Is It Safer to Invest Your Money or to Pay off Your Mortgage First?
This is a loaded question that has quite a few different answers, depending on which professional you are talking to at the time. If you're talking to a professional investor, for example, from your local bank, he would probably recommend that you put your money into safe mutual funds that would pay 5% to 6% in compounded interest during the next five years.
This does make a lot of sense when you do the number crunching right now. Mortgage rates are currently sitting at 2.5% up to 3%, so any higher returns with an investment would translate into more money in the end.
When you're looking at the safety factor, however, you won't use today's numbers to look at future investments. The return that you can get today on the safer investment options in Canada may not be available tomorrow. This means that the safer choice would be to pay off your mortgage first.
When you have a mortgage that has been locked into a set rate until the term is up, you don't have to consider predictions and forecasts of the future. You can sit down and find out exactly how much money you'll be making and saving by paying off your mortgage as a priority. These numbers will be set in stone and take away any of the dangers that can be associated with numbers that can vary in the future.
While you can figure out the safest way to invest your money right now, based on the greater return on investment, it's more difficult to figure out a long-term plan with so many variables that could turn up. If you're the type of person that wants safety first with your money, the best thing that you can do with it is to invest it into your home to pay it off earlier.
This may not be the best way to invest your money or bring you the highest profits in the future, but for long-term investment strategies it can be considered as the safest.