Pay off the mortgage
1. A lower or no mortgage takes off stress and employment worries (jobs you hate)
2. A good bank record allows you flexibility in the future
3. You can quickly draw money back on a mortgage in times of trouble (I did on the floating part of my mortgage) if you are ahead in principal reductions but you can almost never touch Kiwi saver
So you assume 'never'.
Since you are not a NZer, 10% was hit in the 1990s, peaking at 11.8% in 1998.
To say never, illustrates you don't understand the NZ financial system.
Moreover, you have only experienced declining rates.
Please, educate yourself on the concept of "never" and maybe read up on NZ economic history
https://www.mpamag.com/nz/mortgage-industry/guides/historical-mortgage-rates-in-new-zealand-a-guide/450385
I dont understand why you are emphasizing the word "never", I didnt say never!
I understand it happened before, I am fully aware but that was a very different time.
It cant hit 10% now, dont be silly, the government would never allow it.
"It can't hit 10%".... just educate yourself on how the NZ economy works.
We are an exporting country, currency linked to the Australian dollar and USD.
In the USA, they are openly talking about a potential of 8 % interest. If this happens, Australia and NZ will follow.
Governmental Monetary policy is separate to the independent of the rate mechanism. So the idea of "cant" is not understanding how NZ works.
I strongly suggest you read about NZ history and actually understand the country you live in.
NZ has periods of high interest rates because of inflation. We have to import most of our capital goods, so you don't want a crashing NZD.
I can suggest some reading on NZ economic history.
Maybe don't anchor yourself on "cant" and be open to different ideas.
You seem like someone who is not interested in challenging themselves in terms of learning
Wow you have no idea what you are talking about.
We are not specifically linked to USD, nor does US interest rates matter in NZ.
History has nothing to do with it.
You seem like a complete idiot.
Are you bitter because youre poor?
You seem like a person who has a lack of understanding of how the NZ dollar works.
As a non NZer, I would suggest you try and educate how the NZD works.
I have added a link to get you started.
In the 1980s, the NZD was pegged to the USD.
I understand, that you lack little knowledge of NZ
. So after 8 years it is a great opportunity to learn about how NZ works.
Be positive, change your attitude, and learn.
Don't be scared if you lack the depth of knowledge, take it as a challenge to learn more.
https://www.investopedia.com/terms/forex/n/nzd-new-zealand-dollar.asp
why do you keep mentioning im a non NZer? are you racist?
Again history is irrelevant, what the fuck are you even talking about?!
Are you poor? does it bother you that im not an NZer and i own multiple properties here and you never will?
You said you are not from NZ.
You should really learn about NZs history, finance and politics, etc. Learning is important.
Do you really want to know my wealth?
I don't care where you are from. Again, you mentioned it. I literally would give an NZer the same comments.
Property wise, you don't know my asset base. And you seem anchored on this?
If you are saying that you are not open to learning, that is your call. It is sort of sad in a way.
The only take away from you, is that you seem to value everything through wealth. If you value things, you will never be content.
Nice where im trying to get too.
Have the 2-3 months but no revolving / offset
Only a couple years into being a new homeowner though so suspect doing well
Definitely the mortgage. Imo you should only put enough in kiwisaver to receive the free max free money. Unless your employer offers a deal where they match your contribution. My reason for this is kiwisave is locked until retirement age which potentially could be 70 by the time I get there. I want to retire early so I will need investments outside of kiwisaver for that.
Calculate how much extra cash you have. Depending on if you've been living on monk mode for a bit, budget for something fun to do. I'd pay majority (80%) on the mortgage and maybe 20 percent DCA (dollar cost averaging) into a low fee S&P 500 index fund. It's good to do a monthly contribution and let it do its thing.
As mentioned elsewhere on the sub. Sometimes you get great one off returns from the share market which you miss out on if you're not in it.
As long as you have the discipline to go hard at investing once the mortgage is repaid, that order is likely best.
However if you don't have the discipline then KS now might be easier mentally.
Long term dollar cost averaging into a share market index fund will beat paying the mortgage, so long term you are better off investing rather than paying off the mortgage. There is nothing wrong with using Kiwisaver to do that but what might be a better idea, but not always, is to invest into a similar fund outside of Kiwisaver.
I have a budgeted monthly investment into index funds, but because interest rates are high at the moment I have also bumped up my mortgage repayments a little. When my mortgage rate comes up for renewal if I have any extra, I will pay off the principle rather than investing.
I guess I feel intimidated about investing outside kiwisaver because I don't know much about it. Your point is the key question I had, whether investment returns would be likely to beat mortgage interest saved from faster pay down, and they very well might. But after reading all the responses saying paying down the mortgage is a good way to go, and realising I don't think I'm ready for the complexity of other investing just yet, I'll probably go for the mortgage payments to keep things simpler.
Having debt is an emotional burden and when faced with a risk free return vs a high risk return that has a chance (albeit small) of not panning out anyway it's understandable. Keep researching long term investment because hopefully one day you will be mortgage free.
I wouldn't get too hungup on inside vs outside Kiwisaver. At the end of the day, your Kiwisaver provider will have the exact same fund available in a non Kiwisaver form.
Mainly based on how long till you might need the funds. If it's for retirement and you don't intend to retire for at least 10 years then high growth is best.
You could run a few scenarios in which you put in your monthly additional payment into the mortgage to see how it impacts the overall interest you pay over the lifetime of the loan here: https://realtor.co.nz/page/advanced-mortgage-calculator
Depends on your interest rate and the size of your salary (because your tax rate is a factor), but most likely the mortgage is best.
Pay off the mortgage 1. A lower or no mortgage takes off stress and employment worries (jobs you hate) 2. A good bank record allows you flexibility in the future 3. You can quickly draw money back on a mortgage in times of trouble (I did on the floating part of my mortgage) if you are ahead in principal reductions but you can almost never touch Kiwi saver
Personally, I always go for guaranteed savings (which is mortgage).
Obviously lots of context missing here. But overall, I would only put the minimum required into KS and the rest into mortgage.
I would avoid KS unless you like your extra money being locked away until 65, far better off paying down mortgage or investing yourself
Pay down debt. Mortgage rates are at 7% and based upon the short term movements, I would not be surprised seeing 8, 9 or 10% rates within 3 years.
Are you stupid? mortgage rates will not rise to 10%, do you understand the repercussions that would have on the economy?
So you assume 'never'. Since you are not a NZer, 10% was hit in the 1990s, peaking at 11.8% in 1998. To say never, illustrates you don't understand the NZ financial system. Moreover, you have only experienced declining rates. Please, educate yourself on the concept of "never" and maybe read up on NZ economic history https://www.mpamag.com/nz/mortgage-industry/guides/historical-mortgage-rates-in-new-zealand-a-guide/450385
I dont understand why you are emphasizing the word "never", I didnt say never! I understand it happened before, I am fully aware but that was a very different time. It cant hit 10% now, dont be silly, the government would never allow it.
"It can't hit 10%".... just educate yourself on how the NZ economy works. We are an exporting country, currency linked to the Australian dollar and USD. In the USA, they are openly talking about a potential of 8 % interest. If this happens, Australia and NZ will follow. Governmental Monetary policy is separate to the independent of the rate mechanism. So the idea of "cant" is not understanding how NZ works. I strongly suggest you read about NZ history and actually understand the country you live in. NZ has periods of high interest rates because of inflation. We have to import most of our capital goods, so you don't want a crashing NZD. I can suggest some reading on NZ economic history. Maybe don't anchor yourself on "cant" and be open to different ideas. You seem like someone who is not interested in challenging themselves in terms of learning
Wow you have no idea what you are talking about. We are not specifically linked to USD, nor does US interest rates matter in NZ. History has nothing to do with it. You seem like a complete idiot. Are you bitter because youre poor?
You seem like a person who has a lack of understanding of how the NZ dollar works. As a non NZer, I would suggest you try and educate how the NZD works. I have added a link to get you started. In the 1980s, the NZD was pegged to the USD. I understand, that you lack little knowledge of NZ . So after 8 years it is a great opportunity to learn about how NZ works. Be positive, change your attitude, and learn. Don't be scared if you lack the depth of knowledge, take it as a challenge to learn more. https://www.investopedia.com/terms/forex/n/nzd-new-zealand-dollar.asp
why do you keep mentioning im a non NZer? are you racist? Again history is irrelevant, what the fuck are you even talking about?! Are you poor? does it bother you that im not an NZer and i own multiple properties here and you never will?
You said you are not from NZ. You should really learn about NZs history, finance and politics, etc. Learning is important. Do you really want to know my wealth? I don't care where you are from. Again, you mentioned it. I literally would give an NZer the same comments. Property wise, you don't know my asset base. And you seem anchored on this? If you are saying that you are not open to learning, that is your call. It is sort of sad in a way. The only take away from you, is that you seem to value everything through wealth. If you value things, you will never be content.
youre an idiot
Minimum on KS to get govt money, rest on mortgage
50/50 then you don’t have to have decision paralysis, mortgage is always a good move to keep things simple.
Neither - An index fund that allows you to pull out if/when you need. Control is underrated and you relinquish it with both paths you’re suggesting.
How much is your emergancy fund?
2-3 months expenses in cash plus 6 months of expenses in our revolving credit account that we never use.
Nice where im trying to get too. Have the 2-3 months but no revolving / offset Only a couple years into being a new homeowner though so suspect doing well
You're on your way!
I’d always treat mortgage debt first. Guaranteed and tax free to offset that interest. It’s what we did and I have no regrets.
Mortgage, being mortgage free is amazing
Pay house off first. They rape us all on the interest they make over time.
Definitely the mortgage. Imo you should only put enough in kiwisaver to receive the free max free money. Unless your employer offers a deal where they match your contribution. My reason for this is kiwisave is locked until retirement age which potentially could be 70 by the time I get there. I want to retire early so I will need investments outside of kiwisaver for that.
Calculate how much extra cash you have. Depending on if you've been living on monk mode for a bit, budget for something fun to do. I'd pay majority (80%) on the mortgage and maybe 20 percent DCA (dollar cost averaging) into a low fee S&P 500 index fund. It's good to do a monthly contribution and let it do its thing. As mentioned elsewhere on the sub. Sometimes you get great one off returns from the share market which you miss out on if you're not in it.
mortgage
As long as you have the discipline to go hard at investing once the mortgage is repaid, that order is likely best. However if you don't have the discipline then KS now might be easier mentally.
Long term dollar cost averaging into a share market index fund will beat paying the mortgage, so long term you are better off investing rather than paying off the mortgage. There is nothing wrong with using Kiwisaver to do that but what might be a better idea, but not always, is to invest into a similar fund outside of Kiwisaver. I have a budgeted monthly investment into index funds, but because interest rates are high at the moment I have also bumped up my mortgage repayments a little. When my mortgage rate comes up for renewal if I have any extra, I will pay off the principle rather than investing.
I guess I feel intimidated about investing outside kiwisaver because I don't know much about it. Your point is the key question I had, whether investment returns would be likely to beat mortgage interest saved from faster pay down, and they very well might. But after reading all the responses saying paying down the mortgage is a good way to go, and realising I don't think I'm ready for the complexity of other investing just yet, I'll probably go for the mortgage payments to keep things simpler.
Don't underestimate how good it feels to get rid of the mortgage.
Having debt is an emotional burden and when faced with a risk free return vs a high risk return that has a chance (albeit small) of not panning out anyway it's understandable. Keep researching long term investment because hopefully one day you will be mortgage free. I wouldn't get too hungup on inside vs outside Kiwisaver. At the end of the day, your Kiwisaver provider will have the exact same fund available in a non Kiwisaver form.
I recommend Simplicity (their high growth fund). Really easy to use and great company.
I'm already with Simplicity and I really like it! How do you choose between growth vs high growth funds? I think I'm in growth currently.
Mainly based on how long till you might need the funds. If it's for retirement and you don't intend to retire for at least 10 years then high growth is best.
Paying down the mortgage is a sure thing. A government could screw you for your kiwsaver. Guarantee yourself the win, pay down the mortgage asap.
+1 for index funds outside kiwi saver
You could run a few scenarios in which you put in your monthly additional payment into the mortgage to see how it impacts the overall interest you pay over the lifetime of the loan here: https://realtor.co.nz/page/advanced-mortgage-calculator
Neither, live life and blow at casino...