Is it better to pay off our mortgage or invest the money? It’s a hotly debated topic (well at least in financial circles) with some surprisingly conflicting conclusions. We’re exploring how to determine the best approach for each of us individually and the factors we each should consider.
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Notable Notes
What the Internet has to say:
This article from Money Geek helps us take a look at whether paying off your mortgage or investing your money is the right decision for you.
What Jen + Jill have to say:
- Considerations:
- Tax exempt retirement accounts
- “For the relatively few people getting a tax benefit from mortgages, this is the scenario where the S&P 500 wins more often than paying down your mortgage.”
- Taxes
- Usually, you get more benefit from stocks, due to a lower tax rate for stock gains. However, recent changes in the tax code actually give an edge to the 30-year fixed for many Americans.
- 82% of homeowners have standard deductions large enough that the mortgage interest deduction isn’t providing a tax benefit to them.
- Tax exempt retirement accounts
- Other considerations
- You have other high interest debt
- Risk averse
- Need cash quickly
- Eligible to refinance
- Diversify
- Pay down high interest debt
- Max out any employer match
- Look for opportunities to refinance
- Assess your goals and situation to see what works best for you
More from the Internet:
This article from Financially Simple provides a break down of the numbers of whether it is best to pay off the mortgage or invest.
More from Jen + Jill:
We highly recommend the exploring the example provided and considering for yourself what makes the most sense and brings the most financial AND emotional freedom
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Lightning Round
Our mortgage payoff and investing plans
- Jen- refinanced and paying off in 15 years, no more no less
- Jill- diversify, currently paying a bit more towards principle AND investing in retirement accounts
Wrap-Up:
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