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Alon Gal advises: close your mortgage or invest your savings?
The business coach is coming to Walla!
Business: Every week Gal advises in areas of life that concern us all.
This time: the listener and his partner saved hundreds of thousands of shekels - what should they do with the money?
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mortgage
Alon Gal
Alon Gal
Friday, 23 April 2021, 02:27 Updated: 02:28
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Her mortgage (Photo: ShutterStock)
The Corona year does not seem to have hit the real estate market, and in fact the demand for apartments is only rising. A listener who spoke with business coach Alon Gal on his program on 103FM radio said that he and his partner managed to save about 700,000 shekels, The
listener said that he and his partner currently live in the house, which is valued at NIS 2 million, and they have a mortgage of NIS 680,000 left. The two managed to save a considerable sum of NIS 700,000, and now they are debating whether to close their mortgage. Or invest the money in different channels. "My partner thinks we should take the money and close her mortgage.
I think not".
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Alon Gal advises: to buy an investment property or the dream apartment?
To the full article
Gal instructed the couple to conduct an online inquiry regarding the annual return on study funds over the past decade.
"You will suddenly see that all the leading training funds, almost all of them, have been making an average of 7-10 percent annual return in the last decade. That is a beautiful return."
He explained the importance of this: "A study fund is the best medium-term savings tool there is, because it is tax-recognized. On the other hand, it is perhaps the dumbest investment instrument there is. Despite this with so little wisdom and little investment, the tool knows how to give averages of 7- 10 percent a year for the last decade. "
He advised the couple to invest the savings in a solid investment portfolio for 5 years.
"After all, if you close her mortgage - you will not touch NIS 700,000, they will be in the walls. It is the same thing, you did not intend to touch the money anyway."
Overseas Real Estate Investment Portfolio
Later, Alon clarified to the listener that by investing the amount in a study fund, and not by closing her mortgage, they will earn a 5 percent return per year. "Show your wife that 5 percent of this amount is 35,000 shekels a year, do it at compound interest, for the 18 years left on her mortgage, that means a profit of another million shekels in the next 18 years. The money works for the money."
The listener replied, "I will make the conversation fun for her," and wondered if it would be right to invest in real estate abroad instead of in an investment portfolio. Gal expressed reservations: "Abroad you have to be very expert in this. In my view today, making a solid investment portfolio is a safer option in my eyes. Although buying an apartment for NIS 700,000 in the periphery, which knows how to yield returns, is also an option. "In
conclusion, Alon emphasized:" Her mortgage is a loan on the best terms possible, because there is a house. There is almost no risk to the bank, so the conditions are excellent. I would not close the money but invest without a doubt at all."
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