Should I Payoff My Mortgage Early or Invest?

Strong opinions exist on each side of this debate. Some believe plowing money to pay off the mortgage early is better. Others would rather step up their periodic investments and keep a low rate mortgage? In this episode Derek walks through how interest rates affect mortgage monthly payments. Key things to consider when evaluating which is better pay off early or invest. Also, what percentage of your monthly payment goes to principle and to interest depends on where you are in the loan and current rates.

What should you consider when evaluating whether to try and payoff your mortgage early?

How does inflation make your payment lower over time?

The present value of your mortgage payments equals your loan amount

How paying off your mortgage rather than investing the funds might overweight real estate

Considerations should you need to pull money out for emergencies

Will you do better over time investing periodically or paying down mortgage early?

How to calculate when you will pay more in principle than interest

Key assumptions that you will increase 401k contributions or investments monthly

Understanding how interest rates change the calculus on the decision to payoff mortgage or invest

Does the FIRE movement and Dave Ramsey get this question wrong?

Return on paying off mortgage early vs. potential investing returns

Liquid vs. illiquid investments

Mentioned in this Episode:

4% withdrawal rate and retirement considerations https://podcasts.apple.com/us/podcast/is-the-fire-movement-doable-and-the-4-withdrawal-rate/id1432836154?i=1000461766880

Inflation and purchasing power of the dollar https://podcasts.apple.com/us/podcast/how-purchasing-power-dollar-is-eroding-plus-why-inflation/id1432836154?i=1000433222599

Derek Moore's book Broken Pie Chart https://www.amazon.com/Broken-Pie-Chart-Investment-Portfolio/dp/1787435547/ref=sr_1_1?keywords=broken+pie+chart&qid=1558722226&s=books&sr=1-1-catcorr

Contact Derek www.razorwealth.com