Reply to Paying down a mortgage - not a debate about whether it makes sense

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]No need to debate.  It's not a good decision. [/quote]

Usually it isn’t. But my friend in Feb 2000 sold 600k worth of internet stocks and paid off mortgage did well. [/quote]

People always use examples that they earned more in the stock market than they would have paying off the mortgage. However, they never acknowledge that they could not have known [b][u]in advance[/b][/u] that investing would have been the better outcome. If over the next decade the stock market had a 0 percent real return, they would be posting about how smart the were to have paid down their mortgage. The mortgage is a guaranteed rate of return in the amount of the interest rate on the loan. Investing in stocks could lead to a higher return but there is risk. It's not to say one is better than the other. It is simply to acknowledge that no one knows what the optimal outcome might be in the future.[/quote]

I think savvy financial people just look at the available data over the course of the last 100 years and make an informed choice that it's probably not smart to go for barely above inflation returns of 3% when basically all of recorded history of the S&P 500 would indicate over a long time horizon (e.g. a 15-30 year mortgage) dumping your money in VTSAX is a far better (and some might say safer) choice.  Not to mention the tax benefits.

Inflation is risk.  [/quote]

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