Over the years, many clients have come to me asking this question: does it make more sense to pay down my mortgage or invest? Both options have advantages and disadvantages but ultimately the best decision will depend on your household’s unique financial situation.
Investing can potentially yield higher returns in the long term, but it also comes with greater risk. Conversely, paying off your mortgage guarantees a lower debt burden and greater financial stability in the short term, but it may mean missing out on potential investment opportunities.
It is always important to consider the interest rate on your mortgage when weighing your options. If you have a mortgage with a high interest rate, it may make the most sense to pay off your mortgage sooner. However, if you have a relatively low interest rate, it may be a better option for you to invest your money. Historically, the stock market has yielded a higher average annual return than the rate of most mortgages today.
All things considered, the decision between investing and paying down your mortgage will depend on your personal financial goals and tolerance for risk. It is always a good idea to consult with a trusted financial advisor before making any major changes to your financial plans or goals. I encourage you to reach out to me or a member of our financial team with any questions you may have.