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wish I could afford one

Where Are You Putting Your Mortgage Principal Payments

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I've now been on HPC since 2007. Many others have been here longer. If we weren't dirty renters and had instead purchased a family home we would have by now made reasonable inroads into the mortgage principal.

Have HPC'ers spent that potential principal? If so where?

Have HPC'ers saved/invested that potential principal? If so where?

For me it's interesting that not buying a UK house has actually changed my life. Instead of buying the home I rented a much smaller flat. All of those savings including what would have been mortgage principal plus savings from living well below my means have been invested in equity, commercial property, gilts, NS&I Index Linked Savings Certificates, gold and cash. They've achieved an annualised return of 6.9%.

The strange thing is that I came here in 2007 and called myself wish_I_could_afford_one. Seven odd years on and I know longer have any interest in one. At the same time I feel more secure than I ever have.

Edit: grammar

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Money can bring some kind of security up to a point....other things in life are as important if not more so....for myself freedom and choices far out weigh stuff and tat... large lumps of property are all well and good and not so good but brings with it a great deal of unnecessary responsibility and can be a huge tie.....no debt, a bolt hole freehold place in a great safe place, then put into other places, out and about spread into other alternative safe places... ;)

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Money can bring some kind of security up to a point....other things in life are as important if not more so....for myself freedom and choices far out weigh stuff and tat... large lumps of property are all well and good and not so good but brings with it a great deal of unnecessary responsibility and can be a huge tie.....no debt, a bolt hole freehold place in a great safe place, then put into other places, out and about spread into other alternative safe places... ;)

I agree. I'm a fan of Maslow's Hierachy of Needs. The second level is Safety which among other things requires security of employment and security of property. By not maxing out on property it makes achieving security of employment much easier as you have far more options which then also in turn makes security of property easier.

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OP - I think you mean Principal. Principle means something completely different.

As a scumbag renter myself my stash is with the banksters (in which I include Building Societies). It gives me the feeling of financial security but I do assume that they will pay the money back that I have lent them.

I reckon my landlord is getting a gross yield of about 2.6% but as he bought the house many years ago he thinks he's getting a lot more. I'm happy enough handing over my dead money every month.

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OP - I think you mean Principal. Principle means something completely different.

As a scumbag renter myself my stash is with the banksters (in which I include Building Societies). It gives me the feeling of financial security but I do assume that they will pay the money back that I have lent them.

I reckon my landlord is getting a gross yield of about 2.6% but as he bought the house many years ago he thinks he's getting a lot more. I'm happy enough handing over my dead money every month.

Grammar was never my strong point. Have corrected the post but maybe the Mods idc can fix the title.

Are we really scumbags? I more think of myself as a dirty renter - after all my Landlord never really wants to repair things properly. Who needs hot water when you never bathe anyway...

How long have you been sitting in cash? Just conscious that after tax and inflation it's pretty hard to even stand still.

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Mortgage principal is SO 1980's.

I'm still mulling ovver what to do with the endowment that paid out at 11%over 25 years.....

A holiday or a BMW i think they said.....

Oh hang on, thats right, it didnt, cos i cashed it out in 1999, knowing it to be a stinking crock of shyte.

Edited by shindigger

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Being a renter makes me feel in control. I sold my house over 10 years ago and I'll buy again when I'm good and ready or when I get thrown out.

My landlord never does anything. If it needs fixing I fix it. If the house falls down completely then I'm off.

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Bit off topic, but being an admirer of the discipline you've shown in your investment strategy I thought you'd be interested in this article from this week's Investor's Chronicle.

https://anthonyfjgarner.files.wordpress.com/2015/02/investors-chronicle-the-power-of-passive.pdf

This is the first of a series, Investor's Chronicle is behind a paywall but the articles should be viewable on Anthony Garner's website (which is what I've linked to).

Good luck with your plan!

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I held mine in premium bonds which averages 2.2% gross until last month. I've just sunk most of it into a house at 50% LTV.

The house we're renting is £800 per month, the repayment mortgage will be £400 from next month. I could never make that back investing plus I would like some security. I have moved 26 times, the 27th will be my last.

I'm certainly not anti HPC now, I simply look at it as the bankers and government won. Falls of 50% would put a smile on my face, I might even decide to go into BTL at that point.

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Bit off topic, but being an admirer of the discipline you've shown in your investment strategy I thought you'd be interested in this article from this week's Investor's Chronicle.

https://anthonyfjgarner.files.wordpress.com/2015/02/investors-chronicle-the-power-of-passive.pdf

This is the first of a series, Investor's Chronicle is behind a paywall but the articles should be viewable on Anthony Garner's website (which is what I've linked to).

Good luck with your plan!

Thanks for the link. I buy into much of that but also remember to KISS (Keep It Simple Stupid). As you know I've been fully DIY since day 1 and have made plenty of mistakes. So far though these have been more than offset by:

- Time in the market not timing the market. I buy plenty but rarely sell. Buy and sells are based on strict rebalancing criteria (the author calls it a rule based investment system).

- Minimising expenses by not paying for expensive fund managers or IFA's with all their access to 'Big Data' but instead have used trackers to build my own balanced portfolio (again rule based)

- Minimising taxes (yes I avoid as much as I can)

- Be as mechanical as possible (again rule based) with a predetermined plan and certainly don't let emotion creep in. This includes shifting equity allocations slightly based on a mechanical valuation method (again rule based) to try and squeeze a bit more performance

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Thanks for the link. I buy into much of that but also remember to KISS (Keep It Simple Stupid). As you know I've been fully DIY since day 1 and have made plenty of mistakes. So far though these have been more than offset by:

- Time in the market not timing the market. I buy plenty but rarely sell. Buy and sells are based on strict rebalancing criteria (the author calls it a rule based investment system).

- Minimising expenses by not paying for expensive fund managers or IFA's with all their access to 'Big Data' but instead have used trackers to build my own balanced portfolio (again rule based)

- Minimising taxes (yes I avoid as much as I can)

- Be as mechanical as possible (again rule based) with a predetermined plan and certainly don't let emotion creep in. This includes shifting equity allocations slightly based on a mechanical valuation method (again rule based) to try and squeeze a bit more performance

I think there's another component to your strategy that's particularly important...you're well diversified. And that's not always easy, I'm sure like me there have been times when your instincts are pushing you to load up on one class of investments, but in a world where none of us know the future that's an urge that needs to be resisted.

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These are always interesting threads, and are always a good sense-check of whether you're mad to shun the great property fetishism of our time.

My situation is equities, NS&I bonds (back when it was worthwhile), private small business investments, and cash. I have also put more into a personal pension than I otherwise would have had I had a large mortgage to service (which is technically also equities at this point). The flexibility of having cash to put into business ventures has transformed my life from what it would have been if I'd taken a large mortgage.

Interestingly, our rented house is in an area that was once very poor but is now uber-gentrified, and our LLs are a boomer couple that got lucky and are sitting on a once in a century windfall. Their children live in the rough part of town and do minimum wage jobs at the central Post Office parcel department, and their grandchildren go to poor performing schools, which brings me to the philosophical part of the post.

If you are too young to have received the financial capital of property price appreciation, then you have to focus on building social and intellectual capital, that's one of the only things of intrinsic value available to you.

Our boomer LLs have benefitted massively from capital appreciation of an inherited property, but their children and grandchildren have not benefitted from any of this. The boomers have nice holidays and a nice retirement and are busy remortgaging to release capital to find the lifestyle they have become accustomed to (they remortgaged the house at aged 60), but their children live a life of minimum wage drudgery and by the time their boomer parents die there will probably be little or no capital left in the house.

Meanwhile it's our children that are growing up in the nice part of town where the schools, their peer group and local amenities are good and cultural and educational expectations are high, and we have a disposable income (because we don't have a huge mortgage) that allows us to pay for a decent lifestyle and save for our kids' education.

So the late 20th century neoliberal concept of freedom via property ownership has ended. It's been exposed as a ponzi scheme that has already excluded new entrants. Freedom in the 21st century more about flexibility to move physically and financially, and to do that you need skills and contacts and fewer ties to immovable assets, especially if and when this ponzi finally collapses.

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For me it's interesting that not buying a UK house has actually changed my life. Instead of buying the home I rented a much smaller flat. All of those savings including what would have been mortgage principal plus savings from living well below my means have been invested in equity, commercial property, gilts, NS&I Index Linked Savings Certificates, gold and cash. They've achieved an annualised return of 6.9%.

I have rented for 32 years

Never paid stamp duty, never paid agents fees. never accumulated 'stuff', never directly paid for anything for the fabric of a property, never so much as bought a carpet.

I was brought up with the home ownership model, but now I have no interest in buying a house. However, I wouldn't 'not buy a house' if the financial decision was correct.

I feel fairly financially secure due to saving and living in a way some would describe as frugally, but actually I consider better than others. Each to their own and no criticism. My enjoyment can be a good walk round the coast (in the rain today)

Right now I am damn glad I don't own a house or have a mortgage.

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I think there's another component to your strategy that's particularly important...you're well diversified. And that's not always easy, I'm sure like me there have been times when your instincts are pushing you to load up on one class of investments, but in a world where none of us know the future that's an urge that needs to be resisted.

Good point. Diversification is for me critical. Predominantly it's all about getting a whole pile of uncorrelated assets which in the modern financial world is possibly one of the only free lunches out there (if you believe in MPT). Coincidently this exact theme was the topic of my blog post this week. I called it 'my own balanced portfolio' above and I agree it takes real discipline. The way I overcame it was by going fully mechanical with preset rules which I've pretty much stuck with all the way.

The one I remember well was when we had all the euphoria over gold prices a few years back. No matter how much new money I was allocating to the worst performing assets within my portfolio the gold portion of my portfolio kept rising resulting in me being 25% over allocated to the precious in August 2011. I remember it well because it's one of the few times my strategy has forced me to sell down as usually new money to the worst asset fixes the over allocation. The average monthly peak was only a few months later. With the proceeds I was forced to buy European Equity and European Commercial Property. Since then those investments are up 45% and 38% respectively plus both have also spun off dividends.

Currently US equities are my most over allocated asset class but I haven't been forced to sell yet. Hopefully new money into my worst performing allocations - cash and then gold - will neutralise it before I have to sell some of those assets.

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... never accumulated 'stuff'...

That has been a crucial element for me. Opting out of consumerism and ignoring the billions that corporate marketing machines spend trying to get me to buy has been one of the most life changing decisions of my life. It allows me to live well below my means which has given me so many options.

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I found this sad

For me I no longer care for bankers and governments. I can't control what they do so I'm not going to worry about something I have no control over. I do however try and give both of them as little as I possibly can simply because if I can achieve that I'm helping my own family.

For me life is no longer worrying about others (including trying to keep up with the Jones's) but instead about my own Self Actualisation.

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Oh I completely agree - focus on 'investing in yourself'. I appreciate this is bullsh*t, but what I can't get over is the arbitrary nature of the outcomes - if you had planned to go into this crisis in a certain way, there was no guarantee you would have prospered.

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For me life is no longer worrying about others (including trying to keep up with the Jones's) but instead about my own Self Actualisation.

This is true and resonates, and is 'sad'. It is society's loss, without wishing to be seen as individually, arrogant.

I have opted out from caring about others of my generation in the UK, which is actually 'sad'. I just look after my very close circle.

I contrast, I care a lot about anyone up to the age of ~25 and go out of my way to help them if they show initiative.

Having said that, I do contribute a lot to others of any age around the world through giving free 'stuff' regrading what interests me and that can change lives.

Like you, my goal is to be financially 'free of the system'. It is something that my colleagues don't seem to understand. It is manifest by doing what I want and it is resented by many who are hostage to their mortgage.

As a result, I don't have an easy life by any means. However, mentally, I feel free.

(I've just drunk a bottle of 14.5% wine)

Edited by LiveinHope

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Oh I completely agree - focus on 'investing in yourself'. I appreciate this is bullsh*t, but what I can't get over is the arbitrary nature of the outcomes - if you had planned to go into this crisis in a certain way, there was no guarantee you would have prospered.

I agree and that's why I haven't backed a single horse. It's one of the reasons I'm amazed that some go 100% BTL as their future. Madness IMHO. My method has been use a number of routes. Some will be mistakes but as long as you get more winners than losers you're ahead.

If I had have lied to get a mortgage back in 2007 maybe I'd be further ahead. I don't know. What I do know is that even if my current route is not the optimal it's still working out pretty well. That's good enough for me.

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This is true and resonates, and is 'sad'. It is society's loss, without wishing to be seen as individually, arrogant.

I have opted out from caring about others of my generation in the UK, which is actually 'sad'. I just look after my very close circle.

I contrast, I care a lot about anyone up to the age of ~25 and go out of my way to help them if they show initiative.

Having said that, I do contribute a lot to others of any age around the world through giving free 'stuff' regrading what interests me and that can change lives.

Like you, my goal is to be financially 'free of the system'. It is something that my colleagues don't seem to understand. It is manifest by doing what I want and it is resented by many who are hostage to their mortgage.

As a result, I don't have an easy life by any means. However, mentally, I feel free.

(I've just drunk a bottle of 14.5% wine)

You are of course right. It's not the system I'd choose but unfortunately it's the system and even more unfortunately I'm just a tiny little speck within it so have no influence. Just think about how much better mankind could be if powerful people didn't try and continually get one up on others but were instead content with themselves.

Nobody but my direct family knows of my desire to be 'free of the system'. One day my colleagues might but the first notice of it will be when they hear the words 'I'm retiring early'. I suspect many of the responses will be along the lines of 'how, you're not even 45'.

(I haven't drunk any wine)

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We bought in 2011. My allegiance to the HPC cause meant we didn't over borrow or over spend and our choice of a modest 3 bed semi in what is considered a highly desirable village has been life changing.

It enabled my wife to leave a dreary 'safe' corporate job where her hard work seemed only to reward those above her handsomely and leaving crumbs for the drones to a new role in a new company faced with uncertainties (probation, redundancy etc) but potentially higher rewards. For now it appears to have paid off. She's had her review and is in line to receive an annual bonus which will be enough to clear the mortgage (£80k) and the outstanding finance on my car (£20k), pay the exit fees (£5k) and buy the Rolex which she is pining for.

Last year I'd never have imagined ourselves to be in this position and we'll soon be looking to purchase our second home (again modest 3 bedder) in an area that is a feeder into a really good secondary school nearby and live across both properties with the assurance that if our circumstances change for the worst we can rent one of our homes out.

Since the child benefit changes took effect (2012) we diverted money into our (her) SIPP to reduce her net adjusted income with the original intention of using this to clear our mortgage but now we can allocate it towards our children's university or career training fees. I've been in charge of this despite some disastrous choices (only last week one AIM listed company in my selection suspended trading (WTI) so I don't expect to see the £8.5k invested back) on a portfolio worth £60k with contributions of £80k :blush: now focusing on divi payers and the last two have done well for us (sains/esure) and the previous two trades fairly neutral (braemar/delarue).

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...

It enabled my wife to leave a dreary 'safe' corporate job where her hard work seemed only to reward those above her handsomely and leaving crumbs for the drones to a new role in a new company faced with uncertainties (probation, redundancy etc) but potentially higher rewards. For now it appears to have paid off. She's had her review and is in line to receive an annual bonus which will be enough to clear the mortgage (£80k) and the outstanding finance on my car (£20k), pay the exit fees (£5k) and buy the Rolex which she is pining for.

...

Congratulations. With bonuses like that your family could become Financially Independent very very quickly if you lived well below your means. I guess it's not for everyone and it's why we are all different. Personally I would never take finance on a car (I once did) and I certainly wouldn't be buying a Rolex (I once desired a Tag Heuer). Those things are no longer important to me.

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