<nospam[at]nospam.com> wrote in message
news:lckso09e6fpei9n9knv014dlo8q5lbihbs[at]4ax.com...
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I did not meen to take out another loan. My calculations were from a
savings plan calculator. (Not a home loan calculator). What I ment was. Now
you have paid off the theoretical house. You use your $1569 that you used
to pay off loan to start saving/investing a month at 5 % a year over 10
years.
just saving that amount without the 5% = $18,828pa * 10 years = $188,280

- quote -

I believe mortages are compounded. If you Pay extra on your mortage than
your loan is lowed, which in turn you pay less interest and more of the
principal. Which has that ripple effect

$200k mortage
For example your first year you pay Principal = $4123.81 Interest $9906.35
And in your last year you pay Principal = $13657.45 Interest
$372.71

The interest is calculated on the remaining loan amount, Eg 200,000 and at
the end of year 1 your loan would be down to $195,876.19. Which would make
your interest for year 2 would $9695. So if you were to pay an extra $4800
on principal the first year, the interest for year 2 would be calculated on
$191,076.19 which will save you approx $240 in interest and which is paid on
the pricipal. Which will take your loan down to $190,836.19 And over the
years it will grow to a large saving.
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bi weekly works the same as weekly

I personally always live by the 10% rule. The savings from this gave me my
deposit for my home. And then started me on my portfolio. I do like to pay
off a lot on my mortgage when ever I can.
You seem like a clever person who can out perform your mortgage by a least
2% a year. Which will bring you out ahead. I think you should start your 10%
right away. Building your portfolio. The 10% rule should be done always.
And as you said before"if all your gains are non taxable capital gains,
your gains will be compounded."



======================================= MODERATOR'S COMMENT:
Please trim the post to which you respond.

On Sun, 7 Nov 2004 05:49:39 CST, "Starvin" <freedom[at]coming.com.auwrote:

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When I run the formula, payment=1569/mth, 5%/yr, 10 yrs, I got total
principle and interest =147,900. Were you using other numbers?

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capital gains, your gains will be compounded.

On the other hand, mortage interests are not compounded. So when you
invest, you earn interest on the interest you generate. But when you
pay down your mortage, you don't get the same effect.

Do you agree?


- quote -

Business investment loans and expenses are tax deductible, not sure if
they still are in personal income tax.

About paying down mortage weekly, I get pay biweekly, so I don't think
there is any advantage paying it down weekly.

<nospam[at]nospam.com> wrote in message
news:lk3qo05a14gdkktpnigalegpn162npr3k7[at]4ax.com...
- quote -

Consider the following A mortage of $200,000 taken over 25 years. and you
have $400 a month spare cash to either save/invest or pay off your mortage

Savings/investing
$400 a month at 5% compounded over 25 years =
contributed = $120,000 interest earned = $118,203.88
total at 25 years $238,203.88

Paying off mortgage Quicker
$400 a month extra paid on a $200,000 loan.
interest saved =$64,963 and nine years and nine months off the loan.
House Paid off in Approx 15 years
Your house will also be worth over $400,000 which is also a lot of equity to
borrow against for investing, (I will not go into that at the moment). Now
you can invest what you were paying on the mortgage for the next 10 years
you saved.
10 years of savings $275,005

The 10% rule is the most effective tool you can have. Due to compounding.
However a mortgage works the opposite. when you invest you get say 5%, and
then interest on that 5% etc. and when you get a loan you pay the bank 5%.
So on a $200,000 loan you end up paying the bank over $410,000 at the end of
a loan.

Ps. Paying your mortgage weekly instead of monthly, will save you over three
years on a $200,000 mortgage and $23,000
In Canada are investment loans and expenses tax deductible?

nospam[at]nospam.com writes:

- quote -

One thing you have to keep in mind is that paying down your mortgage
is an absolutely risk-free investment. You might earn more by
investing in emerging markets, but you might not; that's a notoriously
volatile and risky market segment to invest in. Over the 20 or 30
year period of your mortgage, those risks might even out, but if you
need to cash in some of your capital in the shorter term, you might be
out of luck. (A less risky strategy would be to invest your money in
a more conservative mix of stocks and bonds.)

-Sandra the cynic

Just read the Wealthy Barber and learned about the 10% saving rule.
But I'm now wondering if you have a mortgage, would you still be
better off to pay down you mortgage than to invest?

I guess it all depends on your mortgage interest rate and the return
from your investment. If you have a 5% interest mortage, you should
earn at least that much from your investment to be indifference of the
two options.

And your investment earnings should be largely in the form of capital
gains so that it wouldn't be subjected to tax.

I want to invest my money in some emerging markets, like South
America, China and I believe they should yield higher than 5% return
and thus I would be better off doing that than to pay down my
mortgage.

Is my thinking right? Mind you that I'm from Canada and our mortgage
interest is not tax deductible. Thank you.