Pay off mortgage trading ?

[robster970]

I have one question.

Why would you pay your mortgage off when interest rates are this low?

You can make your money work a lot harder for you in this environment and you should consider paying the mortgage off when interest rates are high commensurate with your rate of return from trading.

 

[new_trader]

I have one question.

Why would you pay your mortgage off when interest rates are this low?

You can make your money work a lot harder for you in this environment and you should consider paying the mortgage off when interest rates are high commensurate with your rate of return from trading.

I suppose that is directed at me? Interest rates were not this low when I paid my mortgage off. I didn't want to be in debt and risk trading at the same time, clear mind etc.

 

[robster970]

It was more a general question for the OP rather than one directed at you NT. I do get what you're saying though.

 

[TheBramble]

If the OP is locked into a much higher rate mortgage than he currently generates through his trading it would make sense. But by that same token, if that were the case, he's unlikely to ever generate sufficient to pay it off anyway. But this is all idle speculation obviously. (LOL - unintended).

 

[anley]

Another point to ask is why have a mortgage if you're a good trader. Far more money can be made by renting and then using ALL the money to be used to pay off the mortgage for speculation.

I know a excellent trader who owns nothing, pretty much rents everything for just the above reason. He's also sly and married to an Eastern European girl and I reckon he doesn't trust her 100% (she's younger than him by about 10 years). So if there's a divorce, there's few assets to be forced to give away and as he says 'it would be a shame if I lost my job wouldn't it'. Good plan because his bank isn't in his name either......

 

[TheBramble]

Another point to ask is why have a mortgage if you're a good trader. Far more money can be made by renting and then using ALL the money to be used to pay off the mortgage for speculation.

I think that was the point Robster was making.

I know a excellent trader who owns nothing, pretty much rents everything for just the above reason. He's also sly and married to an Eastern European girl and I reckon he doesn't trust her 100% (she's younger than him by about 10 years). So if there's a divorce, there's few assets to be forced to give away and as he says 'it would be a shame if I lost my job wouldn't it'. Good plan because his bank isn't in his name either......

He obviously doesn’t rent everything if he’s married.

 

[new_trader]

Another point to ask is why have a mortgage if you're a good trader. Far more money can be made by renting and then using ALL the money to be used to pay off the mortgage for speculation.

I know a excellent trader who owns nothing, pretty much rents everything for just the above reason. He's also sly and married to an Eastern European girl and I reckon he doesn't trust her 100% (she's younger than him by about 10 years). So if there's a divorce, there's few assets to be forced to give away and as he says 'it would be a shame if I lost my job wouldn't it'. Good plan because his bank isn't in his name either......

At the risk of having more snide remarks directed at me I will say that I agree and that is what I am doing now. I sold my property a while back and have been investing the money in different assets that generate enough income to cover my rent, so I am in principle, living rent free. I expect my investments to outperform the UK property market and so far, so good.

The problem is that anyone starting out in trading or investing doesn’t know how good they will be at the game, so if they already have a mortgage I would recommend that they keep any capital that has been set aside to pay the mortgage separate from the capital they have put aside for trading and never give in to temptation. If you don’t have a mortgage then continue renting whilst you gain more experience in investing/trading until you have promising results and more confidence in what you are doing.

 

[anley]

He rents pretty much everything, flat in London which is furnished and no car. Apart from that what is there to own if you're not into material things (and don't say stuff like underpants or books etc)?

 

[new_trader]

He rents pretty much everything, flat in London which is furnished and no car. Apart from that what is there to own if you're not into material things (and don't say stuff like underpants or books etc)?

yes, be he's married...nudge...nudge...wink...wink...say no more

 

[TheBramble]

I sold my property a while back and have been investing the money in different assets that generate enough income to cover my rent, so I am in principle, living rent free. I expect my investments to outperform the UK property market and so far, so good.

The current cost of rental of any given UK property compared to the cost of a 100% mortgage on that same property at current rates (around 5%) is still very favourable. And the fact that UK housing is currently (on average) a slightly depreciating asset is not a major factor for or against ownership at this time. So your approach is very sensible.

But the one prime factor which overrides any rational assessment of the above is the rate you're getting on your trading activities.

This whole thread is predicated on the ability to pay off your mortgage, for whatever reasons the OP thinks that might be a good idea. My earlier response suggests that very few of those who start out trading end up making ANY money at all and in fact, lose money. So from that perspective it is a complete non-issue.

As for those that aren’t losing and are making something for their efforts, I have no real idea of the numbers or percentages of traders making more than the current mortgage rate on their annual trading performance, but my gut feel is that there is a sudden and quite distinct transition from making next to nothing to making shed loads. For every 9999 traders who made less than 5% on their trading last year, I suspect there is one who made triple digit percentage gains and very few in-between.

Am I way off base here? Anyone else have either an experientially based view or empirical confirmation of this?

 

[rc450]

bet there are more people that have remortgaged and then blown the lot trading than there are that have managed to pay off their mortgage!

 

[new_trader]

As for those that aren’t losing and are making something for their efforts, I have no real idea of the numbers or percentages of traders making more than the current mortgage rate on their annual trading performance, but my gut feel is that there is a sudden and quite distinct transition from making next to nothing to making shed loads. For every 9999 traders who made less than 5% on their trading last year, I suspect there is one who made triple digit percentage gains and very few in-between.

Am I way off base here? Anyone else have either an experientially based view or empirical confirmation of this?

No, you're not way off base, and I'm sure this has been raised, but if the question was 'How many people bought a car with the profits from their trading'? Well, did they buy a Ferrari or Fiesta? Mortgages vary depending on property size, location, size of deposit and especially the whims of incompetent Central Bankers and Governments. There are too many variables to give any meaningful statistic. Especially with the property bubble and bust the UK has experienced. Someone covering their mortgage now might not be able to do so if and when the BOE decides to tackle inflation seriously.

From my perspective, I learned so much more about the investment world through my efforts to learn daytrading that it gave me the confidence to do what I did. I (erroneously?) make the assumption that anyone else trying to make a crust through short term trading would have the same realisations.

 

[the hare]

For every 9999 traders who made less than 5% on their trading last year, I suspect there is one who made triple digit percentage gains and very few in-between.

I'm a purely mechanical trader these days, but the strategy that I use is heavily diversified. What I do find interesting is that the same basic strategy often results in a fairly wide distribution in returns, from small losses, right up to triple digit annual returns, and practically everything in between.

I dont see why this situation shouldnt represent a reasonable proxy for a population comprised of competant traders. The situation you describe is probably true, but I'd argue that the distribution is a function of the noise generated by the high number of non profitable market participants. Perhaps looking at returns from CTA's might throw some light on this. I havent looked, but I suspect that the distribution in CTA returns is probably more in line with what you'd expect from a normal distribution.

 

[glyder]

has anyone actually done this ?? we all know how many sites and people are pushing "trade for a living" "earn 100k per year from home" etc....:whistling

any successful traders on here actually made some serious money and paid off the mortgage etc ???
(or is this just an unachievable dream that we get sold...)

Hi ADVFN,
In some of my previous jobs I worked for retail stockbrokers, and I have seen plenty of PEP / ISA accounts grow to £500K plus by the late 90s."
Usually the clients were older retired or bordering on retirement and did a lot of Investors Chronicle type of research. I can't say reall how actively they traded it probably varied a lot between different customers.

I worked with an elderly lady who did the same thing. All from investors chronicle.
That type of research don't really interest me but it works for some.

I see RG Thomas has interviews with these types of investors in his Free Capital book, although the interviews are with kind of super retail investors.

Bottom line is it can be done.

The most amazing discovery I have yet come across is that cutting my losses
is a good part of a strategy

Why don;t they tell you that sort of thing when you first start trading?

 

[advfntrader]

interesting comments. maybe a way forward for me is to sell the house, take out any equity I have and trade that while renting.....now how do I get that one past the wife.....:whistling

 

[glyder]

interesting comments. maybe a way forward for me is to sell the house, take out any equity I have and trade that while renting.....now how do I get that one past the wife.....:whistling

LoL

I can understand the idea of putting your assets to good use
but a secure roof over your head, and your family's heads
more to the point, is a major psychological plus (physical too !)for all concerned.

I do remember reading on one forum not sure where of a trader
who lived in a nice hotel, his first £200 or so per day paid for his room,
after that all the rest was profits. Nice life if you don't have ties and need more space.
Flexible and carefree with no cleaning etc..

 

[new_trader]

now how do I get that one past the wife.....:whistling

Sell her too and rent another one

 

[spreader_legger]

Is yours for hire??

Sell her too and rent another one

 

[dazfletch007]

Still looking and hoping to find the one that really works and tried hard to find it. Hopefully one i test will b e the one but none I have ever tried has worked properly and made money so far so mortgage being paid off is just a dream

 

[JRP2891]

Still looking and hoping to find the one that really works and tried hard to find it. Hopefully one i test will b e the one but none I have ever tried has worked properly and made money so far so mortgage being paid off is just a dream

Maybe one needs to look within oneself for the answers...!