Time to Stop Investing And Pay Off Your Mortgage?

Is it time to stop investing and pay off your mortgage? By the end of this video, you should have your answer.

To answer this question you need to know?

What are stocks, and other investments, likely to return in the future?
What are the risks you have to take to get those returns?
Are you comfortable with that risk?

Aswath Damodaran

Financial Planning

DISCLAIMER:
This channel is for education purposes only and does not constitute financial advice. Any opinions or assessments expressed are James’ own opinions or assessments, which are not affiliated with any third party. Any representations stated as facts or views based on such facts are relevant to circumstances applicable at the time of publication. This information should never be relied solely upon to make decisions, and James accepts no liability for any investment actions undertaken by viewers. Please seek regulated financial advice or an advisor if you require assistance. The value of an investment and the income from it can go down as well as up and investors may not get back the amount invested.

0:00 Two Strategies to Pay Off Your Mortgage
2:44 Video Aims
2:58 Understanding Risk
5:04 A Thought Experiment
6:48 Expected Returns of Corporate Bonds
8:44 Inflation Expectations
10:23 Expected Returns of Stocks
12:59 How Demand for Risk Affects Expected Returns
14:37 Evidence of Higher Expect Returns
15:16 How to Calculate Expect Returns on Stocks
18:44 How To Use This Data to Decide on Mortgages

DISCLAIMER:
This channel is for education purposes only and does not constitute financial advice - James is not responsible for investment actions taken by viewers. Please seek out a regulated advisor if you require assistance (whilst James is a financial adviser, he does not provide advice through this Youtube Channel, which is not affiliated with his employer).

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Copyright © James Shackell 2022. All rights reserved.
The author asserts their moral right under the Copyright, Designs and Patents Act 1988 to be identified as the author of this channel and any video published on it.

[jonathanhowson]

What sort of lunatics are taking money out of equities at the moment? Everything is on sale. If you can, keep consistently investing every month no matter if the market is up or down. Do it as soon as you get paid, so you dont even notice you had that money. It will be a massive reward to your future self.

[Geometric-Rate]

One of the best financial channels. Breaks it down nice and easy with the aid of nice graphics

[tradingspaceship]

What a perfect video. this must be shown in school

[mattabouttrails]

I've been activly doing both for a few years now. Over paying on the mortgage each year up to the 5% threshold and consistently buying global based index funds on a dollar cost average strategy. It's kind of a conservative approach with an aggressive long term view. I really dislike having the debt aspect of a mortgage. I've got about 4 years left untill the mortgage is fully paid and hopfully wont need to touch the index fund portfolio for about another 20 years.. Theres some great info on your site James, thanks..

[minimad]

very well produced James. I currently have 1.63% mortgage rate which runs for 4 years so investing for the most part. I do have the niggle of overpaying a smaller amount as emotions always kick in seeing the balance fall quicker than normal. Just me but maybe others on here are the same. Thanks for the tutorial and I may have to watch it a few times to understand the bond yields :)

[jameslong]

Thanks James, another really helpful and informative video!

[juliettan]

Love your videos. I just wish they would be more often. You inspired me to look into investing. This year, I have cash ISA, but I wanted to try S&S one next year. However, I also thought about opening junior s&s isa this year for my kids, but I'm not sure if this is a good idea. Don't remember seeing a video on this. Does it make sense to open it? I'm not sure I like the idea of them having access to it when they turn 18, when I'd prefer to have some control over it to keep it for a very long investment.

[RobCLynch]

If i sold my equities to pay off my mortgage, i would be selling years of compound interest and an average annual return of 11.4% since 2005. Two of my trackers are currently running at 44% in the green and my global technology is 144% up over the last five years. My mortgage can wait.

[rodgerq]

I'm facing this conundrum just now. I'm split right down the middle on it as well. The attraction of future returns on investment is obviously strong but I'm also the guy who likes peace of mind. I think having the weight of a mortgage payment off my mind would be quite excellent. I'll probably just do a bit of both in reality. Steady investment, probably into a sipp, and then random lump sum injections into the mortgage when I can refrain from using the money to book a holiday 😅

[philipmumford]

This video is a superb lesson in investments, particularly bonds.

[JamesShack]

What are you thinking? Has this video changed your mind?

[martinhammett]

If you use ground blast furnace slag you can reduce the amount of cement you need to use in concrete by up to 60% We used to use a lot more until Heidelberg a German company shut two of the plants that produced it (in the uk at Llanwern & Teesport )& started importing excess cement production from Germany into the uk !

[marcinmadrala]

You should add that people on old low interest mortgages will be better off putting them into savings account for minimum risk. Start repaying after fixed term finishes and new fixed is much higher.

[davidwarwick]

Excellent as always. Your videos should be part of a high school curriculum.

[MultiOutdoorman]

So in other words investing at a low return rate should be swapped for using that money to eliminate your borrowing which is at a high rate ?
Many years ago grandad applied (via a branch interview) to his bank for a large, fixed, super-low-rate loan ... the bank manager asked him "why ? (as he had thousands in his accounts) ".
He replied " The loan interest is so low that i want to borrow more to invest it back at a higher rate, and make some more money doing so !"
The banker authorised the loan.

[richardturner]

Hi James,
When a close family member dies and leaves a considerable sum of money,
do you only pay Tax on parts of an estate...or is everything put together in cost terms...then you pay Tax on everything over £325k ?
Assuming it's around £550k

[Jeffybonbon]

Pay off your home quick as you need a place to live after that pay into index tracker funds use Pension and ISA

[darrenmonaghan]

Have to say if you're young now is the time to increase your pension contributions. Any increase will pay you off in the long term. Also if you can direct any bonus or some of it to your pension also it might be the time to think about that

[tinanolan]

I used the 2 years plus of this planned shit show to throw the best part of my salary at my mortgage, paid off last July ten years early. Zero regret.

[Creophilia]

Available bonds for me yields 3-5%, global index fund yields around 14%, tech funds have yielded 20-25%. This is yearly for the last 7 years.

Inflation has been 4-5%. So bonds have never been an alternative here.