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pay off part of mortgage or leave cash in the Bank?

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  1. #1

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    pay off part of mortgage or leave cash in the Bank?

    to pay off part of mortgage or leave cash in the Bank?

    lots of talk of a global meltdown, savings melt down.

    or do I put into other government bonds etc?

    obviously paying off the mortgage changes the monthly overheads.

    or should I buy a hut in the Hills in New Zealand?


  2. #2

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    I'm still getting the bank to give me as much money on a mortgage as possible - they will still lend at ~2.5% and if you just stick it in a RMB bond you could expect a yield of ~6% with minimal risk. To me that's free money.


  3. #3

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    Quote Originally Posted by PDLM:
    I'm still getting the bank to give me as much money on a mortgage as possible - they will still lend at ~2.5% and if you just stick it in a RMB bond you could expect a yield of ~6% with minimal risk. To me that's free money.
    Don't know if you realise this, but buying CDOs ("minimal risk" fixed income securities) with borrowed money is exactly what the gambling ibankers did pre-2008....

    I would stick to whatever mortgage payments you originally agreed to, and use extra cash to buy corporate bonds of creditworthy companies (sorry, I only know European companies - no idea if you can for example buy Munich Re bonds in HK).
    dumbdonkey likes this.

  4. #4

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    Quote Originally Posted by audiot:
    to pay off part of mortgage or leave cash in the Bank?

    lots of talk of a global meltdown, savings melt down.

    or do I put into other government bonds etc?

    obviously paying off the mortgage changes the monthly overheads.

    or should I buy a hut in the Hills in New Zealand?
    Sit on the cash for now - cash is King. And then when assets really hit rock bottom, use that cash and the additional purchasing power you then have to buy up an income-producing asset cheaply.

  5. #5

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    Quote Originally Posted by er2:
    Don't know if you realise this, but buying CDOs ("minimal risk" fixed income securities) with borrowed money is exactly what the gambling ibankers did pre-2008....
    I really don't think that a bond issued by a Chinese state-owned entity is comparable with a CDO (which were minimal risk only in the eyes of the ratings agency, who, experience has shown, have absolutely zero credibility)

  6. #6

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    Quote Originally Posted by PDLM:
    I really don't think that a bond issued by a Chinese state-owned entity is comparable with a CDO (which were minimal risk only in the eyes of the ratings agency, who, experience has shown, have absolutely zero credibility)
    back in 06 they were certainly saying the same about CDOs...

  7. #7

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    In 2006, everyone would have considered mortgage lending to be minimal risk. Of course, subprime obligors defaulted from time to time, but then you foreclose and auction off the property and recover at least 95% of the loan, so, where is the problem? And then you start leveraging it more and more until you come to the point where even small losses wipe out your capital, and swoosh....

    China looks good right now, all right. But provincial-level debt has reached really staggering levels, and I don't think it is impossible that, at some point, we see province-owned enterprises default. Yes, unlikely. But not impossible, and thus, yes, comparable to CDOs. Before 2006, no one knew really what a CDO was, just that they somehow bundled mortgages and paid decent interests. Right now, no one knows what's going on in Chinese companies (especially state-owned), other than "China is the future" and that they pay decent interests. It might be a good investment, but I would never use borrowed money to leverage it. I don't believe there is such a thing as free money.

    @randy - I rely on you to inform us all when exactly we've reached rock bottom ....

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  8. #8

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    Keep your money in the bank and you're losing local purchasing power at the rate of inflation which is at least a couple of % not to mention the devaluation of your money since the greenback is continuing to tank. Whatever you do, you take a risk so do what feels most comfortable to you.

    If it were me, I would do anything except keeping my money in the bank because I know that will get me absolutely nowhere and I prefer to take risks, reap the benefits and assume the downsides when they happen. I am millions down this year but I'll keep on buying as long as things keep going down. I'm not stupid enough to think I can time the bottom When things start going up I'll start to sell as I bought...gradually.

    If you don't like risk, pay off the mortgage. If you do, invest at whatever level of risk you're comfortable with...


  9. #9

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    Quote Originally Posted by gilleshk:
    If you don't like risk, pay off the mortgage. If you do, invest at whatever level of risk you're comfortable with...
    .....but definitely do one thing.....or the other
    luckycat likes this.

  10. #10

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    [QUOTE=er2;1744353@randy - I rely on you to inform us all when exactly we've reached rock bottom ....[/QUOTE]

    Sure - will let you know. Look for the Hang Seng to hit below 15,000. Is already very cheap, but if the index ever gets to 15000, load up and buy pretty much anything and you will do fine!


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