PPOR paid off, what to do with spare funds?

[richard56]

Hi
PPOR is now paid off.

Looking to retire in under 10yrs.

IP has $309K on IO and $130k P&I
IP covers it's own cost for IO loan and I am hitting the P&I loan hard with my wages.

Have $11K in ETF.

Should I use the $11K and all spare cash to pay down P&I loan ?

Or leave P&I loan as it is and put spare cash into ETF ?

Not looking to invest in anymore IP's....I stress too much
Thanks
Richard

[PC]

Women, fast cars and booze. Then squander the rest!

Maybe leave the ETF if it's returning more than 3%.
What will you do with the rental mortgage in 10yrs time? Can you pay it off in that time?
You are going to be paying a lot of provisional tax. So buying another could be worth the hassle.
It might double in 10yrs and could then sell it to clear mortgages.

[Anthonyacat]

If you had a debt free home and rental, would you raise a mortgage to invest in your ETF?

If not, then you should sell the ETF and use all other available funds to pay down the debt. Make sure you keep yourself a safety cushion; maybe in a revolving credit or offset account.

[Frezzinghot]

ETF?? What is the acronym?

[Anthonyacat]

ETF?? What is the acronym?

http://letmegooglethat.com/?q=ETF

[richard56]

Women, fast cars and booze. Then squander the rest!

Maybe leave the ETF if it's returning more than 3%.
What will you do with the rental mortgage in 10yrs time? Can you pay it off in that time?
You are going to be paying a lot of provisional tax. So buying another could be worth the hassle.
It might double in 10yrs and could then sell it to clear mortgages.

Hi
ETF was returning more way than 3%...until Covid19.

More than likely I will get out of Property Investments.

IP is breaking even with maybe a small profit this year. So Tax is not an issue...yet.

Did your first 3 suggestions until my 40's...then saw the light gave them all up and got money wise.

Thanks
Richard

[richard56]

If you had a debt free home and rental, would you raise a mortgage to invest in your ETF?

If not, then you should sell the ETF and use all other available funds to pay down the debt. Make sure you keep yourself a safety cushion; maybe in a revolving credit or offset account.

Hi
I am not sure that I would get a mortgage for more ETF

The safety cushion idea was why I put my spare $11K in to the ETF...no point in it sitting in bank doing nothing.

I have a $30K RC account that has nothing used out of it yet.

So are you saying that it would be smarter to rely on the RC as my "Slush Fund" and use ETF's $11K to do a bulk reduction on the P&I loan ?
Thanks
Richard

[Anthonyacat]

So are you saying that it would be smarter to rely on the RC as my "Slush Fund" and use ETF's $11K to do a bulk reduction on the P&I loan ?
Thanks
Richard

On the RC as slush money, yes absolutely what I am saying. On the bulk reduction, not at all! What I am saying is that your current ETF is effectively borrowed money, in that money is fungible.

There are a lot of people out there with a mortgage who invest in share funds, but would never dream of *taking out a mortgage* to invest in shares. But this is effectively what they're doing by not paying down the debt instead.

You need to decide what you want to do with your investments. Am just giving you a perspective you may not have considered.