It does indeed.It all comes down to risk and reward
You’re just showing that you’ve no concept of risk, risk-adjusted returns, or risk/reward.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
But paying off a mortgage has a similar compounding effect…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
Looks like some of the posters here would also begrudge a successful entrepreneur - obviously that success was because they were lucky
Ah, our old friend pendantry.
“effectively”
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.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.
Oh I see…so mortgages and debt don’t compound?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
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.
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”…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.
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.Using moderate returns based on S&P 500 historical data, investment beats mortgage overpayment considerably.
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.
Yes, it’s too pedantic in the context ofSo when considering to switch mortgage rate, I shouldn't factor in the costs associated? That is too pedantic?
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”…
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…
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.
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.
Since we're going back to your advice to me...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)
€400,000 initial investment would be €1.55 Million after €20 years. Net amount after CGT would be €1.2 Million give or take a few quid.
Repayments for 400k over period would be €2015 per month. If you did not refinance and simply DCA'd into equities with a monthly amount of €2015 this would build up to €1.05M. This would be €863k after CGT
Lump sum investment would yield €337k net profit more".
Is €337k not considerable in your opinion??
Where do I start?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)
€400,000 initial investment would be €1.55 Million after €20 years. Net amount after CGT would be €1.2 Million give or take a few quid.
Repayments for 400k over period would be €2015 per month. If you did not refinance and simply DCA'd into equities with a monthly amount of €2015 this would build up to €1.05M. This would be €863k after CGT
Lump sum investment would yield €337k net profit more".
Is €337k not considerable in your opinion??
You have continually overpaid your mortgage rather than invest and you still actually have a mortgage? Yes, smart move indeed Gordon Gekko, setting the world on fire I see. Your name sake would have been sacked for that.
I never claimed that it was ‘exactly’ the same…that’s why I repeatedly used the term effectively.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.
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?
Yes because calling out confirmation bias and the issue of relying on historical performance to infer future performance makes me wedded to recent memory.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.
A British & Irish ‘Lion’? Brendan M, is that you?A Lion doesn’t concern itself with the opinion of sheep