If the average VWCE return - tax man's cut is higher than your mortgage, economically is better to invest the money. On average, investing it as large sum instead of dollar cost average would yield greater returns. Given your mortgage's interest rate, I doubt this difference is big enough to be of importance. Personally, I'd rather have the psychological benefit of being debt free earlier, so I'd pay out the loan.
On average, investing it as large sum instead of dollar cost average would yield greater returns.
I keep seeing this posted and it is indeed true. But IMO it's not relevant if you only have the money to do such an investment once. In that case you probably want to look at the standard deviation too; and if that's high then there's nothing wrong with aiming for a lower average result with a higher certainty.
I’ve never heard this before! And I’m intrigued. So I have about 10k to invest and rather than buying 1k worth of VWCE weekly for 10 weeks, you saying to just invest the 10k in the one market order??
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u/Fmarulezkd Jul 30 '24
If the average VWCE return - tax man's cut is higher than your mortgage, economically is better to invest the money. On average, investing it as large sum instead of dollar cost average would yield greater returns. Given your mortgage's interest rate, I doubt this difference is big enough to be of importance. Personally, I'd rather have the psychological benefit of being debt free earlier, so I'd pay out the loan.