Paying Down Mortgage Versus Making Investments
Filed in archive Housing , Investing by Justin McHenry on May 23, 2006

I agree, but in my house we have always taken at least a small chunk of any extra money we have to invest and paid down a little bit extra of our mortgage. As noted in the article, this can give you a little greater peace of mind, as it's nice to see debt go away. I've always seen it as a guaranteed investment as well, and an OK one when interest rates are down. If you pay down a mortgage that has 4 or 5% effective interest (the mortgage interest rated reduced by taxes), that's the same as getting a 4 or 5% return on an investment as far as I'm concerned. In the recent past, you could only get that kind of return in the stock market, as a lot of other investments paid such piddling amounts.
You don't want to go hog wild paying off your mortgage, obviously, because it's not a liquid asset, and if you have all your money wrapped up in your house, it's more difficult to get at. But putting a little extra toward the mortgage fits my goals of keeping it simple and not putting too much financial stress on myself. It's not all about the return on investment; it's also about feeling at least some level of security so you can keep your mind focused on living the life you want.
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