10 K Cash - Should I pay towards mortgage or invest in ETF?
I have 10 K cash and I am not sure if I should reduce my mortgage by paying this towards my home mortgage or invest it in ETF or E series ?
May 18th, 2015 9:22 am
May 18th, 2015 9:39 am
May 18th, 2015 9:46 am
May 18th, 2015 11:30 am
May 18th, 2015 12:17 pm
So by bonds with a greater yield than the interest on the mortgage.
May 18th, 2015 12:28 pm
May 18th, 2015 12:29 pm
May 18th, 2015 12:30 pm
One thing missing from your examples are the taxes.kr0zet wrote: ↑So by bonds with a greater yield than the interest on the mortgage.
Or buy dividned stocks that are paying out more than your mortgage interest rate. For example, 2.5% interest on a mortgage; Buy CM yielding 4.5%. Unless Canadian Imperial Bank of Commerce goes belly up you will continue to receive your dividends.
Example : $300,000 mortgage over 20 years with a 2.5% rate, a one time payment of $10k would save you $6,246.
$10k in CM stock today = 105 shares. Currently CM is paying $4.24 per share (payout has increased yearly for the last 5 years and CIBC has not missed a payout since 1868). If we keep the dividend the same for the next 20 years the payouts would be $8,904 or 43% more than the mortgage payout. I do not own CM nor do I suggest owning it, just using it as an example.
May 18th, 2015 12:32 pm
May 18th, 2015 12:32 pm
True, unless you purchased the investments in a TFSA.thetipster wrote: ↑One thing missing from your examples are the taxes.
If you buy bonds, the eventual return is fully taxable.
For Canadian dividends the rate of tax is a lot less, however there is still tax.
May 18th, 2015 12:37 pm
I had set my payments to accelerated biweekly and increase the payment amount by 40%. Last time I talked to my banker I was told that paying down faster did not effect my refinancing or credit rating. BUT i am not a banker...
May 18th, 2015 12:49 pm
May 18th, 2015 12:53 pm
May 18th, 2015 12:55 pm
May 18th, 2015 8:30 pm
May 18th, 2015 8:38 pm
May 26th, 2015 8:07 pm
May 26th, 2015 8:47 pm
but the stock market average return is around 8% right, so that's hardly a wise decisionUrbanPoet wrote: ↑I say.. Drop it into your mtg. Say you have a 2.99% rate on your mtg.
Paying it down would mean you get a tax free 2.99% return on your money. Thats difficult to get in an investment unless you take a bit of risk.
You'd have to aim for about 4-5% in an investment to match the "return" of paying down your mtg. You'd have to take some moderate and possibly high risk investments to earn 4-5% (although it isnt too far fetch to earn 4-5% with moderate risk).
But dumping it into your mtg is risk free.
May 26th, 2015 10:00 pm
another vote for mortgage. For me, paying down debts always take priority over investing.
May 27th, 2015 10:45 am
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