Repay loan now or let investments grow?

[banders]

Fun exercise. October 2025 I have to pay ¥4.5m on a 1.9% loan. I have ¥2.8m in Apple stock and ¥1.8m in All Country (values right now) that were earmarked for this debt long ago. So I can pay the debt now.

But both investments could rise or fall. Would you cash out now and cover the loan or wait for more? I know there’s no right or wrong answer, just wondering what others would do in the same situation. Literally, what would you do and your reasoning. Not hypotheticals.

[Deep Blue]

it really depemds on your overall financial situation, which you have not provided enough details for others to advise.

If i has those I would let the investments run and repay the loan when due. But you need to decide based on your other assets, any liabilites, age, risk tolerance, family situation yadda yadda yadda.

[Beaglehound]

As you will definitely need 4.5m of your investments in 16 months time, I would not leave it all invested until that date. I would be reducing the risk substantially, perhaps by selling off in tranches.

[beanhead]

Both of these investments have grown substantially, right?
I would be inclined to take the gains, pay off the debt, and never think again about 'what might have been'.
Assuming, of course, that this is not 100% of your invested wealth, which I don't think it is.

You said yourself that you have been planning to use these investments to pay off the debt. So don't be too greedy, and do it...

[sutebayashi]

For a fairly short term debt to be paid I’d be de-risking too.

Hopefully you’ll have money to pay any tax bill left over.

[banders]

Thanks everyone! I guess "what ifs" are a lot less painful than "if onlys"...

[RetireJapan]

If the only way you can pay the loan is with those investments, I would be inclined to be careful and lock in the current price.

If you could pay the loan anyway, then you could afford to gamble that the investments will go up before the loan is due.

[banders]

I think this is the old ‘pay and invest or clear debts’ scenario. If I’m using the loan calculator correctly, this would mean another 10 years at ¥40k pm. I’ll be approaching 70 at that point. Sure, the investments may grow, but all I’ll see is the debt every month, which I’d either have to continue working that extra bit to cover or it will come out of my drawdown/pensions. If I pay now, it’ll be consigned to history and forgotten.

[beanhead]

October 2025 I have to pay ¥4.5m on a 1.9% loan.

or I have ¥4.5m left to pay on a 1.9% loan.

Slightly different situations, aren't they?

[banders]

The 4.5m lump sum remainder is payable. I’m just guessing I could extend it at the same rate for another 10 years. I don’t know.