Sell my AAPL to pay down Mortgage?

Question

Hi Everyone! I purchased 32 shares of AAPL a few years ago, and it has nearly tripled in value since. I own two investment properties (closing on my third in two days), and I want to start paying down these mortgages, in addition to saving for more properties.

Here are the numbers:

32 Shares AAPL current mkt value - $6,384

Long-term capital gains tax (20%) - $820

Total amount left to invest in mortgage - $5,564

Principal left on mortgage - $62,000

Interest rate - 5.25%

I want to pay down this particular mortgage first because it has the smallest principal remaining, and the highest interest rate. I save enough from my W-2 job to meet my goal of purchasing one property per year, while also putting about 25% of my income into retirement accounts, so I would use this money to pay down the mortgage.

Do I capture AAPL around $200/share right now to pay towards the mortgage? Standing by for thoughts and suggestions...

Alexander Felice · Answer

Iet me make sure I'm reading this right.

you want to sell $6k worth of equities in one of the hottest stocks of all time, to pay down 10% of your mortgage locked in at 5.25%

if that's what you're asking, then you should absolutely not do it.

let your money make money. your mortgage rate is CHEAP and you'll experience zero cash flow difference from paying it down and not paying if off.

Joe Splitrock · Answer

Why pay down older mortgages while you are actively taking on new mortgages? I would just stock up my cash, acquire everything I want, then start paying it off. Or another approach is save up and pay cash for all future purchases. Paying off old (lower rate) loans to take on new (higher rate) loans is counterproductive is all I am saying.

Frank Wong · Answer

@Alexander Felice  @Douglas Spence

Haha, Douglas, he was not saying that.

Let me give you a perspective from a guy that pays cash for homes and likes to own them outright.  When you are early in your investing career investing with leverage is a good thing.  You need to be able to scale and gain equity because you don't have much.

Later in your investing career 10+yrs equity gain may not be as important and netting more per each deal and having more time will be.  That is when owning the properties outright and buying cash is the preferred method for someone like me.

Paying down the mortgage in your position does not make sense.  It makes more sense of saving money and looking for another deal.  When I buy cash I get an incentive to do so.  I get to buy properties that finance buyers can't, I don't have to pay lender fees, and lender title insurance, I also can get the deal bc of my quick close.  So you gotta have a benefit in paying cash.

Alexander Felice · Answer

that's not really what I'm recommending, either. LOL

I rarely recommend paying off mortgages, that's what you said YOU wanted, so I was trying to make the best case to get you there based on the parameters you set.

my personal recommendation would be to hold the AAPL stock, and don't pay the mortgage off early at all.

Alexander Felice · Answer

ok so sell the stock if you don't want to own it, but paying down the mortgage is still not a good plan unless you can pay it all off at once. (not that I would recommend that either).

paying 5k on a 60k mortgage changes your situation ZERO and increases your opportunity cost. If you think you should sell AAPL, go for it and get a better investment, but taking it out to get a 5% return is not a better investment and it doesn't' reduce your risk or overhead. If you really want to pay your mortgage off, keep stacking capital until you have enough to make the full payment.

Doug Spence · Answer

@Alexander Felice Thanks for the feedback! My concern is that the 'hottest stock of all time' can't stay hot forever right? I could lock in the gains and guarantee myself a profit, and reinvest that into an asset that I plan to hold for the next 15-20 years. The sooner I pay off that mortgage, the sooner I increase the cashflow on that asset by $344/mo (the P&I).

Isn't it a common investor fallacy that because a stock has performed well in the past, it must continue to do well in the future?

Matt Ward · Answer

@Douglas Spence no for the reasons others have said and more ... you’ll lose opportunity costs on a dividend paying stock to make a minor dent in an already minor mortgage?  Nope.  Punt.

Tanner Marsey · Answer

No. Don’t sell it.

Frank Wong · Answer

Hi Douglas,

You can always sell and just sit on the cash. Most people forget that cash is a position.  Sometimes the best thing is to just sit on it until the right opportunity comes along.  In your case, you feel strongly about selling.  Do whatever you want. No regrets no FOMO.

Alexander Felice · Answer

thank you Frank, I agree with this post and thing this is the best approach for a long term strategy.

Sell my AAPL to pay down Mortgage?

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