I take the point about maximising mortgage payments (we plan on purchasing a home next year) - this is interesting, I will discuss this with my wife.
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Hi tvman
I am repeatedly astonished by this point of view.
How can it make sense to save for 18 years at 1% , while borrowing at 4.5%?
You could justify it over a very short term e.g. within a couple of years of your kids starting college.
You could argue that it was worth borrowing at 4.5% to invest in shares, although most people would consider that far too risky.
Ask yourself this simple question: "Would I go to the loans desk in AIB and take out €100,000 in cash at4.5%, and then move across the floor of the bank and put it back on deposit at 1%?"
People do it in Credit Unions all the time, because of this bizarre notion that they like to have "savings" even if those savings are pledged in full against the loan.
Child is 2 years old so I have approx 16 years to save for his college education. I estimate this will require a fund of approx €30,000.
After all costs and taxes? It's certainly possible but it's definitely not a sure thing that your investment will outperform the mortgage cost over 15 years.I invested it for 15 years then hopefully it would earn more than I would save by knocking the 10k off my mortgage
I would assume a 5% return on average from my investment
If it's simplicity you want, pay down your mortgage. It's a tax-free return.
Hi Gordon
So you are assuming a 13% return after costs and before tax on the equites fund?
Have I done the maths right? I am assuming 1% net on the deposits which might also be optimistic.
=(60%*0.6*13%) +(40%*1%)
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