Originally Posted by Extenda

But historically the total return of the S&P is 10% if left untouched. If your timeline is thirty years on a 3% mortgage then you’re literally going to be millions of dollars poorer if you pay off your mortgage quicker instead of dumping excess cash into the market (depending how fast you want to pay it off if able).

The “peace of mind” you’re getting for owning your house is an illusion. You never own your house, you just keep renting it from the government at a low price instead of the bank.

Originally Posted by Delta757

You must've skipped the multiple responses going over exactly what you're saying. Yes for the millionth time, paying down a 5.5% mortgage nets you less than investing the money, historically. Yes, yes, yes. The counter argument is if you already max out all of your tax advanged accounts every single year, contribute to your brokerage on top of it, and already have a large amount of investments/retirement, do you really need to invest even more?

For me, it was diversification (like how some have bonds in their portfolio), and insurance (insurance is often "wasted money" in the end, but it's not there to maximize your money, it's there if things get bad).

The "you don't own your house" is a tired line. Ok whatever. If we take a massive paycut or even go Ch 7, I'll be in a much better position having a very very small yearly payment on a "house I don't even own" vs many sizeable monthly payments on a "house I don't even own". It's a non serious argument.

"But you can use the money you invested instead of paying the mortgage!" Ok cool let me sell a bunch at probably a very low recession dip (I did just lose my job so the economy probably sucks) and instead of living off this money I'm going to have to use it for the mortgage.

I don't know, call me crazy, I enjoy the peace of mind and financial security I have now instead of dying with an extra million in the bank.

Originally Posted by Trip7

For me, liquidity is a better peace of mind. If all else that you stated above is equal, and the extra mortgage payments were placed in a savings account, the liquidity and the tax savings from the mortgage interest deduction puts you into a far more superior position in a downturn vs years of paying down the mortgage and reducing your liquidity.

Furthermore, investing that money on a strict value based approach likely leads to a far FAR better financial position in a downturn.

I will agree that for many who see investing as Yolo'ing into Nvidia stock(or Calls&#128514 paying down the mortgage is better

Originally Posted by Verdell

Not sure why you only mentioned 1/2 of the tax equation when comparing mortgage to savings account.

If you had, say, a 4% mortgage and a savings account that pays 4% interest, the tax implications essentially cancel either other out. Sure you deduct the mortgage interest from your taxes, but then you add the 1099-INT tax on the savings interest right back in.

Even then, you still have to get "over the hump" of the standard deduction to make a plan based on itemizing your mortgage interest worthwhile.

Originally Posted by Trip7

For me, liquidity is a better peace of mind. If all else that you stated above is equal, and the extra mortgage payments were placed in a savings account, the liquidity and the tax savings from the mortgage interest deduction puts you into a far more superior position in a downturn vs years of paying down the mortgage and reducing your liquidity.

Furthermore, investing that money on a strict value based approach likely leads to a far FAR better financial position in a downturn.

I will agree that for many who see investing as Yolo'ing into Nvidia stock(or Calls&#128514 paying down the mortgage is better

Originally Posted by Trip7

For me, liquidity is a better peace of mind. If all else that you stated above is equal, and the extra mortgage payments were placed in a savings account, the liquidity and the tax savings from the mortgage interest deduction puts you into a far more superior position in a downturn vs years of paying down the mortgage and reducing your liquidity.

Furthermore, investing that money on a strict value based approach likely leads to a far FAR better financial position in a downturn.

I will agree that for many who see investing as Yolo'ing into Nvidia stock(or Calls&#128514 paying down the mortgage is better

Originally Posted by Extenda

But historically the total return of the S&P is 10% if left untouched. If your timeline is thirty years on a 3% mortgage then you’re literally going to be millions of dollars poorer if you pay off your mortgage quicker instead of dumping excess cash into the market (depending how fast you want to pay it off if able).

The “peace of mind” you’re getting for owning your house is an illusion. You never own your house, you just keep renting it from the government at a low price instead of the bank.

Originally Posted by Gone Flying

not sure I agree with your logic trip. My mortgage is 6% and only part of the interest is really affecting my deductions, meanwhile my savings account yields 3% and all of that money is taxed as income. ( without my mortgage interest I wouldn’t be close to the standard deduction limit, so all the interest between that gap really isn’t affecting my taxes)

if the economy goes south I can just re-cast my mortgage and lower my monthly payment. That seems better than selling a bunch of stock at the bottom of a market.


paying down my mortgage is just one way I’m diversified. I invest about the same in a brokerage every month as I use to pay down my mortgage, and that’s after maxing out as many tax advantaged accounts as we have.

Originally Posted by Gunfighter

Your approach is more like a bond allocation as opposed to an all-out assault on a low interest home mortgage. When your choices are pay off a house or build a 6 figure emergency/investment fund life is good.

Originally Posted by Trip7

Couldn't agree more. I will say that paying down a 5%+ mortgage is likely better than investing in an S&P 500 ETF that trades at historically high multiples right now. History has shown real returns of -2% to 2% over 10 years when buying at the current Shiller PE ratio. But that assumes putting all your eggs in at the top as dollar cost averaging would almost certainly lead to higher returns, particularly when continuing to purchase during market crashes. Your thesis on liquidity stands true. The Dave Ramsey approach works well for those that are not financially savvy or don't have the willpower to avoid spending a substantial portion of their liquidity on material things

On the other hand, it is not difficult to become financially savvy. Again, it does not require a high IQ to use 4th grade level math to read financial statements, have a little patience, and ignore the fast money high flying meme/tech/AI stock noise. Especially when buying below replacement cost. Commercial Real Estate investors regularly outperform the SPY because many use 4th grade level math to buy below replacement cost and it's a bit easier to ignore noise because there is no daily ticker on the asset. Using this strict value based approach when it comes to Commercial Real Estate or Public Equities easily yields 15%+ IRRs over the long term.

My advice, learn to read financial statements then start digging around at small companies where there is little competition from large funds because the company is too small to move the needle. If the company has little to no analyst coverage even better. AI has made researching companies much easier. Here's an example of value hiding in plain sight:

Mammoth Energy Services
Ticker TUSK

Read the latest 10K and 10Q. Get AI to summarize/guide if you need to. You'll quickly realize there is no need to pay down a mortgage when there are opportunities like this hiding in plain sight. The best part, these opportunities are never discussed on CNBC or Bloomberg