- Equity Mates
- Posts
- Pay off mortgage first or invest in ETFs? | Ask An Advisor
Pay off mortgage first or invest in ETFs? | Ask An Advisor
Should I prioritise paying down the mortgage or investing in ETFs?
Equity Mates
July 26, 2023
Ask An Advisor
Today’s Ask An Advisor is proudly brought to you by Fidelity
Do you want to invest sustainably in a way that aligns to your values, but you don’t know where to start? Between the noise of greenwashing and ‘green hushing’ (yes that’s a thing!) it can be difficult to know what you’re investing in.
At Fidelity, we want to help investors understand more about sustainable investing. Listen to our latest podcast with Equity Mates with our Head of Sustainable Investing Australia or visit our website to learn more.
This information does not take into account any person’s objectives, financial situation or needs. The PDS and TMD for the relevant fund can be obtained by contacting Fidelity or on our website www.fidelity.com.au and should be considered before making any investment decision. FIL Responsible Entity (Australia) Limited ABN 33 148 059 009, AFSL No. 409340 (“Fidelity Australia”) issues Fidelity’s managed investment schemes. To the maximum extent permitted by law, Fidelity Australia, its associates and related bodies corporate disclaim all responsibility and liability for any loss however arising in relation to this information which is solely for use by and distribution to the intended recipient.
©2023 FIL Responsible Entity (Australia) Limited. Fidelity, Fidelity International, the Fidelity International logo and Fsymbols are trademarks of FIL Limited.
Hello and welcome back to Ask An Advisor.
Ask An Advisor is a series designed to bring Australia’s best advisors to you, giving you the opportunity to ask your questions, for free (submit a question below).
Over on Equity Mates Investing Podcast we have a monthly episode with one advisor answering many of your questions on a particular topic.
This week’s question
“Is it best to pay down a mortgage faster and not invest in etfs or pay down less of a mortgage and invest the difference into etfs?”
This week’s advisor is Glen Hare, from Fox and Hare Financial Advice. Here’s what he said in response to Will’s question:
The decision to pay down a mortgage faster and/or invest in ETFs should align with one's specific financial goals or objectives.
If the primary objective is to become debt-free as soon as possible, focusing on debt repayment makes more sense. However, for those aiming to both pay down debt and build a share portfolio for future passive income, diversifying how you allocate your disposable income might be a more suitable approach. This may push out the debt-free date but will simultaneously work towards achieving both objectives.
Paying down a loan faster offers a 'guaranteed return' compared to the naturally volatile nature of shares as an investment. Recent significant increases in interest rates have further enhanced this 'guaranteed return,' making debt reduction a more appealing strategy compared to a year ago. Moreover, paying down debt faster does not result in taxable income, whereas income generated from share investments carries tax implications.
While investing in shares has historically yielded strong long-term returns, individuals should carefully assess their risk tolerance, especially as the potential for outperformance diminishes with rising interest rates.
About Glen Hare
Glen is an entrepreneur, financial adviser, cross-fitter, and D&I activist passionate about helping young professionals achieve financial freedom. He honed his craft at Macquarie Bank for over a decade, leaving as one of the youngest Directors. Glen co-founded Fox & Hare to bridge the diversity gap in financial advising, making financial freedom accessible to all. He has received several awards and nominations for his contributions, including being voted among Australia's 50 most influential financial advisers for three consecutive years. Glen is also actively involved in community organisations and is a board member for Wear It Purple. All opinions are the opinions of the advisor, and any advice is general. |  |
We’re excited to announce our second book: Don’t Stress, Just Invest
Money is stressful. And the more time you spend on your finances, the more questions that arise. Am I doing enough? Am I saving enough? Investing enough? Will I have enough?
Even after building Equity Mates for the past six years and interviewing hundreds of experts on the podcast, we still ask ourselves these questions all the time.
So we set out to write a book and answer these questions. What we ended up with was an outline of the absolute simplest way to invest and importantly, why we are confident that it was enough.
In Don’t Stress, Just Invest we step through the practical ways you can figure out how much you need to invest, set up an automated investment portfolio, and decide what assets you should invest in.
We’ve written this book for all those people in our lives that want the benefits of investing without dedicating the hours, days or even years it takes to become an investor. Once you’ve read this book and set up your automatic investments you can get on with your life confident that you won’t miss out on the awesome wealth creating power of the stock market.
Don’t Stress, Just Invest is available for pre-order wherever you buy books. And it will be hitting shelves around Australia on the 22nd of August.
Want to ask a question?
We have a star-studded list of advisors waiting to answer your question, so what are you waiting for?
Email [email protected] with your question
Keep learning
Podcasts
Online Courses
The Rask Value Investor Program with Equity Mates, is Rask’s full online investor training complete with stock market valuation templates, Excel downloads, investing checklists, case studies and hours of HD video.