You can spend on the mortgage for investment and the sun

Buying real estate today is many people. The availability of mortgages, relatively short years and rising real estate prices in the future are a motivating factor. Even if you have enough pensions for the property, you can take out a mortgage and cash better.

Therefore, if a situation arises where you have a certain amount suitable for buying real estate, you can use it in several ways. One of them is the possibility that you take out a mortgage and do not use your own funds to buy real estate, but invest them. At a time when mortgages are still relatively cheap, this option seems to be very appropriate. When it is possible to invest funds in sufficient returnable products, the return on investment can cover the cost of installments and, in some cases, after the payment of the installment, you will have your own residence and the current amount you have invested. It is a bad idea for the selection of investment tools and how their returns will develop in the future.

Let’s say you have 2 million K at your disposal, which you will want to buy to buy an apartment. You can, of course, decide to invest all these resources in the apartment. If you opt for a mortgage, most mortgage banks today are able to pay a pension at 100% of the value of the property for a period of, for example, 15 years. Under these conditions, the minimum mortgage rate is around six percent (meme potat 6.5%). After taking into account the fee for keeping here and tax benefits, we should work around an effective year of around 5.5% and the annual installments would then amount to around 16,300 crowns (195,600 crowns per year). Together, we will pay almost 3 million crowns (in the event that we do not fix the years for the entire period of the investment, the mortgage may go to the forefront if they are called in the future).

What you are investing in is another opportunity to evaluate your disputes. If you want to meet the mortgage return on investment, it is certainly not easy to state that you will save pensions where you will have three million after fifteen years (it would be enough to invest in securities with an expected annual return of around 2.8%).

Not in any case is the investment combined with the mortgage suitable. The unsuitability is evident for those who would consider a fixed position or only in conservative, small-scale investment instruments. In this case, although investors have great hope that the returns will be relatively stable at all times, their amount does not reach the year they pay for the mortgage. Conservative investors should therefore invest the amount directly in housing and not complicate the situation with the risk of risk.

It is suitable (at the cost of a certain risk) and investments in risky instruments such as stocks, equity funds, index instruments, ETFs, etc. (high-risk instruments such as futures contracts, options, warrants or currencies will not be taken into account). Their long-term performance can reach around ten percent. It is therefore simplified because we would spend 200,000 crowns in the first year, which would be enough to cover the mortgage. And the amount invested in the portfolio would increase.

However, the fact is never regular, especially for risky instruments, that historical long-term performance does not mean that securities will continue to earn regularly in the future. In addition, not all stock markets achieve the same returns over time. Market inputs in developed countries may be lower, the average is not measured, but they are relatively stable. On the contrary, in emerging markets, inputs are completely common, which are several times higher. Volatility and thus the risk of loss is so much you. Due to fluctuations in risky instruments, the first years of investment may be decisive in this case.

It is easy that the investment will increase by more than the mentioned 10% in the first years, and even if the price is met, the value of the portfolio will grow. In the coming years, we will start from the same stock base, and even in the event of subsequent losses in the stock markets, we will end up with a significant contribution after fifteen years.

In the same way, however, there may be a case (as was the case, for example, in the years 2000-2002), when the shares will be sharply lost on investment. If we meet the lost, the investment portfolio will change rapidly, and despite the strengthening of the stock market in the coming years, we may end up in the negative in recent years. After several years of decline (even after the following number), deposits will not be enough even for regular installments.

One can diversify the portfolio into different types of assets with different risks and expected returns. The tools with its input potential thus significantly reduce volatility and the risk of sharp fluctuations. The risks of the tool will then ensure sufficient inputs, of which will be a mono payment, incl. The largest such portfolio should be represented by shares of developed countries (USA, Western Europe). These can provide a relatively stable, yet interesting input. Bonds, which will form a conservative component, reduce portfolio volatility, should represent a significant part of the portfolio. Shares of developing countries will certainly find their place in the city, and their income could have a positive effect on the returns of the entire portfolio.

One of the possibilities that is offered is the reallocation of the portfolio, which means that during the given period the investor changes his portfolio by gradually shifting funds from risky assets to conservative ones. For those who do not want to engage in a complex selection of investment funds and their reallocation or do not have experience with investment days, one of the options are the so-called life cycle funds. They are long-term products, their portfolio at the end of the investment consists mainly of risky equity instruments, over time they have a risk of risky and non-risky assets. At the end of the investment horizon (or the life of the product), most of the funds are placed in risk-free securities, which are exchanged for the value of assets in the portfolio.

Here, too, it is equally important that the risk of investing in the pastel returns you, especially in the first years. If the market succeeds in the first years, the proceeds from the event will create a sufficient reserve, which will be enough to meet the year even in later years, when the company will be placed in risk-free instruments.

Also in this case, however, there is a real risk that the investment will end in a hurry and the investor has delayed. In the event of a fall in the stock market in the first years of a permanent mortgage, investors who reallocate their funds would be able to go, but not those who invest in risky assets for the entire duration of the investment. The combination of low returns in recent years and the declining value of the portfolio (both due to the decline in the markets and the use of income from installments) will make it possible in recent years that nothing may remain of the amount invested and we will go to pay the mortgage from our own.

However, the investor has to deal with the risk of each investment. However, the reward for his submission is interesting in case of a hurry.

Heath IM Provement