What to do...pay off mortgage, invest in stocks or...??

koylez said:

I'm in the same situation, bought a house this year, have paid extra into the house and the value of the property has gone up, so have some equity. I've been thinking about implementing debt recycling, where you take out an interest only loan investment loan with your equity as collaterol to buy shares that pay dividends. Your interest only loan is then tax deductible as it is for investment purposes.

During the year, pay any dividends into the home loan, and any extra money you have, put it in the home loan. At the end of the year, increase your interest only loan by the amount extra you paid off during the year. The aim in the end then is to have your home paid off, but be replaced with an interest only loan on shares that have gained in value. Still reading more into it though.

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My approach is a little different.

I put in a fixed amount each week into my investment loan, effecting paying P+I. $250 I think it is at present. I'm comfortable with that commitment, it is what I may have put towards a managed fund or the like. Sort of like 'enforced saving'.

I have availed myself of all DRPs where possible, and any cash dividends go back into the loan. Not all my shares pay dividends anyway.

As the loan goes down and some money frees up (line of credit), I acquire more shares.

Hi Navtek

Paying off personal debt is always a good plan. The fact that you have a good job and have the ability to make your mortgage payments comfortably puts you in a position to invest.

Have you thought of borrowing to buy bluechip shares such as banks or gold and renting them out via call or put options on a monthly basis to derive income?

Cheers
Happytrader

paying off as much of the mortgage at this stage of your life is sound advice.

but dont let that discourage you from making some level of investment, even just to get your feet wet.

pick a small % of your annual income you can afford to live without, and find 1 or 2 stocks that, irrespective of what others say, are of interest to you and therefore wont be a chore to investigate, analyse etc.......may be its shares in your employer, a competitor, something you have good sound knowledge of.
THEN come back to this forum to see what consensus is on the quality of that stock - that doesnt mean they are right, but just to get a feel.

then take that first plunge - sign up with one of those online brokers that offers trades for around $30 or less, plenty of free research etc.
once youve committed, dont immerse yourself in the day to day movements, maybe just weekly check the saturday share listings to see how they are going.

then comes the fun bit.......currently the market is being spooked - and plenty of folk dont know which way to go - invest heavily now cos the bottom is here, or sell everything and run for the hills......

in your case, do nothing, except do some reading to understand why its going up or down and wait......and when EVERYONE agrees the share market sux and its no place to make money, thats the perfect time to jump in harder.