Pay Off Mortgage or Invest
After listening to both Dave Ramsey’s and Bigger Pockets Podcasts on the hot topic of to Pay Off Mortgage or to Invest, I’ve decided to provide my own insights and add our own little twist. After all, personal finance is personal. There’s no right or wrong answer or approach either.
The answer used to be more obvious, which is to invest since the mortgage interest rate used to be lower. However, that’s no longer the case. Mortgage Interest Rates used to be around 2%, and it’s now hovering close to 7% as of to-date. Also, investing in the US and in AU are vastly different due to their focus and strategies.
Our approach is to do both, which is to pay off our mortgage and to invest. We’ve actually been doing both for the past few years. It works, but requires discipline to keep the records up-to-date.
We were fortunate to have a nice uptrend especially in Banking, so we managed to liquidate our banking positions and transferred our funds over to our ING Offset of about 47.5K. WBC and CBA are now out of our TPP range, so we’ve zeroed out both. We’ve trued up for NAB and ANZ since their TPP range is within 10%. For Materials, BHP is now trading closer to its 52WL, and RIO isn’t too far off, so we’ve bumped up our targets allocations to about 35K each. That would give us about 8.5% DFC, or about 2K in Divs and 1K in Franking Credits each, totaling to 5.5K DFC. DXS for REITs is still in play as it’s volatile. MIN is back in play due to its discounted price. We’ve decided to put WAM back in play as we’ll be focusing on trading less on volatility and refocusing on Income for DFC. WBC have lowered their trading commissions, so we’ve set our DCA closer to 2.75K range for all of our trades.
For ETFs, our core will be SYI. IOZ, VAS, and AFI are near the 8% TPP range, so we’ll hold the target funds in ING Offset. CRYP will be our kicker for volatility trading. We’ll continue to monitor GEAR and QAU. We’ve increased our SYI from 5%-to-7.5%. Target ETFs is now at 22.5%. Target Income and ETFs remains at 200K target, and we’ll average 125K Invested. We’ll continue to hold 47.5K in ING Offset saving us 6.79% in mortgage interest. If the market discounts within 10%, we’ll utilize the 47.5K. If the market discounts within 15%, we’ll go full blitz on the 200K target.
Our ING Mortgage Simplifier is now at 57.2K mortgage remaining as of JUL24. Our mortgage interest as of JUL24 is under 500, which is what we expected. We’ve freed up our cash flow of 1K monthly in mortgage interest, so we’ll continue to tackle the remaining balance.
RIO’s payment date is 26-SEP and BHP’s payment date is end of SEP as well so we’ll transfer our Dividends to ING Offset or to Prepay Mortgage (PPM).
