Should You Be Investing Your Money or Using the Extra to Pay off Your Mortgage Sooner?
In most cases it's a better decision to start paying off your mortgage as fast as you can instead of putting your extra money into other investments, but it all comes down to some simple math.
If you're going to be receiving a lower rate of return on your investments than what you're paying in interest rates on your mortgage, it makes sense to pay off your home loan as quickly as possible. If, on the other hand, you can find an investment that pays a higher rate of interest than what you're paying on your mortgage, you'd be better off putting your money towards this type of investment.
What's in store for the future?
Not only do you have to look at the different rates of return as they stand now but you'll also have to take into account what they could be in the future. If you can find a mutual fund that provides a 5% rate of return now, what type of interest rate will you be dealing with in the future?
Rates of return cannot be guaranteed or controlled and can never be correctly predicted with any amount of certainty. Paying off your mortgage is often the best conservative option you have that gives you more control.
While there is no absolute wrong or right solution to be found unless all the numbers are calculated for both present time and the future, paying down your mortgage as fast as you can is always a good sound option.
At the same time, whether you plan on investing your money or on paying down your mortgage, both are financially responsible decisions that will lead you down the road of security to help you better meet your goals for retirement. Instead of sitting on the money for too long and pondering what you should be doing with it, make a decision and then go forward with it.