of the stupid things I did.

So another timely warning about my posts. Stupid it seems was my middle name. Perhaps it still is. But somehow we did alright in the end.

Moral of story. If you are going to do stupid things with your money including getting suckered into get rich quick strategies then get it out of your system as early in life as you can whilst there's time to recover. That luxury disappears later in life.

 

I think this whole discussion is very relevant to me as I prepare to invest - despite still having PPOR debt. Trouble is I keep calculating how much faster I could pay off the PPOR if I put the money I am thinking of investing into the mortgage instead.

 

I guess each individual is different in my case I paid off my ppor at 32 I'm 33 now don't like debt and invest using my savings and have lined up a loc against my home yo invest down the track when the market turns sour!

I call it the sleep at nyt test, I have paid off my debts and sleep well at nyt others would like more debt and believe leveraging into shares and more property equals more wealth, yes it could but it could also lead to more stress too.

Debt recycling I guess could be used but each to there own! You have to be comfortable in your strategy! Mine may be slower but I aim to invest around 20 to 25k of my money per year into lic's as well as maxing out pre tax Super savings of 25k per year into Super with an addition 25k of bank savings for the long term to get into a strong position in my early to mid 40's.

Best of luck

 

Definitely consider debt recycling as a strategy.

 

Excellent position to be in at 32. Well done. The future is looking bright for you.

 

Cheers!

All my reading and learning has helped but it all comes down to living within my means and saving which I have been doing for as long as I can remember and I actually don't feel like im living without stuff, I just don't need to spend all my income to be happy!! Savings is the bedrock of wealth!

Will take market returns minus the fees compounded year after year after year any time rather than look for the great new hope or stock promoted and chop and change strategies based on what's new in the stockmarket world!