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Discussion Starter #1
I know this question has been raised so many times but the situation is quite dynamic. so here it goes again.

i just paid off my car loan of 14k (2 minutes ago) and i think i still have about 10k cash. our rrsp rooms have been maxed out and so is our last years tfsa. wife is on mat leave (EI) till next march. we still have about 100k on our mortgage. till last week we were going aggressive on our mortgage since it was at 5% fixed. now i have renewed it at P-0.4 variable. since the interest rate is so low, the question arises. should we continue to be aggressive on our mortgage or start investing? is the market condition conducive enough now to get in?

any comments, suggestions appreciated!!! if it helps, we are 31-32 yr olds and have a 2 yr old and 2 month old. i prefer to stay away from resps for a while.
 

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In my opinion as long as the mortgage gets paid off for retirement then use money to invest.

There is a fantastic sale in the market right now, although prices may go even lower. How low, and for how long? No one knows.
 

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IMHO pay the d**n mortgage! You will have so much more cash flow and so many more financial options open to you once you get rid of that albatross. (Although why you would prefer to stay away from RESPs for a while is a puzzler - at least consider contributing enough to maximize the CESG)
 

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Discussion Starter #4
its still under consideration. we are not sure if we will permanantly settle down in canada or our kids will go to univ here...
 

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I know this question has been raised so many times but the situation is quite dynamic. so here it goes again.

i just paid off my car loan of 14k (2 minutes ago) and i think i still have about 10k cash. our rrsp rooms have been maxed out and so is our last years tfsa. wife is on mat leave (EI) till next march. we still have about 100k on our mortgage. till last week we were going aggressive on our mortgage since it was at 5% fixed. now i have renewed it at P-0.4 variable. since the interest rate is so low, the question arises. should we continue to be aggressive on our mortgage or start investing? is the market condition conducive enough now to get in?

any comments, suggestions appreciated!!! if it helps, we are 31-32 yr olds and have a 2 yr old and 2 month old. i prefer to stay away from resps for a while.
If it were me I'd put the 10k into the market, but pay off your mortgage at the same amount per payment that you were paying at 5%.

So if your old payment was $1000 and your new payment is $800, still pay $1000, and your life won't really change but you'll be paying off the mortgage quickly.
 

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pay off the mortgage...I wouldn't sink 2 cents into the market at the current time. Paying off your mortgage is akin to making a guaranteed investment at your rate of interest. Plus, it gives you peace of mind. Nobody who is wealthy has a mortgage...
 

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Discussion Starter #8
thanks for all your advice. i am not sure how rbc renewed my mortgage, but my payment is now actually more than what it was at 5% and this was one thing i had no complaints with. cos i was going full double up earlier.

for now, i think, i will continue to go double up and also start PAC DRIPs on my RRSP with the spare money that i have. any suggestions for good equity ETFs are welcome since this will be my first time doing it. the only other ETFs i have are HOU and XIU
 

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thanks for all your advice. i am not sure how rbc renewed my mortgage, but my payment is now actually more than what it was at 5% and this was one thing i had no complaints with. cos i was going full double up earlier.

for now, i think, i will continue to go double up and also start PAC DRIPs on my RRSP with the spare money that i have. any suggestions for good equity ETFs are welcome since this will be my first time doing it. the only other ETFs i have are HOU and XIU
You may want to look into how you're paying a lower rate but a higher amount. Did you change the amortization of your loan?
 

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Discussion Starter #10
You may want to look into how you're paying a lower rate but a higher amount. Did you change the amortization of your loan?
might be. i will check the agreement again. since the payment increased, i did not bother to look into details. the thing was that the actual term remaining was less than 60 months while the minimum period rbc would go with for variable rate was 60 months. so the rep was playing around with this to see how she could adjust the renewal.
 

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I'm planning on shoveling money into the mortgage as I'm financed 95% on an expensive house lol. And that I personally think the markets are going to tank again.
 

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it's a no-brainer...pay it down as fast as you can...and then invest with money you can afford to lose. And I agree with your opinion on this market...too far, too fast...and with no real reason to do so.
 

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Ah thank you!!! That is the first calculator that I have seen that did this properly with continuous extra payments rather than one time lump sums.

According to the calculator with my numbers it always makes sense to put it in RRSPs even up to a 10% mortgage rate even at only 7% return!
 

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Discussion Starter #17
Ah thank you!!! That is the first calculator that I have seen that did this properly with continuous extra payments rather than one time lump sums.

According to the calculator with my numbers it always makes sense to put it in RRSPs even up to a 10% mortgage rate even at only 7% return!
but both mine and wife's rrsp has been maxed. i was talking about investing unregestired money.
 

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but both mine and wife's rrsp has been maxed. i was talking about investing unregestired money.
In that case I would have to go for the mortgage. You would have to get something like an 8% return to match the interest rate you are paying for your mortgage. You'd have to pay tax on any income from investments, so if you get a 5% return on your investment which would "match your mortgage interest" you would end up losing money.
 

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I'm always baffled by how one sided these forum discussion get re: paying down the mortgage. Sure you can't "guarantee" 8% returns every year, or predict when they might happen, but surely those who invested over the past year have returns that exceeded the interest rates of their mortgages.

My second pet peeve is when people say pay down your mortgage when the rates are low, more goes towards the principle. From a purely mathematical standpoint, makes sense to bank money when mortgage rates are low, then pay down aggressively when those rates are high.

I guess its like the old adage of 'buy low, sell high'. People seem to always do the opposite there as well.

:confused:
 

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I'm with you!

My rates are 1.65% right now, I'm shovelling money into my RRSP, if the rates go up then I'll do the opposite. When I was at 5% I was paying off the mortgage as that was a good gain IMO.

Emotions away, just do the math... but for some having no debt is a great feeling and liberating for sure. But leverage makes you rich if you do it properly.
 
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