# Stock Investing with a Mortgage



## ENP (14 October 2012)

My partner and I have put down a deposit on a mortgage for our first house. We are going to split the mortgage in half so we have the same amount each. 

I've got a stock portfolio around 30k that I can sell some or all of. (I have 10k in cash also)

I'm wondering if I should keep some of the shares and have a bigger deposit, or to pay down and focus everything on getting the debt down asap. 

How has everyone else managed to build a stock portfolio whist paying down the mortgage? Or have you gone down the pay down all debt fast route? Revolving credit perhaps?

I really enjoy researching and investing in stocks and have done well financially thus far, earning a return well in excess of the mortgage rate.


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## ROE (14 October 2012)

ENP said:


> My partner and I have put down a deposit on a mortgage for our first house. We are going to split the mortgage in half so we have the same amount each.
> 
> I've got a stock portfolio around 30k that I can sell some or all of. (I have 10k in cash also)
> 
> ...




If mortgage is at 7% in theory you got to make 10% out of the market to break even money paid into the mortgage....assuming you on 30% tax bracket.

The question only you can answer is can you deliver 10% a year average (dividend and capital gain combined)..
year in year out?

for 10-20K I dont think it makes a difference, if you enjoy the research and the reading invest 20K in the market
even if you cant beat 10% a year probably valuable in term of education itself.

that knowledge can then be very very useful once your mortgage is paid off..by then you have ample knowledge on a lot of business and you can put that spare cash to work from day one...

As for me I nearly paid down the mortgage (95%) before I got involve with the market...


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## VSntchr (16 October 2012)

Excellent advice ROE. I really have nothing to add, but bumping this thread so that more people can see this!


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## Des P (16 October 2012)

VSntchr said:


> Excellent advice ROE. I really have nothing to add, but bumping this thread so that more people can see this!




ENP i like what you are doing, 20 years ago i wanted to get into shares, i had a mortgage it was only 12% of my income but unfortunately my ex needed the extra cash more than i did so now i have started very late in life (50) , any way that is another story, just by reading your post you seem to be a good saver so why not after the monthly cost's if you have the spare cash split it both ways e.g.If you have $500 at the end of the month then $ 250 extra to the mortgage and the rest to your investment portfolio, But remember what Roe has said there is always the Tax burden so your shares need to make that little bit extra if and when you decide to sell
Happy investing
Cheers
Des


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## Bill M (17 October 2012)

ENP said:


> How has everyone else managed to build a stock portfolio whist paying down the mortgage? Or have you gone down the pay down all debt fast route? Revolving credit perhaps?




When my wife and I borrowed for our first house we decided to stop all share investments and pay down the mortgage. As ROE says, you need to be making 10% on stocks to be out in front, we knew this and thought it wasn't worth the risk. In the end we knocked our home loan on the head really fast and then started investing in stocks. I think we made a good decision, good luck.


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## ENP (22 October 2012)

I personally do think I have the skills for earning 10% on shares on an annual basis. Bearing in mind that if I hold them for long term, I'm essentially earning that capital gain return tax free, only my dividends would be taxed. Although I may have to pay tax when I sell. 

It seems revolving/line of credit type mortgages may be the best option, as it wouldn't make much sense having a mortgage at say 7% then, having a savings account to save up for share purchases only earning 4% or so. I only buy shares when I have 3k or more to reduce brokerage and only buy when things meet my criteria, which depending on the market, I may not buy anything for several years, or go on a binge buying spree all at once.


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## moXJO (14 November 2012)

Can you put the money into the mortgage, then borrow the money back out for share investment and claim the interest as a tax deduction?


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## robusta (14 November 2012)

moXJO said:


> Can you put the money into the mortgage, then borrow the money back out for share investment and claim the interest as a tax deduction?




Yep sure can, I do via a line of credit, be aware of the risks however.


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