Paid off house, now what?

Most people who have bought a home spend several years and sometimes decades paying off their home. They work hard day in – day out, week in – week out for many years striving to pay off that home. For many with a mortgage, thinking about paying it off is a constant in their lives.

If you have paid off your house or are close to it, congratulations !!!

While many people dream about making that last mortgage payment and the feeling of satisfaction that will come with that achievement. Not many think about what’s next? What should I do with the spare $,000’s a month I no longer have to put into the mortgage?

Well, the good news is that now life can get even better. There are plenty of options available. Some options are about maximizing your financial situation for retirement; and some are about maximizing your enjoyment of life now!!

Some of the options and considerations with your now spare $,000’s per month on the financial side include:

Increase your savings

  • Watching your savings grow is a great feeling
  • Earn 3 – 4% interest in Australia on your savings
  • Savings will give you the opportunity to earn a higher return from some of the options below

Buy an investment property

  • Having a tenant paying off your new mortgage is a great idea
  • Buy and sell costs and the need to wait for capital growth make it a very long term investment
  • High Aussie property prices at present mean it is likely you will be in a negative gearing situation ie your costs to own the property will be greater than the rent you are paid

Open a managed fund

  • Put the equivalent of your $,000’s savings into a managed fund
  • Your returns will track closely with that of the share market
  • Managed funds do charge fees however regardless of whether they make money for you or not
  • Being a more liquid asset, it is easier to commute your holdings to cash if something changes in your life

Buy shares

  • Picking the right companies shares at the right time can grow your money quicker than all other options without the need to go back into debt
  • However, without adequate knowledge, the risk of buying either the wrong companies or buying at the wrong time is quite high

Consider the Edge Fund

  • If you are reading this, why not?
  • We buy shares in the right companies and work hard to buy them and sell them at the right time in order to outperform the market
  • We use our extensive knowledge to invest in a safe, reliable and profitable manner
  • Our investors use us as they don’t have the time, interest or knowledge to devote to successfully investing in shares themselves. They would prefer to be out doing other things with their career and living life while we take care of their financial future
  • By outperforming the market, we maximise our investors returns in order to take advantage of the good financial position they are already in

Increase your superannuation

  • “Salary sacrifice” is an option to take some of your current salary and divert it into your superannuation account
  • A decent option however you will accrue fees each year along the way similar to that of a managed fund

The goal with all of these options is to retire earlier and with more money to enjoy in retirement. The choice from these alternatives will be about what will suit your personality and stage in life.

Okay, enough of the boring stuff
What are the fun options now available to me if I own my home?
What could I do to enhance my life now?

Drop back to part-time work

  • Without a mortgage, you many feel you do not need the extra income
  • You can spend a couple of days a week doing what you want

Spend a bit more

  • Buy a nice new car
  • Go on a long holiday
  • Renovate your house

Quit work and start your own small business

  • A small business in a field you are passionate about is a great idea
  • You may be working hard however, if you love it, it won’t feel like work

Other lifestyle enhancing options might include:

  • Start a new recreational activity such as dancing, surfing or golf
  • Start a new career
  • Start a new course in a field of interest
  • Do some volunteer work to help the community

A balanced approach is probably best and the beauty is that once you own your home, the options are plentiful and endless.

Owning your own home is a great opportunity to start putting some extra money aside for your retirement. It is also a great time to start living and enjoying your life more.

Owning your own home is a wonderful opportunity to pursue your dreams!!

This article is written by Dean Mico.

The information provided in this article is intended for general use only. The article is intended to provide educational information only. Please be aware that investing involves the risk of capital loss. The information presented does not take into account the investment objectives, financial situation and advisory needs of any particular person, nor does the information provided constitute investment advice. Under no circumstances should investments be based solely on the information herein.

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