Investment informant

Ruapehu Bulletin, Volume 12, 20 September 1994, Page 10

Investment informant

By Warrick Funnell Independent investment adviser. I have just inherited $50,000. My problem is I don't know whether I am better to put this toward paying off my mortgage, invest in another rental property or invest it in some other way. Any ideas on which would be better in the long run? More money than options Dear More Money than Options Each individual investment must be appraised on its own merits. We find that residential real estate investments usually have a projected internal rate of return of about 8% but each particular deal could be more or less than that amount. There are other property investments such as local commercial ones which indicate a return of 1 1% which may be better than owning residential property. There are many other types of recognised investments that will, over a long period of time, average out to 10- 1 2% return. If you are only paying 8% on your mortgage it may be better to invest than to pay off the mortgage. However it is also true to say that paying off the mortgage is a very safe and sure way of increasing your nett worth. So such a decision will also be based on how aggressive you wish to be when making investment decisions. Disclaimer - The advice given here is of a general and non-specific nature. It is essential to seek full advice for each individual case before any action is taken.