Should I pay off a low-rate mortgage or invest?
· 12 min · Episode 1041
Episode Should I pay off a low-rate mortgage or invest?
1041. If you have extra cash, should you pay off a low-interest mortgage or invest it? Laura answers a listener’s question about balancing financial math with the emotional peace of mind that comes from being mortgage-free.
Key Takeaways:
• Paying off a debt yields a guaranteed return equal to your loan’s interest rate. • Make sure you have a healthy emergency fund before making extra debt payments. • Consistently investing 10% to 15% of your income for retirement and capturing any employer matching should take priority over prepaying a low-interest debt. • Eliminate high-interest debt, like credit cards, as soon as possible. • Low-interest, tax-deductible debt, such as a mortgage should be your lowest payoff priority. • Younger investors benefit from decades of compounding market returns, while pre-retirees should focus on preserving wealth and reducing living expenses.
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