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Repay mortgage or buy shares?

Investment | Shares Helpful? 7

Asked by daverussell, submitted 27 June 2013.

Open Quote My wife and I have a endowment policy maturing in December 2013 and is estimated to pay out £18,000.

We have a mortgage for £25,000 that is on a base rate of 2.5%. This is our only debt.

Is paying the mortgage off the best option or do I add to our 5,200 standard life shares?
End Quote

Answered by Justin on 23 August 2013

There is no right or wrong answer, it depends on whether you want to play safe or take risk.

Paying down your mortgage would be playing it safe and equivalent to a 2.5% annual return at current rates. Choosing to invest the money instead could result in a higher return or loss, depending on how it performs.

It boils down to which you are most comfortable doing.

Another option could be to reduce your mortgage and then set up a monthly investment with the money you save via lower mortgage repayments.

Finally, if you do choose to invest, maybe consider an alternative investment to Standard Life so you don't have all your investment eggs in one basket – assuming you don't already hold other investments. That way, should Standard Life shares dive in price for some reason your won’t be fully exposed.

Please note this answer does not constitute a recommendation or financial advice and should not be relied upon when making specific investment or other financial decisions. You should always undertake your own research into whether a product or service is appropriate for your needs and, if necessary, use a qualified professional adviser.

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Readers' Comments (1) - To post a comment please register or login .

Comment by SteveJ at 5:41pm on 18 Jan 2014:

We've just spent some months debating the same issue. Whilst I am sure that most people will make more this year, in conservative investments, than what they would save in paying off their mortgage, we decided to the latter. Better to be safe .....