Paying off your mortgage money towards overpayments rather than topping up investments . This will become even more important when property prices decline – which they are expected to do as housing affordability gets stretched and buyers lower their offers .”
Can ’ t put a price on it Investors are often advised to take emotion out of their decision-making process , which is easier said than done at the best of times . When it comes to the place where you live , however , it is nigh on impossible . This is why Morgan says the answer to the quandary doesn ’ t necessarily lie in a spreadsheet .
“ Uncertainty is a factor in itself ,” he adds . “ The peace of mind that comes with lowering mortgage expenses and not having to worry about the performance of financial markets may outweigh the potential advantages of investing . It comes down to priorities and , quite possibly , how different routes make you feel .” Although it may be an inferior route from a mathematical perspective , prioritising a smaller mortgage over investing can make your financial position more resilient . Morgan says it can also give you greater control and more options , helping reduce anxiety about an uncertain future . However , the analyst says that if you are happy taking risk , compounding returns over lengthy periods can be a hugely powerful force – provided your strategy is sound , and you have a long enough runway ahead to deal with the volatility that markets throw at you . “ In summary , if your broader finances are in good shape – you don ’ t have other high-interest debts to pay off and you have built up a fund for emergencies of around six months ’ expenditure – both strategies can work well ,” Morgan adds . “ But it ’ s not just about the maths .”
Issue 89 - November 2022 / 15 /