Ask Paul: Should I sell shares to pay off my investment property?

Dear Paul,

I am 39 and have been saving and investing now for nine years.

I hold two investment properties worth $800,000 and $570,000, with loans of $280,000 and $350,000 respectively.

I also have $180,000 in super, $240,000 in equities and $50,000 in cash for an emergency fund.

My question is, should I sell down my stocks and funds and pay off one of the houses? The house is paying $30,000 a year before tax and the equity portfolio is fully franked, paying $30,000. - Josh

My immediate thought, Josh, is why sell?

I am very concerned that I am missing something here.

Sure, we have higher rates of interest and cost-of-living pressures. You, however, are in a wonderful position.

With significant equity in your properties I suspect they are pretty close to break-even, with the rent covering interest and expenses.

Then you have emergency funds of $50,000, a healthy super balance for your age and a good share portfolio. To me, it seems as if you should keep steaming ahead.

Your properties are obviously well located; they have both grown in value well above your loans.

Your only reason to change an effective strategy is if your life has changed, and this is what I may be missing.

Maybe you want to take a couple of years off to travel, you are about to start a family and want to use one of the investment properties as your home, or you just want to reduce your debt and relax?

I'm really not sure. But based on what you have told me, unless your life plans have changed, you have a terrific thing going here. For a 39-year-old, you have a very valuable and well-diversified portfolio. Unless your life is changing, I would not change anything.

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