Drop Your Debt Or Put Money in the Market?

With today’s low rates, the pay down debt or invest debate isn’t as clear cut as it used to be.

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Ever since people started borrowing money centuries ago, people also started worrying about being in debt. Nearly 250 years ago philosopher and economist Adam Smith made a comment that still rings true today: “What can be added to the happiness of a man who is in health, out of debt, and has a clear conscience?”

As Smith suggested all those years ago, for most people, being debt-free – and in control of your income – is good for the mind, the soul and the wallet. However, what Smith didn’t have back then was ultra-low interest rates and a robust capital market where one could conceivably make more money investing than paying down debt.

For today’s savers and investors, that’s the big question: pay down debt or invest?

There are many reasons why paying down debt first makes sense. It delivers a risk-free, after-tax return. This is especially true when you consider costly, high-interest credit card debt. The more you put towards paying off debt, the more you save in interest costs and that can equal more money in your pocket.

It can also have a profound emotional impact. In 2012, a study out of the University of Nottingham looked at the links between debt and depression and found that those who had trouble paying their debt obligations also showed evidence of poor psychological health.

Paying off credit card debt first makes the most sense because rates are often high. But when it comes to mortgage debt, the question becomes harder to answer. With some people paying below 3% fixed and variable rates these days, the cost of carrying debt is far lower than it has been in the past.

At the same time, the S&P/TSX Composite Index has returned 4.6% annualized over the last five years, according to S&P Dow Jones Indices, which is higher than the mortgage rate you’re paying.

In other words, if your debt is affordable, putting extra cash towards an investment with the potential for a higher return may be the better option.

With today’s low rates, the choice isn’t as obvious as it used to be, so talk to a financial advisor who has a good overall understanding of your financial situation. They can help you make the decision that’s right for you. And perhaps, you can get a little closer to Adam Smith’s philosophy of happiness.

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Take advantage of new mortgage promotions – effective June 22

Take advantage of new mortgage promotions – effective June 22

As summer approaches, we are pleased to announce exciting changes to our mortgage promotional rate offers,1 including two new promotions being introduced for our 36 and 48 month fixed rate terms.

Available for new-business transactions, including purchases, transfers and external refinances. Excluding internal refinances and blend and extend transactions.

 

New mortgage promotions

Term Purchase or

Transfer2

(No new money)

Refinance

Internal or External

NEW

36 month closed FRM

2.44% 2.54%
Family group assets $500K+3 2.34% 2.44%
Family group assets $1M+ 2.24% 2.34%
NEW

48 month closed FRM

2.49% 2.59%
Family group assets $500K+ 2.39% 2.49%
Family group assets $1M+ 2.29% 2.39%
Updated

60 month closed FRM

2.54% (no change) 2.64%
Family group assets $500K+ 2.44% (no change) 2.54%
Family group assets $1M+ 2.34% (no change) 2.44%

 

Note: No change is being made to current variable/ARAP offerings or rental property promotional rates.

Promotion parameters

  • Applicable to new business committed on or after June 22. Clients who have a commitment with one of the terms listed above will automatically receive the lower of the Annual Interest Rate effective at the time of Approval, or the Annual Interest rate in effect on the day the funds are advanced, according to the term selected.
  • For future refinances of existing loans using the blend option with the current promotional rate, the resulting end rate must be equal or greater than the current rate available for the new term selected. For example, if blending a client’s current term with the new 36 month promotion and the result of the blend is below 2.54%, the client will receive an end rate equal to the current promotion of 2.54%.
  • Not eligible for rate saves or rate guarantees. The rates are not guaranteed until the following has been submitted and received in Underwriting:
  • Signed and dated Acknowledgement and Consent Form
  • Loan application
  • Credit bureau report
  • Once the deal is approved, the rate is guaranteed for our standard 90 day commitment period.
  • Pre-approvals will be eligible for purchase transactions only. Our current pre-approval process remains unchanged.
  • Maximum commitment period of 90 days.
  • No further rate discretion will be allowed on promotional rates.
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Jim Pagiamtzis Speaking on Activity based management

Jim Pagiamzis shares insights on time management

Time
Event Management
Flex time
Fixed Time
Phone calls
Take the dog out!

Feel free to leave a comment

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The All-in-One as an active asset in retirement

Many homeowners approaching retirement view their home as their nest egg; however, the majority of retirees would prefer to continue living in their current home into retirement. Using the All-in-One, clients can transform their home from a fixed to an active asset, and have flexible access to the equity they have worked so hard to build.

0517_The All-in-One as an active asset in retirement

 

 

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EXCLUSIVE: 1381 Queen St East in Leslieville Toronto For Sale

EXCLUSIVE LISTING: 1381 Queen Street East, Detached Victorian Income Property Listed for Sale at $1,539,000

Leslieville Rental Property1381 Queen Street East, detached rental property (3 Units) in Leslieville (Toronto)

This Is A Stunning, Solid, Detached Victorian Home In Leslieville! Three (3) Self Contained Units,  Renovated Including Mechanics.  Beautiful Victorian Detailing…Leaded Glass Windows, High Baseboards, With Soaring Ceiling.  Two 1068 SF Self Contained Suites Tenanted ($1420.00 Per Unit), and One 1500 SF, 2 Storey, 3 Bedroom Suite That Can Rent For Approximately $3000.00 per Month (Owner Occupied).  Solar Panels That Reduce Hydro Bills.   Huge City Lot (23.29’ x 165’) With 6 Car Parking. AMAZING OPPORTUNITY!

Zoned Commercial/Residential.

Address: 1381 Queen St East, Toronto.

For viewing or more information contact: Baldo Minaudo, Broker, Real Estate Homeward, 416-564-0245.

Home may not appear exactly as shown in picture. Buyer solely responsible to verify all details and information. Not intended to solicit clients under contract with a brokerage.

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Originally published by Baldo Minaudo on BaldoMinaudo.com, Baldo Minaudo, M.B.A. is a Real Estate Broker located out of Toronto serving local and international clients. He may be reached through is office 416-698-2090 or through his website.

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