Property vs pension

[FrontEnder]

If your life insurance is £10 a month and covers £500k, then go for it. If it's closer to £50 a month, then I'd say use some of your cash to clear your mortgage, then you don't need as much life cover and with the mortgage gone you can invest more.

If it costs £50 a month for the level of cover you require, then you need to pay it. Mortgage rates shouldn't come into the equation at all. Paying a few quid extra a month on your mortgage isn't going to reduce it by much, but could mean a significant amount less for your family if you die.

[WTFH]

Why are you looking at life isnurance like an investment. They're different things for different purposes.

OP: "I'm wondering if property or stocks are a better investment"
WTFH: "Do you have a car? Why bother with a car, It's just throwing money away - never mind 11% or 2%, it's a minus 100% investment"

Nope, not what I said and you know it, so please stop twisting my words.

The guy said he was more interested in investments than paying his mortgage. He then said he had life insurance to cover. So the money he is spending on life insurance is part of his investment strategy.
I'm suggesting that his chosen strategy might not be the best use of his investments at a time when interest rates are low and a mortgage could be paid off quickly.

If you think/hope/believe that interest rates will stay < 1% for the next 10+ years (or whatever time is left on your mortgage), then it's less of a risk. If you think interest rates are going to rise, then the money which could be used clearing the mortgage down now will end up being spent servicing the interest on the mortgage.

[WTFH]

Comparing apples and oranges there, surely.

Life insurance is there to provide for the family if you die. The payout would presumably pay off the mortgage, therefore taking away a significant financial commitment from the bereaved wife and kids. At least that's why I have life insurance.

My point being, while mortgage rates are still low, that's when you should be clearing that debt, rather than paying more when the rates rise. Some people seem to think that low rates means borrow more, but really it's the best time to clear your debts. Once you're debt free then you can look at taking riskier investments and you can put your money into savings (with the likely increase in interest rates).

If your life insurance is £10 a month and covers £500k, then go for it. If it's closer to £50 a month, then I'd say use some of your cash to clear your mortgage, then you don't need as much life cover and with the mortgage gone you can invest more.

[FrontEnder]

So why bother with the life insurance? It's just throwing money away - never mind 11% or 2%, it's a minus 100% investment.

Why are you looking at life isnurance like an investment. They're different things for different purposes.

OP: "I'm wondering if property or stocks are a better investment"
WTFH: "Do you have a car? Why bother with a car, It's just throwing money away - never mind 11% or 2%, it's a minus 100% investment"

[FrontEnder]

OK, so how much do you pay per month into life insurance (which has a zero return while you are alive), compared with how much you pay in interest on the mortgage?
You said you saw paying off the mortgage as a waste, but you pay into an insurance policy instead.
For someone focused on the returns, is paying into an insurance policy a better investment than paying down the mortgage?

Comparing apples and oranges there, surely.

Life insurance is there to provide for the family if you die. The payout would presumably pay off the mortgage, therefore taking away a significant financial commitment from the bereaved wife and kids. At least that's why I have life insurance.

[WTFH]

Yes, it's much better because it is cover for a small but potential catastrophe. Paying a few hundred quid off the mortgage will in no way provide the same cover.
My mortgage is a couple of % interest, I am averaging 11% from investments, I think its the right choice.

So why bother with the life insurance? It's just throwing money away - never mind 11% or 2%, it's a minus 100% investment.

[lukemg]

Yes, it's much better because it is cover for a small but potential catastrophe. Paying a few hundred quid off the mortgage will in no way provide the same cover.
My mortgage is a couple of % interest, I am averaging 11% from investments, I think its the right choice.

[WTFH]

If I croak suddenly, my life insurance pays off the house and provides a ready surplus, this is structured to pay direct to my partner, not the estate.

OK, so how much do you pay per month into life insurance (which has a zero return while you are alive), compared with how much you pay in interest on the mortgage?
You said you saw paying off the mortgage as a waste, but you pay into an insurance policy instead.
For someone focused on the returns, is paying into an insurance policy a better investment than paying down the mortgage?

[lukemg]

I'm guessing from this you don't have a partner or dependents (or haven't seen high interest rates or spent a long time on the bench).
With others in your life, it's useful to have your finances in such a way that they will not suffer should something happen to you, but if all your money is locked away in long term investments and they can't easily access them (or it goes to probate), then their family home may well be repossessed.

You guess wrong I have both partner and dependents, I structure my finances accordingly. I will concede that the investments I have are in part easily accessible (ISA's).
If I croak suddenly, my life insurance pays off the house and provides a ready surplus, this is structured to pay direct to my partner, not the estate.
Similarly, the SIPP is externally held outside my estate for obvious reasons and covers longer term requirements.
While not ready to retire I am keen to be financially independent so that I can maintain my lifestyle immune to needing to work.
For me, that entails taking some calculated risk and investing in global markets as I cannot find a better way to generate the returns needed.
I see this as my plan B and have spent a long time getting to grips with it.
I would see property as the only reasonable alternative but BTL would definitely not suit me, I would just use a REIT or Commercial property trust (e.g. FCPT) to increase my exposure.
Good Luck all...

[SueEllen]

Reminds me of the time I questioned my IFA, what's the point of this Accident, Sickness and Unemployment Insurance? I never use it!

It's for the 5% of people who get hit by that "bus", survive and are unable to work for a while.