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Reply to "If paying off your mortgage is dumb, why do so many rich people do it?"
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[quote=Anonymous][quote=Anonymous]Paying a mortgage means paying interest. Why pay interest if you don't have to? Pretty simple.[/quote] Because I have a 2.625% mortgage. I can put the repayment amount in my online savings account with a 3.4% interest rate, and make money. If I want to get crazy, I can buy a 1-year T-bill at 5%, and make, after the mortgage interest deduction, a 100% return over simply paying the mortgage off. Plus, I maintain liquidity, and can pay off the mortgage at any time. And those are just the risk free options. In this situation, paying off the mortgage is the equivalent of having a match in your 401k, but investing in an IRA instead because someone, sometime, told you it was simpler, and safer. It isn't. [/quote]
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