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
KZbin - / aswathdamodaranonvalua...
Website - pages.stern.nyu.edu/~adamodar/
Financial Planning
I am a Chartered Wealth Manager and Partner in a financial planning practice based in the UK. If you would like to find out more about our services, please follow this link: go.novawm.com/getintouch
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 KZbin Channel, which is not affiliated with his employer).
James Shack™ property of James Shackell
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.

[@jonathanhowson6420]

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.

[@JamesShack]

I think many people have slowed or stopping investing. Like you say, automating the process is the solution.

[@piersgooderham8674]

You are assuming that everyone has money to spare each month...

[@jonathanhowson6420]

@@piersgooderham8674 there will always be people who absolutely can't, but also there are people with a £400 lease car oln the drive, eat out 3-4 times a month, go an flash holidays twice a year and then find they have nothing to invest at the end of the month. Most people working in the UK should have access to a work place pension, which is a form of invsting and probably the main area for many people.

[@rinmlo]

Equities are not on sale. 🙄They’re barely back at the level they were pre-covid.

[@u3vs62cja]

@@piersgooderham8674 He didn’t say everybody can do that. It’s a strategy, so those that can, should.

[@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..

[@JamesShack]

Hi Matt, thanks for the comment. Sounds like you have a plan that is working for you. All the best with it!

[@joachimmilberg2313]

Wow…..Daniel Christopher Downes?

[@rachealmarcotte5255]

@@flaviorighetto5753 This is refreshing coincidence,he has been handling my trade, it’s been a year now and the experience has been amazing.

[@derrenmarcus2014]

I have got over $100k stocks trading with him. From $30k when I started by December. So happy I work with the right person.

[@veronicafarmiga5577]

@@stanislavatlas7301 No doubt….I am also benefiting greatly with his daily signals.It’s been amazing and profitable.

[@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 😅

[@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

[@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.

[@minimad8793]

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 :)

[@jameslong5652]

Thanks James, another really helpful and informative video!

[@grandmasterlucien]

Just continue to do both.

[@juliettan3767]

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.

[@philipmumford7871]

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

[@bigupthebeast]

He keeps changing his mind

[@1TrueTradingGroup]

Thanks for Watching..Write me To participate in our current investment offer’s📊🤙🏻. .

[@davidwarwick6378]

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

[@JamesShack]

Thanks David. I appreciate you saying so!

[@earntheweekend3731]

Amen to that David

[@martinhammett8121]

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 !

[@Friction446]

What a great video.

[@JamesShack]

Glad you enjoyed it!

[@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.

[@marcinmadrala7363]

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.

[@blahmaas]

Christ! What a video. 👍🏻

[@JamesShack]

Glad you enjoyed it!

[@elrevesyelderecho]

Thanks for this video. Interesting approach.

[@philbeckett3254]

James. Could you do a video regarding. Fire service. Nhs,police pensions etc. See i was paying into the pension when i started in 2014. However saving for a house and trying to get a mortgage for a decent amount of money scuppered the pension plan. The banks would only pend enough to buy a small bed sit or flat at best. 2016 offered me circa 90k. You cannot buy anything decent for that amount of money. We had good credit. No loans and 2 small credit cards. I was paying circa 350 a month into fire service pension and came out so i could afford a average house. Also. For a full pension i would have to work 40 years. Which is fine. I joined when i was 23. However. Being a fire fighter after 55 with fitness tests, injuries over time and general wear and tear. A 40 year career as a fire fighter is minimal. If i have to leave early due to ill health. I.e cannot run out hose and up ladders any more. My pension would be deffered then i would have to go find another job due to getting the sack. There fore leaving me in a situation where i have paid out lots of money over 30 40 years. And not being able to access it for time. Also. When i retire if i did do my full 40 years. Then the lump some i could take would be circa 70k. However paying in over 180k. With a monthly drawdown of approx 600 to 800 a month. Id have to live until i was say circa 90 to get just what i have put in. And all this is down to if i can survive the 40 year career they want. And the goal posts will change with the normal say working people. I believe that if i invest and pay off my mortgage. I will be better off and cam retire when i want. When i have enough money invested to pay me a wage matched by the fire service /government. We dont get educated in the public services enough. However i have heard if you speak to an advisor they would probably say come out and put the money elsewhere. Cheer si k ow ots long but a video regarding public services pension would be ace. Not a lot of pwople seem to do them. Have not found one yet.

[@JamesShack]

Each public sector has a different pension each with its own nuances. They all change huge amounts over the years. So it’s not surprising it’s confusing. I have not personally had much experience dealing with the fire service pension, but will look into it,

[@pataleno]

Don’t have a mortgage on my home. I have a rental BTL mortgage fixed until 2027 at 3.7% and thought I was getting ripped off on that when I fixed in June. Happy now. 😂

[@JamesShack]

Times have changes so fast!

[@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.

[@hannahb6471]

My mortgage on my still declining in value flat is ending next April so I've had to REALLY fight myself and keep my monthly DD into my S&S ISA as I KNOW it'll pay off down the line. Definitely hard though as I've essentially had to try to save a second deposit to try to buy a house as my flat equity is falling whilst house prices where I live keep climbing. To be frank I've had enough of tiny flat living and will NOT be putting a stairlift in it in my old age 😆 My S&S ISA has definitely slowed down my house buying process but I'm trying to think longer term even if in the short term the last two years have felt like wading through treacle!

[@JamesShack]

Keeping a balance is good. You can always use the ISA to buy a place if you really need it. It's just hard at the moment because everything is down. Or stocks are down, but the properties you want to buy are up 🤷‍♂️. Annoying as hell, but luck will swing back around in your direction if you keep doing the right things.

[@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

[@Kazi2812]

Yep, if you have a UK stocks based pension, it is the same as throwing it in to the market (just check you're happy with the fund provided too).

[@Jeffybonbon]

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

[@richardturner587]

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

[@Trifusion1]

Fantastic video James, my favourite in some time. Answering a question about mortgages by schooling us on the bond market and share returns, loved it.

[@JamesShack]

Thank you. I was trying to think of a way to tackle it for some time!

[@spartacusptolemaida]

Yes! Been waiting for this brother! We definitely need more content and your insights!

[@JamesShack]

Thanks Panos. This video is a bit long, but the stuff it goes through is vital so important for understanding how investments interact with interest rates. I find it bloody interesting ( I hope others do too!)

[@spartacusptolemaida]

@@JamesShack appreciate your effort mate! also would be really cool if you make a video about credit scores perhaps? or maybe the use of credit cards? find that to be quite interesting and sadly few people know how to actually use them and build a good score. just a suggestion tho :)

[@maino9752]

I’d like to invest a lump sum in the S&P 500 due to its lower price but with vanguard the weak pound has wiped a lot of the potential

[@marcwareham9351]

I’m still buying. At least when the dividends come back we get a better exchange rate.

[@bigdawg1353]

Look at currency hedged versions of the S&P500 like the iShares GSPX. This gives you a much better exposure to the index without currency exposure.

[@tomclowes5874]

Hi James, this is ace as always. Where do you or think others should keep there cash buffer in a world of high inflation?? Future video maybe??

[@screambluemurder101]

Would love this too!!

[@tiyom1]

Great video idea

[@JamesShack]

Hi Tom, there's not that many options to be honest. If you're running on 6 months of cash buffer, it needs to be liquid so the highest interest easy access savings account you can find. If you have >1 years worth you could look at putting part of it in a fixed term deposit. I personally have 6 months core costs as a cash buffer, and it's just sitting in a basic savings account with my bank. I know it's losing value to inflation but when you look at my overall portfolio, I have a tiny allocation to cash and the cash allows me to invest aggressively with the rest of the portfolio.

[@tomclowes5874]

Thanks for taking the time to reply James. Very helpful, I'm just sorting out a quick access savings account now for the buffer but was experiencing fear of missing out on a better alternative!! I guess as a % of overall portfolio for me it's probably quite a bit higher than tiny at the minute

[@alangordon3283]

I’m in the enviable position of being nearly Mortgage free . The fix ends in July . I’ve been doing both since taking out the Mortgage saving and paying off chunks while affordable.

[@JamesShack]

Congratulations. Great timing. Is there anything that would spur you into taking out a mortgage again?

[@alangordon3283]

Not so sure in the current climate . May have a better idea when they eventually give the Autumn budget . I’m paying a good chunk into the workplace pension . I’ve only £26 k on the Mortgage left .

[@screambluemurder101]

@@alangordon3283 well done on the diminishing mortgage mate! Very jealous!

[@condor_hero]

Quality video as always Mr Shack. Can tell how much effort must have gone into this one! Many thanks

[@JamesShack]

Thanks! Yes it grew arms and legs!

[@oli0808]

Would be interesting to have that chart from 20:30 but rather than the distribution of a lump sum's performance over 1/5/10/20 years, it showed the distribution of returns from 1/5/10/20 years' monthly contributions.

[@JamesShack]

Those are the distributions from a lump sum.

[@oli0808]

@@JamesShack Exactly. It would be good if you could show what lit looks like for monthly contributions which is I think how most people watching will invest. If you pick a 1/5/10 year period, what does it look like if you do £100 a month over those periods. What is the return distribution like on those.

[@JamesShack]

@@oli0808 Ah I see! Yes you’d probably get a tighter distribution. Good idea I’ll look into that.

[@gav2302]

Hi James, your cash buffer, do you just keep this in an easy access savings bank account or where do you suggest?

[@JamesShack]

Easy access, unless your the kind of person that keep > 6 months in which case a partial fixed tern deposit might work.

[@gav2302]

@@JamesShack Appreciate the feedback, thanks man

[@MRAROCKERDUDE]

How can I get an updated calculation on expected stock market returns so we can consistently decide how to allocate surplus cash to overpaying/investing? Given that interest rates likely to rise, surely that will make overpaying eventually the likely better option

[@JamesShack]

This video explains why the expect returns on stocks should rise as interest rates rise, and should stay above mortgage rates except in very strange circumstances.

[@MRAROCKERDUDE]

@@JamesShack I loved the video but didn’t really get that point. Is it basically that as rates rise, safe assets become more attractive, reducing equity demand, equity prices, therefore increasing long term expected stock returns?

[@ilir1989]

I'd rather just not have a mortgage hanging over me thanks....sometimes it's about more than the money.

[@pistopit7142]

'mortgage hanging over me' = 'I owe money to smoebody'. So it is about the money after all. If repaying mortgage makes you poorer, than if you would use these money for something else, then do not repay your mortgage. Unless you wish to be poorer on purpose.

[@fitzmaurice88]

In that case, wouldn't you look to outperform your mortgage rate and then pay it off earlier?

[@unnikrishnanvannadil]

I'd rather pay my mortgage till I die.

[@jf6882]

My mortgage is fixed at 2.14% for a further 3 years from a 5-year fix I took out. I don't see the point in overpaying I just have all the extra cash now in the Barclays saving account at 5.25%.

[@JamesShack]

That makes sense. Tempted by investing at all ?

[@jf6882]

@@JamesShack I do invest but only 10% of my monthly wage. I use the vanguard life Strategy 60% equity fund.

[@BenGmanUk]

If you look at the actual difference you'll probably find it's only a few £100. Still worth it mind.

[@markwells5781]

Which Barclays saving account gives 5.25%? That’s a really good rate!

[@jf6882]

@@markwells5781 the blue rewards account

[@maxlmaxl]

Great video! Do you have any suggestions on whether to get a variable mortgage vs fixed mortgage & if fixed how long would you be fixing for? We will have to decide in the next few weeks.

[@JamesShack]

That all depends on what rates will do in the future, and I don’t know where they will head. A mortgage broker should be able to help you out ?

[@maxlmaxl]

@@JamesShack thankyou for the fast response, much appreciated

[@garethwilliams4467]

@@JamesShack how does a mortgage broker know the future ? surely, they are just inferring. No one knows.

[@JamesShack]

@@garethwilliams4467 A mortgage broker will advise you based on your personal circumstances whether a fixed or variable rate may be best. Not based on what they think will happen to interest rates.

[@bigwill0236]

Hi James. Great video. I reduced my mortgage 2 years ago from 10 yrs to 5 on a fixed rate mortgage so I'm happy with that. I pay 5% into my work place pension while my company pay 8% so until I've paid my mortgage off I'm happy with that. I only started investing just over 2 half yrs ago, I opened an account at hargreaves and landowne. But I've recently found out its just a general account and not an ISA. I've got around 17k in my investments, would you change anything now if you was me? I'm still new to investing and I'm not sure what to do.

[@JamesShack]

An ISA is better than a GIA for tax efficiency. But right now given you only have £17k in there, any dividends should fall within your £2k tax free div allowance and CGT allowance.

[@OnaAta]

U mean £20k allowance not 2k

[@OnaAta]

@@kieron8051 oh right, divided is 2k

[@shiningstar7775]

@@JamesShack That £2k allowance now looks shaky - might be time to move it into an ISA...?

[@shiningstar7775]

@@williamlyons3947 Yep - in the USA you finance your rates for the life on the Mortgage. In the UK we have the choice of (1) fixed, (2) variable and (3) tracker mortgages. For fixed mortgages terms typically are 1,2,3,5 and occasionally 10 years. Trackers as the name suggest track the Bank of England base rate + an amount denoted by the lender i.e. Base Rate + 1%. I agree with you that this instability in interest rates adds a lot of instability to the UK property market and there should be an option to fix a rate for the life of the mortgage.

[@stacyburnett2809]

Hi James - great informative videos and easy to understand - one question please if I may: have you ever done a video on your own investment strategy ie what and where do you invest and what strategy do you have with your mortgage etc Granted investment is personal as we all have different circumstances now and in the future and we are all at different stages in life along that journey but I’d be interested to see what you use

[@JamesShack]

This is how I invest my money: kzbin.info/www/bejne/oJu6npSIgNKhe6M Well actually most of it is tied up in my business but that's how invest the liquid stuff. I have an interest only mortgage at 50% LTV. I'm a high risk investor and I'm of the view that i'll earn a higher return investing, with more diversification, that I will get from paying off my mortgage. Mentally, I like seeing my investments go up more than I like seeing my mortgage balance go down! I'll do a video on it all at some point!

[@METHVS02]

Really Still none the wiser. Seems there is no exact correct plan. What are your thoughts on over paying mortgage vs recent inflation of 10%?? Or vs inflation in general?

[@JamesShack]

There is no exact correct plan. We each have different preferences when it comes to risk and at the end of the day it's risk, so who knows what will happen!

[@willlsmith8063]

I'm a fan boy James......great content as always

[@JamesShack]

Thanks Will!

[@DeanR3]

Always rather overpay and get mortgage payed for peice of mind, great video as always, would love a video on best savings accounts currently isas and easy access accounts . Thanks 😊

[@GSD-1993]

Money saving expert is a good website for this

[@davem.4003]

Paying off a mortgage certainly gives peace of mind but you should still have "rainy day" savings that are accessible. If you overpaid your mortgage, that cash is no longer accessible. We have an offset mortgage, so although the interest rate is not as low as a fixed rate deal could have been, it's lower than SVR and the deposit in the offset savings account reduces the mortgage interest but the savings are still available for emergency use, if needed. This worked well with historically low interest rates (especially for savings in recent years) but we're now in a different era with rising rates. With less than three years remaining, we'll probably stick with what we have though, rather than chasing a few pounds - for that peace of mind.

[@jamesbowater1328]

I'm sure the "no mortgage to worry about" feeling is wonderful, but you might also want to consider liquidity. If you put all your investment into your home, if something untoward were to happen you'd only be able to access the money again through remortgage/equity release (depending on age) or by selling the house. That'd why I prefer to have a repayment mortgage on a term I will clear within my working life, and separately build up an S&S ISA, that I can easily draw from should something happen and my emergency fund doesn't cover it.

[@CoachPursuit]

James, can you/have you done any videos on the currency exchange risk of UK investors investing into the S&P500? In the US it’s down 20%+ but for UK investors our ETF’s are down more like 5%? Thanks

[@slayerrocks2]

Did you see today's VUSA performance? S&P was up 5% while VUSA only rose less than 1% The dollar weakened heavily against the pound.

[@JamesShack]

Normally you should not currency hedge because it helps to reduce volatility - as we're experiencing as UK investors right now. Ofcourse you can hedge, but that means you're taking an active bet on which way a currency will go.

[@CoachPursuit]

@@JamesShack true but for long term investors in the S&P500 from the UK, say for the next 30 years, our returns could be massively different due to the GBPUSD exchange rate? Aren't we technically already making 2 bets. That the S&P500 will produce good returns (in the USD we swapped our GBP for to invest) and that the exchange rate won't impact our returns much when we change back to GBP in 30yrs time The S&P500 could return 10% per year bang on for 30 years but if the pound gains strength back for 30 years, aren't we at risk of actually losing as we're based in USD? If that makes sense... Not sure if I'm making sense or not but trying to get my head around it!

[@chris420uk]

I'm confused... all the forecasts over the past year is on low equity returns for the next decade. Around 3-4% real returns. But you're suggesting 8.5% (or 6% minus inflation). Which is quite a bit higher. Are analysts etc now predicting a higher return? Analysts from places like Vanguard, etc.

[@JamesShack]

Analysts were saying that at the end of last year. As did this method. Things have shifted since stock values have fallen. It’s still not ‘cheap’ but back closer to longer term averages.

[@chris420uk]

@@JamesShack ahhh ofcourse. Amazing how things can change so quickly. Thanks for explaining and a great video overall.

[@johnjones8572]

Are you an IFA and if so what can you better than my current advisor. I'm in prufund 3

[@JamesShack]

I am an adviser, yes. There’s a link in the description of the video.

[@mattsoutham]

Amazing as always. Should we Brits be hedging our investment if we think the £ will bounce against the dollar?

[@JamesShack]

If you think it will do that yes.

[@guyr7351]

As I am close to retirement age I put my money in two places now, the mortgage and my pension. Spare cash goes into personal pension and I get the tax credit which effectively is 25% boost, there is nothing out there offering such a return with the protection pension funds have. As mortgage rates rise then overpaying gains you more, I’m on 1.29% for next 4 years so in a good position. Few years ago inherited money and that’s gone into pension, mortgage and a rental property. Spare cash/ safety cash is in saving accounts paying 2 and 5%. The situation is very fluid though as interest rates rise so will the savings rates. Investing in stock market ( where pension is invested) always risky as can crash 20-40% depending on politics etc

[@JamesShack]

That’s a nice low rate, very fortunate. Pension tax relief does make investing even more attractive. Unless Jeremy Hunt decides to change all that …

[@guyr7351]

@@JamesShack yes, papers are full of scare stories, “pension grab” to describe not raising lifetime allowance, 1 million not a bad pot to have so no tears from me. The worry is that the Tories see themselves as un electable at the next election, so scrap the triple lock on pensions and remove other tax concessions as the deficit has to be paid for. Time will tell

[@BaileyMxX]

@@JamesShack will be a brave/stupid government to go for this, will just cost them more in the long run with the risk of less people investing adequately via pensions. As it is people aren't saving enough for retirement.

[@stevebrown7281]

You make money with time in the markets not trying to time the markets!

[@stevebrown7281]

I enjoyed your video a lot of sense there the thing I find the majority of investors don’t have is patience their all chasing the 500% return stocks that go to the moon and back! well from my experience they come along very rarely and again even they require patience and conviction.

[@welshhibby]

No mortgage so I’m going to be investing aggressively……

[@ksmith660]

Hi James, Why did endowment mortgages fail if over 25 years you would expect the stock market to perform well?? I'm glad I got a straight repayment mortgage that has now been paid off...

[@JamesShack]

They didn't all fail, but many were invested poorly with very high fees. If on the other hand you had decided to invested in an index fund, you would be sitting very pretty right now.

[@pja8901]

S&P500 producing lower returns than government bonds over 10 years is only a scenario when making a one off investment. If you're in a position where you can make regular overpayments on your mortgage, you will alternatively by investing in stocks and benefiting from DCA, which brings the risk right down.

[@Marc-lx1qj]

Cleared mortgages on properties 22 years ago. Since 2019 Ive invested £160k split between medium risk collective fund and stocks shares Isa. As of start Nov I have only £158k in them after charges and with no withdrawals.

[@JamesShack]

What does this tell you?

[@Marc-lx1qj]

@@JamesShack The ones advising get paid even when I dont 🤔

[@lsismeiro]

Congratulations for this video, you managed to talk about things that many people investing don't know (like me) and now they have the information to dig deeper. Thank you.

[@JamesShack]

I’m glad you found it engaging!

[@arunmenon6513]

Thank you 🙏

[@JamesShack]

Glad you liked in Arun.

[@undercoverboss6579]

S&P 500 or US equity index fund? Which shall I invest for long term? I have large amount of money to invest. Your advice would be much appreciated

[@PAZPERDEE]

Great content always, thanks

[@JamesShack]

Thank you!

[@screambluemurder101]

So… my 5 year fix ends in April 2024. We’ve been overpaying our mortgage by about 50% since March 21 purely because psychologically the prospect of being mortgage free appeals. Have also been adding to easy access funds and my Vanguard LS100 during that time. My thinking was to continue these overpayments as much as possible now before we have to remortgage so the mortgage value is that much smaller when the interest rate is(likely to be) that much higher. Anyone got any thoughts on a better way to manage this?

[@ilir1989]

I see no issues in what you are doing. It makes perfect sense if your priority is to be mortgage free. It's my priority and im doing the same. Remember, this channel is fundamentally about making money. Not about paying off your mortgage.

[@screambluemurder101]

@@ilir1989 I’m probably guilty of wanting the best of both, being mortgage free and making money through investing. Try to go with the brain rather than heart but the prospect of being mortgage free by the time I’m maybe 45 is a huge draw for me. I’m putting money into easy access savings and my vanguard isa alongside additional mortgage payments - just wonder if I could be doing it more optimally.

[@JamesShack]

Where rate is your current fixed? As suggested above, my content leans towards the rational “best thing” but personal finance is very … personal. So you need to take the info and apply it to your own values and personality type to arrive at what’s best for you. Sounds like you’re doing a bit of everything, diversification is always good!

[@tinanolan1485]

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.

[@1TrueTradingGroup]

Thanks for Watching..Write me To participate in our current investment offer’s📊🤙🏻. .

[@davittovi6715]

Amazin video very insightfull as always!

[@JamesShack]

Much appreciated!

[@MrBillybob359]

Could you do a video on currency hedging? There are so many confusing ETFs and the pros and cons are confusing. Cheers!

[@mikesmith1702]

we need to know the unknown

[@patmanrick]

Good stuff, appreciate the work that went into this one!

[@JamesShack]

Thanks, I'm glad you liked it!

[@neilsmith8187]

Thanks as always James. Informative and extremely helpful 🙏🏻

[@JamesShack]

Thanks Neil. I’m glad you found it useful.

[@Gulugulu786]

Invest and stay stressed about returns, specially in these volatile times OR overpay your mortgage and gain some satisfaction in having less debt on your shoulders? No amount of return can match the peace of mind of knowing you have little less debt to pay. Or is it just me?

[@jamestomlinson9679]

No it’s not just you I’ve just payed mine off it’s weird but I feel a lot more relaxed still have savings as well which also helps I suppose

[@slayerrocks2]

It is not logical on a purely financial basis, but I cleared my mortgage as a priority. I lost my job, but quickly got another. The stress I felt about possibly losing my home convinced me to clear it, rather than pay 300-400 per month, and use the endowment for home improvements.

[@jamestomlinson9679]

@@slayerrocks2 happy for you probably isn’t logical financially but I don’t care I’ve been paying mine for twenty years so I’m glad I did it this month is actually the first month I don’t have to pay it might take a while to get used to it

[@horatiopelagius8703]

Who the hell has 3 months income in savings? Statistically, you're doing pretty well in Britain now if you can pay your bills without getting into more debt each month.

[@pistopit7142]

Great video as always or even better than as always :) My mortgage is fixed at the very low rate of 1.14% for the next 4 years, so I will definitely not overpay it. But my student loan is now at 4%. So now I am scratching my head, should I partially overpay student loan or use those money to invest. My job is pretty secure so I am confident I will repay student loan over few years but will pay more interest. My investing horizon on the other hand is 10-15 years so not crazy amount of time to let compounding do it's job. Time in the market counts a lot but that loan at 4% bothers me too. I am thorn so maybe worth doing a bit of both.

[@ilir1989]

Why would you not overpay it now? If your objective is to be mortgage free then now is the time to overpay. At that low interest you pay much more of the balance off because you'll be getting hardly any added on in interest. You'll offset it massively and have a super low mortgage when it comes to renew

[@davem.4003]

@@ilir1989 not quite. I understand your idea but the real advantage is if you grow the surplus instead of paying off the mortgage until the end of the fixed interest period. You can then pay more off the mortgage than would otherwise have been the case. It's the difference between compound interest of maybe 3-4% (when invested) vs. the 1.14% mortgage interest when compounded. In this specific case the discussion is about whether it is better to invest the surplus or pay off the student loan. The answer to that depends on whether interest rates are higher, or lower than the student loan interest rate. 4 years is probably not long enough to mitigate the risks of stocks and shares investments but if employment is stable and an inflation-matching pay increase can be predicted, then it could be worthwhile risking part of that surplus in higher risk investments such as stocks.

[@JamesShack]

Depends what your goal is. Is it to get on the property ladder ?

[@patmanrick]

​@@ilir1989 this is very bad advice. If mortgage is 1.14% then even if you have low risk tolerance, why not invest in a fixed income product at 4% for 4 years, then use the extra cash to pay off a chunk when remortgaging?

[@joshdawson5850]

@@ilir1989 You can put it in Chase for 2.1% for 4 years, then lump sum it… what you’re suggesting is madness.

[@enricoguariento78]

Very nice video, it's too bad that they focus primarily the UK, but still the concepts are very good

[@Ferdinand208]

Who is they?

[@alexporter7003]

Brilliant video James. So many great bits of information. I like that you also get into the details, I'm sure the research takes a while but results are worth it! Cheers

[@JamesShack]

Glad it was helpful!

[@JamesShack]

It does!

[@JamesShack]

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

[@chris420uk]

8.5% is a lot higher than the recent predictions of equity returns over the next decade. Has there been a shift in overall analyst concensus recently?

[@bigdawg1353]

If I had an existing low fix rate mortgage, fixed for the next 2-3 yrs then I would put the money to work harder rather than overpay - split the spare cash between a high interest savings or deposit account and dollar cost averaging into a mix of diversified funds or good quality dividend payer stocks. At the end of the mortgage fix term, if rates are still high, then use the money squirreled away into the savings account to pay off a chunk of the mortgage upon remortgaging. The higher interest earned on the savings should have offset more of interest cost on the mortgage during its low rate fix than simply overpaying hence achieving a better objective then overpaying. And I still have cash invested in the market for a longer term horizon.

[@profribasmat217]

USA here. My mortgage is fixed at 2.5%. My investment mortgages are fixed at 3%. Cheers!

[@DF-dd5nf]

Thanks a lot for your though explanation. I always enjoy your videos. And it is kind of you to be reading your views comments as some you tubers don't what is arrogant of them. But you do, and that is caring and kind as it shows that you value your viewers.

[@JamesShack]

Thanks for saying so. I try to get to all of them!

[@emmatowey985]

Thanks for another great video.

[@JamesShack]

I'm glad you found it useful!

[@NoName-ql1wk]

I'm glad I didn't sleep through ACF307 at uni.

[@JamesShack]

What was that ?

[@NoName-ql1wk]

@@JamesShack 'Investments' in my 3rd year Accounting and Finance BSc.

[@mrt1878]

Brilliant video James. I learn so much from watching your videos (normally takes me more than one viewing). There are so many ‘lazy’ content providers who just bang out the videos whereas your content is thorough and excellently presented. The only problem I have is they often trigger an inner response of decisions I should have taken or not taken 🙄 Cheers 👍

[@JamesShack]

Thank you. I’m glad you’ve found it useful. Well I wish you the best in those decisions.

[@richardthegreat]

Im happy to hear you say raising your emergency fund to 6 months “core expenditure”, I think this is important for people saving for an emergency fund. For arguments sake my take home salary is £5k a month but if I lose my job I’ll probably pause investments, my pension payments will stop, I won’t be adding to my savings and I won’t be spending on “wants”. Each month all of my salary is utilised but it’s far from my core expenditure. My core expenditure to keep things going is roughly half my salary, and even within that I can cut back more quickly. But a lot of experts say to save 6x salary which can seem daunting. For me that’s £30k of savings when in reality £14k (47% of £30k) would keep me comfortable for 6 months. I’ve neglected my emergency fund a lot but more because I didn’t spent the time to actually see how much I needed, once I worked that out it made me much more comfortable and invested in the idea of saving to that number. Sure £30k would be better but with everything there needs to be a balance.

[@JamesShack]

Yes. It’s a personal decision. Part practical - how long with it last. Part emotions - how much makes me feel comfortable to take risk with other parts of your portfolio.

[@dazzassti]

Going to have to watch this a couple of times, but as always superb presentation and info...

[@JamesShack]

Yer there’s a lot to get your head around!

[@stevecurrie1454]

very good video, lots of time went into producing the content

[@JamesShack]

Thanks you. Yes it did!

[@jamesbowater1328]

Great stuff as always, I love how you snuck a detailed explanation of Equity Risk Premium into an 'Overpay Mortgage?' video, rather than just saying opaquely "If we assume 9% return on stocks..." On increasing your emergency fund, you said you're upping this to 6 months of core expenditure. Do you factor in your wife's income? My wife is a teacher, so very unlikely to lose her job. As such, we just save 3-6 months of MY take-home salary, rather than our joint core expenditure. Is this a mistake?

[@JamesShack]

Thank you! Creating content like this actually helps me work it out in my head myself and better articulate it to clients in the future. I would factor in wife's income, yes. Like you say, a teacher or doctor has a much more reliable income than say a salesperson (who also tend to be the bigger risk takers too). It's much more of an art than a science.

[@jamesbowater1328]

​@@JamesShack Brill, thanks! Your clients are lucky to have you! I'm seriously considering retraining to become an IFA myself - I think in a video a while ago you mentioned you might make some content for those considering the leap, so would love to see that some day too!

[@Nasherrrzzz]

Why would you recommend people not to invest in the s and p? It has a proven track record of international companies hoovering up market share around the world. The companies don't just operate in the u.s, they operate worldwide i.e apple, Microsoft, IBM etc. Our world is much more connected now, so I find it strange you would actively turn people away from that

[@JamesShack]

I'm not turning people away. I'm just saying invest in other things as well. A Global Index fund typically has about 50% invested in the S&P 500. If it was so clear that the US was going to continue to do well, more and more people would invest it it (which they have) and pushed up it's valuation (which they have) therefore reducing expecting returns in the future.

[@skinnymoonbob]

Fixed rate for ten years at 1,5%, euro denominated. Did this in February this year 🫠

[@JamesShack]

Nice, well done,