Latest / The Curve / RTC110: Pay off the mortgage or invest? Part Two.

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RTC110: Pay off the mortgage or invest? Part Two. · The Curve

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Are you thinking of making a move in Aotearoa, whether you are buying, renting or just dreaming
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of your next home, trade me property is where 9 out of 10 Kiwi that is 90% search for
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property, plus you can get the low down and the latest property market trends, housing
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information and insights for every step of your property journey.
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Welcome to Raising the Curve, a podcast designed to teach you everything you need to know
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to be better with your money.
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In the wise words of Amy Schumer, we're slipping carrots into the brownie recipe.
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I don't really get the saying.
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It's kind of like eating vegetables that actually taste good.
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You know, I'm like, still not wearing it.
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Are you on the script?
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It's basically like saying, investing in finance can be boring as, but it totally doesn't
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need to be.
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Okay.
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Okay.
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So we're making it fun by putting the carrot.
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Okay.
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The vegetables are good for you.
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It's the brownie recipe.
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Okay.
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Okay.
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Okay.
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We've really got a finance rate.
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Yeah.
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One of us has to.
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This is a show.
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Okay.
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Come and learn alongside me from Vick Harris, ex-fun manager, where I'm going to ask all the
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questions that you wish you could, and I'm going to be eating all the brownie you wish
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you could.
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No.
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It's so not the joke, Vick.
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Okay.
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Just come and talk and learn and laugh with us, because together we really can raise the
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curve.
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We're back.
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Round two.
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Round two.
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Round two.
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You need to not look at me at the start of a podcast as if I'm the one that always should
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talk first.
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I think you've got, you know, just as much interesting things to say.
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Thank you.
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Thank you, sir.
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It's really nice of you.
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Anytime.
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Maybe we should start with just a compliment for one other.
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Well, you were meant to start hugging at the start of each part of our room, that was
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going to be our ritual.
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And it got a weird.
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It did just get a bit weird, didn't it?
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Yeah.
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We were going to hug just to be like, especially when you've got like audio engineers in
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the room and you're standing there.
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Would you feel uncomfortable with that if we just came in and start hugging?
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No.
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Yeah.
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No.
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Good to know.
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No, I think we just got to the point where we're like, okay, come on, hurry up.
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Yep.
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Quick.
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We've only got an hour yet.
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Yeah.
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So anyway, we should.
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So today we are talking about properties and housing and continuing on from the previous
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episode.
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So we haven't listened to that.
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Maybe go back and go back.
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Yeah.
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Otherwise it's probably what makes sense.
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Yeah.
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But this is kind of a part two, isn't it?
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Well, the whole point was because we sort of rambled in part one.
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Yeah.
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And we got.
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We got.
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We immediately.
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We actually have just recorded a podcast with our dads, bless their souls.
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And we came away from it.
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And we were like, God they stutter a lot, don't they?
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In between the words, the thing you start to notice actually you do it.
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I was like, God, they get angry.
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And everyone has that.
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And people just are.
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Workisms.
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I think because when you talk and when you're thinking, doing both at the same time, when
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someone is recording what you're saying, it's so different to just rambling on the phone
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to somebody.
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the best advice and it was like you should be listening to every word that comes out
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of your mouth. You mean someone gave you the best advice or you had the best advice?
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I had been given the best advice. Yes. Okay. Is that you should listen to every word that
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comes out of your mouth? Don't do that. Sounds real robotic actually. But I was listening
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to every word that comes out of my mouth. Yeah, I wouldn't listen to you. But in terms
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of how fast you should speak. Again, like I'm not sure. I think you could have a big
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for forgiveness from being like, you know, just ramble. But we just we've had coffee and
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we're a bit like go go go. But would you listen to podcasts at like 1.5 speed or do you
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listen it normal? I listen to your voice memo. I know because now my voice memos are the most
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the time wasting. She's just a shit. I forgot what I was going to say. Oh my god, how are
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you? Someone walks past. So I just listened to them at 1.5. And then I forget everyone
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else's are now 1.5. And other people talk a lot faster than you. And so they literally
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talk about it. And yeah, but it's due to all the problem is now that I know you listen
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in one and a half speed. I feel the pressure when I'm recording it. So but hi, we're doing
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this and them and it's like makes me stumble and feel more stressed. I had a meeting this
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morning and I told you about this and with a guy who he had about four coffees in this
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place of 45 minutes. He did with you there. And he spoke so fast to the point. I came
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away from meeting exhausted because I felt like I had to speak fast because he was speaking
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fast. And yeah, I came away. Do I do that in person? Oh no. Yeah. Okay. So we have been
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talking about whether you should be investing or paying off your mortgage and we've kind
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of gone through the scenarios of if you are early on in your mortgage, you should probably
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be paying off your mortgage or prioritizing paying off your mortgage rather than investing.
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And that is because you have a larger amount to pay off there for more interest to pay
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off. Yes. Yeah. So I guess if we're running through, if we're in the camp of I want to
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pay off my mortgage early, I don't want to invest. I want to put all my money into paying
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off a mortgage. The pros of that, I yes, you'll save on interest because you'll be paying
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your mortgage off more quickly. You'll be debt free. So you'll be paying your picker.
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Yes. Yep. Because you'll be paying your principal off. So the actual dollar amount of
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your loan, you'll be paying that off. And then eventually you'll be debt free. You can then
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leverage your equity. Yes. So that means that you could borrow more. And we spoke about that,
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but making sure that you do it appropriately, you don't just borrow more willy nilly and invest
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in something stupid. Can we pause on one second because this bit still kind of confuses me.
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Why would you put money into a house if you're just going to borrow that money back again?
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So for example, if I was paying my mortgage off and I was giving $100 a week,
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then I was like, cool, I've paid so much now. I'm actually going to take that all back again.
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Like what's the point of that? So I did exactly that. Right. I had nearly a million dollar mortgage,
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paid some of it back over a couple of years. And then I was like, oh, you know what, I want to
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renovate, but I don't have the money to do it. So I'm going to go to the bank and say, hey,
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can I actually have that money back that I just paid you effectively that I paid off of my mortgage,
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which was a couple hundred thousand. Can I be borrow that back again? So
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say for argument, say I went from a million dollar mortgage to a $800,000 mortgage,
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then I borrowed $200,000 and we back up to a million dollar mortgage and I used that $200,000
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to renovate my house. But why would you just use that $200,000 to renovate in the first place?
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Because I don't know that I wanted to. I'm paying off my mortgage.
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Is that just bad planning? No, because you never know what's going to happen. I might have sold it
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and then bought something else. I don't know that I want to renovate.
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But do you know what I mean? I'm kind of like, you almost usually would be putting that money
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into an investment then or into a savings account where I wasn't getting as high return.
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If I'm paying off my debt, I'm effectively saving myself having to pay interest.
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Right. Yeah, yeah, yeah, yeah, yeah. I'm paying down the principle and the interest.
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Because they let them all pay down. But does your interest thing go back up again if you
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were to then pull out? Yeah, yeah. Because the amount that you're borrowing has gone up.
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But if you're paying for renovating your house, you're adding value to your house. You might be
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adding a bathroom and you might be adding a garage. You might be adding a pool, whatever.
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So therefore, when you come to sell your house, five, 10 years later, it's worth more.
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So the bank's a very accommodating when it comes to lending for renovations.
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Because it's adding value to selling it there technically.
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They're not going to be accommodating if you're borrowing more money to go on holiday.
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Okay. So basically, the key things and why it's great to pay a mortgage off quickly
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is that you'll save your save on interest. You'll be debt-free sooner. You can then
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leverage equity. So we're just talking about with borrowing to renovate, for example.
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And you're free up funds going forward. So you'll have more disposable income to spend on what
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you want because you would have paid off your mortgage. Honestly, it's one of those things.
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I imagine people listening who have a house who are already paying off their mortgage,
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and they kind of understand it. To me, it feels like we're stepping into a whole
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other realm of education, similarly to when we started talking about stocks and stock market.
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It's a lot too. We took a while to really grasp the concepts. I don't know if people listening
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are like, oh my god, Sophie can't keep up. This is really frustrating to listen to.
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I definitely am not like, you explain it once and I fully get it.
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No, that's good though. The previous episode about if you don't understand something.
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I know it's frustrating because it's like when you say it, I know I think Shell look back on
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this and be like, oh, it's easy and I get it. It doesn't really make sense to me why you would
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pay something off and then get the money back again. I know you don't have to explain it.
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You don't have to. I'm saying that's some people's option to basically get it. It's like if I had
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a mortgage and it was $100,000 for argument sake and I'm going to pay a certain amount each month
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and it's going to take me 10 years to pay it off and then 10 years, I'm going to be debt free.
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I'm like, woohoo, when I'm 45, I'm going to be debt free and I'm going to own my house.
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Amazing, amazing, amazing. If I was like, you know what, I want to do it by the time of 40.
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I'm going to scrimp and save and not go out and everything's going to go towards paying off my
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mortgage because I want to be debt free by the time I'm 40. Then I could do that or I could be like,
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you know what, I kind of want to invest a little bit as well. I'm actually not going to pay it off
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until I'm 50. So I'm going to pay even less each month. So you can kind of manipulate how much
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or how little you want to pay off. Use the bank has minimums that you have to pay. It's kind of
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like with your investments. You can be like, you know what, I want a really, really good retirement.
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I'm going to put away so much. I'm not going to go out with friends. I'm not going to go on holiday.
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I am going to prioritize my future and put away as much as I can because I know that I'm going to
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know the benefits of that in the long term. Or you could be like, you know what, I'm young. I don't
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have children. I'm going to spend that money now and I'm going to worry about that down the track.
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And I know you're frustrated when I say it's personal preference, but it totally is. If for you,
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your family's always been in debt. You've always had a mortgage. You've moved or you've moved
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from rental to rental and you've never actually had your own stability or own home.
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owning your own house and being debt free might be your sole priority because for you, that is
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that's the only thing that matters is owning your own home and having that ownership
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and having a place that you know will always be yours. So it does really depend on what
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you're prioritizing in life. And that's why everyone will be so different because some people might
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want to diversify as well. They might want to be like, you know, I don't want all my money tied up
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in a house and all my money going towards that asset because I don't know what's going to happen
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in the property market or I don't know it. And so they might think I'm going to put some aside
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for investing as well as paying off my mortgage because I'm fortunate enough that I can do both.
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A lot of people right now can probably only do one which is pay their mortgage. It's definitely
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the camp. I'm putting towards my investments is very, very small. So I guess the cons of paying
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off your mortgage is that it could cut into your savings because if you're really, really focused
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on paying your mortgage instead of increasing your savings or increasing your investments,
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you're putting all that money in towards paying off your mortgage. But you can then take it out
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again, can't you? Like we just talked about in terms of if you decide actually I need that money
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because I want to renovate. But you have to tell the bank, you can't just... It's not just the
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thing you'll be in your bank camp. It's very much a, you have to say to the bank, this is what I'm
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planning to do, this is how I'm going to increase the value of the house. So you've given that money
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back to the bank effectively. So it's not yours, yours anymore. Yeah, rather than putting it aside
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in an investment in your, in your name, where you've got access to it if you wanted or in a
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emergency fund. You pay someone back. It's like, yeah, someone buys you tickets and then you pay them
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that. You can't just be like, give me the money back. Oh, yeah, yeah, yeah. It's like your parents.
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It's like, yeah, yeah, yeah. Them giving you a loan and then you pay it back and then you're like,
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actually, can I have that money? And they're like, what for? Yeah, you're like, oh,
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getting it. Yeah, actually, I don't know. Yeah. So we're like, no, no, I want to see what you're
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re-borrowing for. So yeah. And another con is that, oh my god, sorry, the con of paying back your
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mortgage earlier. Yeah. Is that, yes, there's that lack of diversification. So because lots of
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your money's in the property market opposed to other areas. And you're focused on paying off that
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one asset. You're not diversifying something like happen to the property market or it might not do
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as well as investing. And you've made that choice. So yeah. And you also might have to pay
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what we call prepayment penalties. So this is when the bank has lent you a certain amount
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for a certain period of time. And if you're like, oh, I just got a bonus or I just got my tax back
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and can I give you some money back now? They're like, no, no, you you signed up to borrow this amount
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for this period of time. Why? Because they want the interest. Yeah. Because they want the interest.
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And they've got, yeah. So there might be some banks you can, you didn't just have to be aware of.
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So don't think, okay, cool. I've got a huge chunk of money. I'm going to pay off my mortgage
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because you might. What's a prepayment penalty? Like how much would they charge you?
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I don't know. There's depends different banks, but sometimes you can't at all. Others you pay a fee.
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Others are like, no, don't worry about it. So it's kind of when you set up your mortgage and your
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mortgage advisor will go to this with you. If you are in a job where you get paid commission or
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you get paid bonuses, they'll tend to say, okay, maybe half of your mortgage you structure that
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you have that flexibility to pay it off. So you just need to know what timeline you're working with
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and not go above that. Would they warn you? So say you were to go and put a lump sum on your
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property and try and pay back some of your mortgage and then you got a $10,000 penalty. Would they
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be like, hey, just so you know, you're going to lose 10 grand on us. Would you have to just know it?
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No, no. So you would structure your mortgage. So say you had a $100,000 mortgage,
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you'd structure it so that $50,000 wasn't you didn't get a penalty. So you could pay that off.
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Yeah. You could say, say you got a $20,000 bonus. You could put that towards that $50,000.
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And then there's other $50,000. You'd just keep chipping away at in terms of paying the interest
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and the principle that you have set it up with. So the full amount doesn't have to have the same
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rules and regulations of that makes sense. We still have time out. Time out. Yeah.
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Yeah. Now we're moving on to, can you give me, I need something just for a moment.
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You know, like, tell me if I'm sorry. We're moving on to maybe sing side. Okay.
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Okay. Give some fun examples in there. So yes. So if you're in the camp of, you know,
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what I don't want to pair with my mortgage early, I want to invest, I want to invest the money.
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Yeah. Then again, the same is kind of true. It's like interest builds up over time. So the more
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you can invest early on, we've talked about this. Oh, compound interest is kind of like the hoggy
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stick on the other side. So you've got heaps of interest on one side for your house.
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But the longer you can be investing in the stock market, the bigger your returns in the long run.
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So yeah, yeah. Okay. Yeah. So that's why if you're like, oh, you know what, I'm going to leave
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investing too later until I've paid off my mortgage, you're kind of missing out on those compounding
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returns. I'm kind of on team diversify. Like do do your property and do the stock market.
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Interesting. Why? No, I'm probably more camp pay off your mortgage. Yeah. Just, you know how much
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I've like a boring conservative person. I'm just, I would love to ring that debt free bill and
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be like, I now own my house mortgage free. I just think that would be so liberating. But yes,
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I do a little bit of investing, obviously. I would like you to explain why if you're so scared,
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not scared, but you're quite conservative when it comes to debt and risk taking or decisions
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making or whatever. Why did you then leverage your current house for another one? Doesn't that
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isn't that like what the hell am I doing? Because I remember when we were away, when we were in
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London and you were talking about making the decision and it was dressing you out and you were
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definitely like a bit not on edge, but it was like it was a massive decision, obviously.
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Why did you choose to do that and instead of invest that money in stocks? I couldn't borrow
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against my house for business stock market. So I can't go to the bank and say, hey, can I draw
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down 200 grand to go and invest in the stock market? They'd be like, hell no. But I'm also a kind of,
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I think, and I've psychoanalyzed myself. I think I'm kind of a, it freaks me out when I do it,
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but I'm like, I know I'll figure out. You come round to the risk. It's okay, it's okay.
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I just feel like everything will work. You need a bit of a time to freak out, get used to the idea.
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I need a bit of a freak out and then I'm fine. I reckon that's similar for the way you work with
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lots of things, whether it's like changing plans on something or an idea for the curve,
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you're like, no, but then two months later if the same idea comes up again, you're like,
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that's a gratitude. I sort of see that eight weeks ago. I feel like my dad's like that too,
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actually. I'm like, Dad, can you help me? He's like, well, no, it can't be done. No, and then
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I'll call back and be like, I figured out a way. I just think I need all the facts. I need to
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understand and I need to like, I'm okay with taking a risk. If it's, if I understand it and I'm,
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yeah, I've done my research. And I think that's just been me forever. I'm okay making a big
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investment with clients money or with my own money. As long as I've got the facts, boxes,
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dotted the eyes and crossed the teeth and all of that. And then I'm like, okay, cool. So if someone's
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like, we should do that. So I'm like, oh, no, no, no, no, and then I go away. I'm like, oh,
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actually, yeah, yeah, yeah. Now that I understand, I've got the facts. I'm all in. So I need to drop bombs
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and then walk away. Maybe, sorry, I shouldn't have really used that word, but I need to come up with a
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bit. If I come up with a big idea, I need to plan that it's going to take you about six weeks
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to get on board. And then I'm like, you know, or just be like, or come with a bit more of like a
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background research thesis being like, hey, so I've looked at all the options. I've done a bit of,
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yeah, yeah, yeah, yeah. I'll probably still be like, no, no, no, I need to build that myself.
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Yeah, that's coming. No, yes. So if you're in the investing camp, I don't want to pay off my
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mortgage. I want to invest some of the pros with that camp is that, yes, you could see a higher return.
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So we know that the stock market over the long term delivers about 10% return per year.
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Because it is inherently a more risky asset that you invest in. So when we talk about risk,
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we mean the movement up and down. So if something, if the price of something moves up and down a
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lot, that's more risky. Cash in the bank, the price of it doesn't really change. It's not risky.
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So whereas stocks, you never know what they're going to do each day, but over the long term,
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which I'm meeting like 10 plus years, we know that they're going to deliver about 10% return per year.
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So you could potentially earn a higher return. There is potential there to earn a higher return.
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Potential being the key word she's willing to highlight. Potential potential. Yes.
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I know another one. Yeah. liquidity. It's easier to sell a stock than it is to sell a property.
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Yeah, definitely. So if you're like shitballs, I've put too much money into my house or into the stock
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market, you can take that money out of stocks, but you can't probably really go to the bank and be like,
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oopsies. Yeah. Can you give some of that back? It's much easier to go to your
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investments and sell something. You don't have to stock markets down or you don't. But you
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should be honest knowing myself and how like I do make decisions kind of without thinking
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them through. Maybe a house is better. Maybe helpful. No, it's going to say maybe stocks because
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I over invest and then I run out. Yeah. That's my problem. Yeah. Whereas, which,
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I mean, there's pluses, there's plus and minus with both. If you're paying off your mortgage.
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I guess I cause I can't get it back. That's the fact that it's gone and you just find it
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out. Find somewhere else. Yeah. Whereas some people might be investing and they'd be like,
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oh, actually, that money to go on a holiday, I'll just dip into it. It's like, no, no, no, no.
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That's what I mean. That's what I need to not be doing. Yeah. But I mean, if you got into
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really dire situation and you needed your investments, you could then sell them and use that. So
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there is the liquidity is definitely a probe in terms of investing over paying off your mortgage.
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I want to try again. Can I try a guess another one? Yeah.
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Can I have a clue? You're increasing your future wealth? Oh, yes. Yes. Because of compound
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interest. Yeah. Because on the other side, if you can leave it in for a long period of time,
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the amount you'll make would probably be more than whatever your interest is that you're paying off.
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Yeah. Yeah. So if you're prioritising paying off your mortgage,
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you're making a sacrifice from your retirement savings from your 20-year holiday.
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So then doesn't it just make no sense to do that? Well, because like, at the end of at the end of
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the day, all you're really worried about is having more money in retirement. I guess I wish I had
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a diagram. I don't like house right now. I'm Sally. Hi, I'm Sally. I have a house. I've just got
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a house. It's a million dollar property. Okay. I've got a million dollar property, seven percent
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interest. I have a thousand dollars coming into my bank account every week that I can choose whether
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I put that straight towards my million dollar mortgage with seven percent interest or into the
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stock market. Yeah. What do I need to think about? You need to think about, okay, you have a million
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dollar mortgage. Yeah. Thousand dollars a week is hardly going to go far in terms of paying off your
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interest. Yeah. So you'd be forced to put all that onto your mortgage. You wouldn't have anything
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like that. Oh, because because the mortgage rate is so high. Yeah. Okay. Okay. That's about
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example then. So I've got five thousand coming into my account, seven percent interest, million
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dollar mortgage. Yeah. How do I divide that up? So if you're like, look, I'm going to pay the minimum,
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I'm going to pay the minimum amount of my mortgage and then I'm going to invest the rest. I think
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that's what I would do. Okay. Awesome. Sonnet. We got that. No, but I'm just giving you the pros and
21:56
cons of putting that extra money. That extra money. And instead of putting that on your mortgage,
22:02
you've decided to invest that. Yeah. There's no guaranteed return on the extra money. Yeah. Okay.
22:07
Yeah. So it's just whether or not you can deal with the risk of that. Yeah. Yeah. You could lose
22:10
money on that. Or you could not, I can't talk. I'm very busy. She keeps calling and it's stressing me
22:14
out. So you may say, I know me. So it's a lie. I'm really fired up here. I know. Oh, okay. I know
22:22
you just want an art. So without audio engineers like fuck hurry up. This is so. No, but I know
22:26
you just want an answer. And that, but this is what I mean. And this is we always talk about how
22:31
we are being compassionate because we've run some different financial situation.
22:35
You've all of that. Let's just say you did. Yeah. We just need to realise everyone is in a different
22:40
boat. There is thousands of different boats that people are in. Yeah. When it comes to this. So
22:47
there's not going to be a black and white answer. But most people want to be in the boat that's
22:50
heading towards the hill with the most money at the top. Okay. And I don't know what that is.
22:55
Oh. Oh, and you don't because you don't know what the stock market's going to do. I don't know
23:00
what the stock market's going to do. Yeah. I don't know what your preference is for risk either.
23:04
I'm not going to be like, yes, and vessel on the stock market. And then you are literally
23:08
oh, I'm reading between the lines here. Okay. I can't sleep at night. Okay. So the reading between
23:13
the lines for this is probably it makes more sense if you're wanting to go to the hill with the
23:19
most money to do what you need to to pay back your mortgage. Yeah. Plus also invest in the stock
23:25
market because you're kind of going both directions in terms of paying off your house. But then also
23:31
you're going to get long term compound interest on your stock market investments. However,
23:36
there is no guarantee on the stock market. So if you're putting that money there and someone's
23:41
like Victoria told me to put the money in the stock market and then it doesn't actually go up.
23:45
You're like, well, that's never guaranteed. So it's the idea of if you're willing to look at
23:50
stats and figures and past returns in the stock market and you can trust that enough knowing that
23:57
it's really nothing is ever guaranteed whether it's property or stocks. So it's just your own
24:02
level of like what you feel comfortable with. Yes, really. If you're wanting to diversify
24:07
and you're wanting to have a cross different like the stock market and the property market,
24:12
you don't want to be getting obviously penalties from the bank for not paying back your loan.
24:16
But you can deal with the idea of being in quite a large amount of debt with the bank.
24:20
Yep. God, we got there in the end. Yeah. And I think with this whole conversation,
24:28
it's also a privilege to even to be able to do both. That's exactly what I'm saying.
24:31
Yeah. For a lot of people, they're probably in the camp of everything's going to their mortgage
24:35
right now and I totally get that. Mine, mine pretty much is, you know, it's very much a
24:40
known as 10 grand a week. They're like, oh, what am I going to do with that? Yeah. It's more
24:43
if you get a lump sum of money or say you are going for that pay rise and you do get a pay rise
24:50
and you're like, okay, cool. Now what? And now I do have that extra bit of money. Should I be
24:54
putting that towards my mortgage or should I be putting, should I invest that? And this is why
24:59
I get so if I started with any things to do with investing is because there is no guarantees.
25:03
You don't know what the stock market's going to do. Therefore, you kind of have to weigh up the
25:07
pros and cons and kind of make these decisions, which might be a different decision
25:12
what you make versus what I make. And that's fine. But what we're trying to do is give
25:17
everyone the information to kind of go away and be like, okay, what, what am I happy with?
25:22
What am I comfortable with? I think they can. And don't get too hung up with like,
25:26
but what's going to make me the most money? Yeah, sorry. That was quite aggressive. Because
25:30
honestly, if you keep getting hung up about that and you actually don't do anything,
25:33
yeah, you're going to be worse off. So it's just do something and realize investing
25:39
paralysis. That's actually honestly probably thing because you don't know what the best decision is.
25:43
And then you don't do anything and that's worse. So it's like, just realize there's always
25:46
going to be someone doing better than you. There's always going to be someone doing worse than you.
25:48
Oh, God. Yeah. Yeah. Don't get too hung up on that. But anyway, so rounding out the cons of
25:55
putting all your money into investing rather than in the stock market and not paying off your
26:01
mortgage is that, yes, it is riskier. There is no guarantees. Investing is risky.
26:07
You could lose your money. Yes, we talk about 10% return over the long term. But within that,
26:12
these years where it goes down and we have to remember that. Another con is that investing,
26:16
it doesn't make you debt go away. You debt still there. You know, even though you are putting
26:22
money into another vehicle and other assets, your debt is still there. You're still going to have to
26:28
pay interest principal whatever that is on that debt. You're still going to see a big negative
26:32
balance. So it's kind of if you're hating seeing that or you want to get rid of that as
26:38
clear as possible, then maybe investing that extra amount isn't right. It should be putting that
26:43
away into your investments. But yes. So if you're in your early days of your mortgage, try and pay
26:48
off as much as you can if you're in your later days of your mortgage. Or just your minimum
26:51
if that's what you feel comfortable with. So with that soft, that amazing summary,
26:57
they've actually got there. It's funny because I did the most prep for this episode yet I feel like
27:03
it was a bit of a channel. Yeah, but we got there on the end. We got there on the end. So after
27:08
all that, what would you do? So I think what I've learned is if the interest rates allow,
27:15
I would personally choose to invest in the stock market because I wholeheartedly believe that
27:21
the stock market is over the long period of time going into more than 2% say I was on a 2%
27:26
interest for my house. So that's I think if I was at if I had more interest, like a higher interest
27:31
rate, I would probably personally choose to pay off the minimum and then I would invest in the
27:37
stock market. Yeah. Maybe that's also just because I feel like we've had only how many pockets
27:42
have we don't probably spend for like over 200 hours about investing. So I feel pretty confident.
27:49
Even if it was just the S&P 500 or something, I think the key thing would be if I go and buy a
27:57
house now, I'm not going to have enough to invest in the stock market and property. So that would
28:02
be a consideration for me. And that's fine. I think the thing to remember with you is because
28:08
you'll be using a lot of your investments to invest in the property market. I assume in terms of
28:14
your QE saver in terms of yeah, I would use all of that. That the thing to remember is when
28:19
interest rates do start coming down and this is something I've told myself, you can then invest
28:23
in the stock market again. Still try and pay that whatever that dollar amount is, but put the
28:29
the difference in the stock market. So good building up that diversification again in terms of so
28:35
you don't have everything in the property market. By the way, that's the biggest like best thing
28:40
you've said this whole podcast. And we got there the last five minutes to let the very
28:44
no, but yes. And I do say this to people when people are like, oh gosh, cost living crisis,
28:49
living paycheck to paycheck, you know, I can't afford to even think about investing.
28:54
Try to think of this time and it's the same with if all your money is going into your pay
28:59
your mortgage because mortgage rates are high. Try and think of this time as almost like a reset
29:04
of yes, okay, all my money is going to my mortgage or I don't have anything left over to invest
29:10
and I've adjusted my lifestyle to live like this. When we start getting into a better
29:15
economic environment and interest rates come down, you've now got a bit more disposal income,
29:20
try and keep the lifestyle that you've created or the more frugalness that you've introduced
29:25
into your life. Try and keep those habits unless you're really unhappy. Yeah, and there's
29:30
you know, because a lot of people are having to, I know you can still try and maintain that,
29:36
but then invest the difference. Yes, you'll be much better off going forward. And for a lot of us,
29:42
you know, we have cut back, but we have maintained, you know, we still have the ability to live and
29:47
function and yes, we might be, you know, dropping down in terms of not buying so many luxury groceries
29:53
or, you know, delaying holiday here and there or whatever the situation is with you,
29:59
if you can try and maintain that lifestyle still going forward, then you'll be much better off
30:05
in the long run. So don't try and creep back to what we, what you were previously
30:10
spending money on or how you were living. So with the, with your situation,
30:16
you have now rented out your house here. Yep. And you're going back over to London and you're
30:20
going to be renting. You've kind of come up with that in your head, right? Where you're like,
30:24
if I can try and pay less for my rent, yeah, I'm still going to pay the same amount for my living
30:30
cost, but I'm going to be investing the difference. Is that where you will? Yes. Yeah. So it was
30:34
when I'm on a fixed mortgage rate, which means it's a fixed percentage amount for a certain period
30:40
of time. So it's, it's 7% for the next, come with exact cut off date for the next 12 months. So
30:47
when that rolls off, I'm hoping that interest rates will be lower, but I'm still going to try and
30:51
pay the same amount. Got it. So therefore I can pay off more principal and then pay off my mortgage
30:57
earlier, because I've adjusted my life to pay this amount to send to whatever. Yeah. This
31:02
amount of mortgage payments each month. Yeah. I'm going to keep trying to pay that. Even if interest
31:08
rates go down, I don't actually have to pay that much or say we give ourselves a salary increase.
31:14
I'm still going to try and pay that same amount of mortgage because I know I can live off the
31:21
difference. Even if, will you be paying that to the mortgage though? Would you put a little bit of
31:25
that into the stock market? I'd probably keep paying my mortgage because you're a debt girl.
31:30
Yeah. It just really kind of scares me seeing that much fair. Yeah. And even though I have made
31:35
a lot of money on my property, it still still scares me how much debt I'm in. I would like to get
31:41
that back down and then just gives you a bit more like breathing room. Okay. Okay. I can now
31:48
decide what to do. I don't know if I'm going to fit. And maybe it's just because I haven't,
31:53
I'm not in debt really. So I don't feel that same stress. Maybe when I have experienced that,
31:58
I'll get it. And I'll be like, no, actually, my paying off my mortgage is more important. Yeah.
32:03
It's quite interesting mentality having different. I'm just like, I mean, money's the bank.
32:07
Yeah, but I think that's it. I'm like, I don't feel, I don't know, maybe I would feel totally
32:11
different. I'm actually not sure. Yeah. But from an outside perspective, not being in debt,
32:16
I'm kind of like, it's a no-brainer. I would just put money towards the stock market and pay my
32:20
minimums for my house. Yeah. Yeah. We'll do a part. Yeah. Part three of this and see what
32:24
in the end of time when I finally bought it. Yeah. We should actually set goals. I know
32:29
that all my goals, because we did actually set personal goals and business goals three years ago.
32:35
In fact, it's already achieved hers and I have it and I'm fit. I only achieved a few out of them.
32:39
No, but yours was to buy a second house mine was to buy one house and I haven't done that yet.
32:42
You've still got two years. There were five year goals. Were they? Yeah, yeah. Oh, you fucking
32:46
eye for a cheva. Are you kidding? There was still three year goals. No, it's five years.
32:51
There's still a few that we haven't achieved. Like what? Three children? Yeah, yeah. There's
32:55
still some personal ones there that we'll take a while to. I'm pretty sure we put things in there.
32:59
I'm going to be able to turn it into a very exciting three years of pumping out those. Yeah, yeah.
33:03
I know. There was personal ones. The salary one was a bit of a joke. Do you feel the joke?
33:09
So we pay ourselves $90,000 right now. Yeah. Yeah. And we had targets near of $350,000.
33:15
By now. Correct. Also, like so booty. Who did we think we were? You said it. I've been moving
33:22
like three. I followed your leg because I was like, okay, so how much would you like to be earning?
33:26
And I was like, did a side item Victoria to be like, well, I don't know. Like what do we want?
33:30
And she was like 350 and I was like, but we always got told if you're achieving all of your
33:34
goals, your goals aren't ambitious enough. You need to be like 75% right. And we hit 75.
33:39
So okay, maybe 50, 75. But yeah. So the fact that we haven't hit 3,000 and 50,000 per year,
33:46
probably that's so long that we thought that we'd be earning that much money.
33:51
Hey, ambitions. Girls can dream. Girls can dream for sure. Look at their one day, babe. Yeah.
33:56
And then we'll be where we like mortgage investors. No, we probably would have paid our mortgage
34:03
off by then, which would be great. God, that'd be good. You just get one first. Have one and then
34:07
pay it off. Can we have a mortgage party when you get one? Yeah. Can we call us something a bit
34:11
spicier? Yeah. Like a mortgage, Bernie. Never do that again. I was thinking more like
34:19
liberation party. Liberation is at the right word, liberating party. Maybe it's like an S
34:24
celebration, like asset celebration or something. Or an asset. No, because you've got, oh yeah,
34:30
no, we want to ask it. Okay, sorry. We're just on that ramping because we are trying to make
34:34
this a longer podcast. Maybe I'll summarize. Yeah. Great. Yeah. Good idea. So keep
34:45
points. Hit me. Keep points. So if you want to pay off your mortgage early, remember the pros
34:52
are your save on interest. You'll be debt free earlier. You can leverage equity and you'll
34:57
free up your funds. You free up funds going forward. So you have more funds later in life.
35:01
The cons are you cut into your savings. Yeah. Because you won't be allocating money there.
35:05
You'd be paying off your mortgage. That might be your only investment. So you won't be
35:09
diversifying. And you could end up paying pre-payment penalties with the bank. If you choose to
35:14
invest and not pay off your mortgage, so you're prioritising investing the extra stock last.
35:20
Sorry. In the stock market. I know. I always think I'm just like everyone. Thank you anyway.
35:24
The pros are that you could see a higher return because over the long term, the stock market has
35:31
outperformed property market. But that's over the long term. You're increasing your future wealth
35:37
because you're allocating more money there. So therefore compound interest has more time to work
35:42
and generate a larger amount of money for you when you retire. And it's got better liquidity.
35:47
If you do have a whoopsie daisies, you can dip into your money that you have in investments
35:53
because you can easily sell them rather than sell your property.
35:57
Some cons are that it is riskier. So there is no guaranteed return. That's why I can't give
36:01
you a guaranteed answer. So fair about what to do. And investing sort of doesn't make your debt
36:07
go away. So you're still going to have, you're still going to be in debt and you're still going
36:10
out with the bank money. I think that was a good one. That one hit on. Because it's true. Even though
36:14
you feel like you're doing a good thing, that number's not getting any less. Yes. Fantastic.
36:19
Thank you everybody. Thank you for listening. Yeah.
36:23
Thank you so much for listening to Raising the Curve. These conversations are designed to
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So I have seconds and it would really make our week. Oh yeah. Our month.
36:45
Okay. Lots of love. See you soon. Bye.
36:53
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