Cash sitting in the bank -- invest it or pay down the mortgage?

[Phanuthier]

What business's have you bought, simmer?

[MoneyGuy]

Originally Posted by simmer2

That's why you need to screen which business you are buying. If you set out criteria and only go after companies with those criteria, then it's not that risky. And a lot of folks that run their own business have one that is too small to be self-sufficient. That's why it is good to go after a company that has a bit of size to it. 8-10 employees kinda thing.

Obviously, it isn't for everyone either. Sometimes, like you say, folks are better off going for "singles and doubles" because they are more comfortable with those. And you can do very well with those investments if you are smart and have a good advisor.

Agreed. I'mjust saying that it's very difficult to do, is all.

[SaskaBushFire]

Originally Posted by V

Pay down the mortgage, and then use the equity to invest.

Ok I am sorry but is that are name, V? I have never seen you post before but yet it says you have been here for years.

Has to be a re name, am I crazy?

Also about the money problem..

Hookers and blow.

Can't believe it made it to page three without that..

[SeeGeeWhy]

Originally Posted by Phanuthier

What business's have you bought, simmer?

One and counting.

[algernon]

Originally Posted by SeeGeeWhy

One and counting.

???/\enquiring minds...

Does anyone have info about the tax-free savings acct mentioned above? I've been away since Nov, and am wondering about this. TVP 2003: how'd things shake out for you?

Edit:

Googled: here
And this from RBC

Looks interesting. Does it keep money in people's pockets long-term?

[Dion]

Pay down the mortgage.

[macker]

Check out this site : http://www.taxtips.ca/rrsp/mortgagevsrrsp.htm

You may also want to eventually open an account with E-Trade where you can buy stocks and index funds that will allow you to invest without paying MER's. You will still be paying trading fee's but they have come down a lot and with E-Trade it is $9.99 per trade. Not bad value IMO. Just buy a basket of large cap/blue chip companies that have a history of increasing their dividends. You can create your own mutual fund for a fraction of the cost! You can even cherry pick off of the top fund managers top 10 holdings lists....If you don't have an hour to put into this each week then you are best to go the traditional mutual fund route which is safe and boring but you won't get the same returns as part of your return is paying for the MER. There are soo many great sites now that it has become very easy to be a do it yourselfer! One of my favorites is www.stockhouse.com Good luck with your investing, and you mentioned maybe investing in real estate and this is one area that I would maybe stay away from unless you are bargain finding in the States IMO.

[macker]

If you want no risk accounts for cash just sitting there that you can get access to anytime check this site : http://www.cannex.com/canada/english/depa/depa01.html

You won't quite get the 5% you are looking for but you may want to park some of your money somewhere where you at least get more than you are likely getting now.

[Mike F]

Originally Posted by fotze

If you put a lump sum to the mortgage, does that automatically adjust the ratio of your mortgage payments of interest/principle. i.e. before the lump sum it is 85%/15% and after 75%25%?

I'm pretty sure that's how it would work.

When you originally sign the mortgage they calculate a payment schedule that would allow you to pay out the intrest accrued on the principal owing at the end of each month plus enough of the principal to drop the balance to zero at the end of the amortization period.

If you put down a lump sum on the principal, obviously you'll owe less interest at the end of each month thereafter than they originally estimted, so less of your next regular monthly payment will be eaten up by interest.

However, anyone considering paying down their mortgage needs to keep in mind that most mortgages are "closed mortgages" which limit the amount of these types of lump sum payments -- typically if you pay an amount more that 15-20% of the original principal (over and above your regular payments) in any one year, they'll penalize you 3 months interest (or the interest rate differential amount)

[MoneyGuy]

Originally Posted by fotze

If you put a lump sum to the mortgage, does that automatically adjust the ratio of your mortgage payments of interest/principle. i.e. before the lump sum it is 85%/15% and after 75%25%?

Yes, you're correct. When you make a lump sum payment on your mortgage it's applied directly to the principle and your monthly payments remain the same. Therefore your effective amortization decreases and the ratio of payments for interest and principle does change, with more of the payment amount directed towards principle paydown.