COVER STORY
Paying off your mortgage
“ The higher interest rates are , the more it makes sense to repay debt as quickly as possible ”
Rob Morgan Chief investment analyst at Charles Stanley
but achieving upwards of 6 % consistently is much more difficult ,” he says . “ The higher interest rates are , the more it makes sense to repay debt as quickly as possible .” So what would have happened if instead of investing at the bottom of the market , you did so at the top , and at a time when interest rates were much higher ? Data from FE Analytics shows that if you used £ 1,000 to pay off some of your mortgage on 31 December 1999 , the peak of the dotcom bubble , you would have saved yourself an additional £ 526.59 in interest payments over the next decade . Meanwhile , the same amount invested in the FTSE All Share over this period would have only generated an extra £ 177.09 , while putting it in the MSCI World index would have left you with less than the amount you originally invested . Stretching the time horizon out to 13 years , as in the original example , sees the FTSE All Share overtake cash , while the MSCI World index is only marginally behind . If you invested on 19 October 1987 – the eve of the Black Monday crash , when interest rates were 9.9 % – the FTSE All Share came out in front again after less than eight years , while the MSCI World index took 10 .
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