Invest or Pay Off Debt? - Hot Topics Q&A

Q. I am a 48 year old doctor working as a Consultant with some private practice earnings. I have around £800 per month that I can spare to invest, but am extremely nervous of the stock market. I have stayed away from this type of investment so far, but colleagues say this is the best time to buy into the stock market due to the recent falls.

I can see their point, but still feel very uncomfortable with this, and I do like to sleep at night! My adviser has also suggested buying a bond that invests in UK Funds and that I should do well.

I do have a mortgage debt of around £119,000, so would reducing this not be more sensible? 

What do you suggest?

A. We can certainly appreciate your confusion, and it is clear that you have huge reservations about investing your money into the stock market.

Keeping this simple here, we would suggest you accelerate your debt repayment programme if this is what you feel most comfortable with.  Having just heard that the Bank of England rate has been slashed from 4.5% to 3%, you have the opportunity to make massive inroads into this debt.

In your letter you say you have a lifetime tracker mortgage, and this means you will benefit from this reduction. It would mean in your case, for example, that you could pay off your mortgage at around age 55 instead of age 60.

This of course is risk free! 

I hope this helps.