When You SHOULD and SHOULDN'T Pay Off Your Mortgage | You Can Retire Sooner Than You Think
HTML-код
- Опубликовано: 10 авг 2024
- This is a gigantic financial question most people face as they move towards retirement. Should you go ahead and pay off your mortgage and be debt-free, or does it make sense to hold on to your mortgage since interest rates are so low?
Financial planners are split. Some money pros think you are better off investing your surplus money rather than using it to payoff/paying down your mortgage. The reason: they believe you will get a larger net return by continuing to pay interest on your house while earning a higher return in the stock market. For example, instead of using $100,000 to pay off a 4% mortgage, these experts suggest, you should instead invest it in the market where you could see a return of, say, 8%. The result: a net 4% gain ($4,000).
Here are two reasons you should pay off your mortgage and one reason you should not.
Send me your questions directly at
www.wesmoss.com (contact box in top right corner)
----------------------------------------------------------------------------
You Can Retire Sooner Than You Think (amzn.to/2l85Ezu)
Free Workbook (bit.ly/2loBpGW)
----------------------------------------------------------------------------
Follow me on Twitter:
/ wesmoss365
Join our Facebook community:
/ wesmossmoney. .
Check out my website for more financial tools and articles:
www.wesmoss.com
Disclosure: This information is provided to you as a resource for informational purposes only. It is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal. This information is not intended to, and should not, form a primary basis for any investment decision that you may make. Always consult your own legal, tax or investment advisor before making any investment/tax/estate/financial planning considerations or decisions.
thanks for all your positive advice
Thanks for sharing Mr. Moss. I read one of your books and it was great insight.
Thank you Wess.You have answered my life long question.
I appreciate you sharing your wisdom
You need to adjust your volume. I can barely hear you with the vol on max.
Very well stated. I’ve seen too many advisors recommend against paying off a home mortgage without differentiating the source of potential payoff funds.
I know im asking the wrong place but does someone know of a method to log back into an instagram account?
I somehow lost my account password. I would appreciate any tricks you can offer me
Thanks for the decision making formula. We are in the last situation and can make extra payments.
Wes, when you say "non-retirement money", are you counting all non-retirement assets? For example, if I have lots of equity in a rental property, would that count towards the 1/3 calculation or are you only counting bank accounts and non-retirement investment accounts? Thank you!
Property tax is still significant though 😂
I say put as much as you can into 401k and Roth IRA, keep a year’s worth of expenses in savings, and put the rest towards your mortgage. If you’re starting this at 30, you’ll likely have $4 million or more by 59 years of age. Your $200k house should be on a 15 year mortgage and you’ll likely pay it off at least 5 years faster if you pay $450 extra a month in principle saving $20k in interest. I see no need to pay it off faster other than piece of mind. Most people have car payments that last 6-7 years. Don’t be like most people.
I think if possible your mortgage should be paid off. It just opens so many more choices in retirement or not.
This is not always good advice. Paying off a 4% mortgage with money that could earn you 6, 8, or 10 percent is bad enough. Add that to the fact that taxes and insurance do not stop when the mortgage is paid off, and this philosophy may actually hurt you financially. And why do we obsess about our mortgage while not discussing the perpetual phone, gas, cable, trash, power, water, auto maintenance and insurance or payment? My wife and I have been in position for the past three years to utilize Wes’s 1:3 ratio with non taxable monies, and I can tell you we are way happier with market returns on those monies that have far surpassed the amount of mortgage payments we have made than we would have been knowing only our mortgage is now paid off. This is easy feel good advice, but not necessarily good financial advice.
I agree. I just took out a 3.5% fixed rate 30 year mortgage at age 61. I have no concerns about a payment that takes up less than 6% of my retirement income. And I often say - hey I'm 62 now! If I'm lucky, I'll only have to pay for half the house before I die!
i owed the bank $335.000 mortgage. i was going to retire at 63 years old. My pension age is 66.5 years to qualify for government pension. i would receive around $570.000 or maybe$580.00 when i resign in 5 months time.
my question is, is it wise to pay my mortgage in full and put some in a term deposit for short period and be frugal to last the rest of the money till i get to age 66.5? Please any advise would be appreciate just to get an idea. thx.
I don't think you should be seeking advice from the internet. You should sit with a good financial advisor.
Thank you for suggestions.@@beatricerights
To be honest I party disagree. Why should I pay off my mortgage if the interest rate I pay is lower than my rate of return on my investment. Besides that there is no added value of having your money stuck in bricks, specifically to the end of your life. Better use this money to live!!
Because for the past 10 years the stock market has been going up way more each year than average which means we will likely see low returns or negetive returns in teh near future.
Also, mortgage interest payments are tax deductable. Why do none of these financial advisors ever factor that into their math?
Theres also a risk factor that an actual mathematical value that no one talks about. And there are taxes and fees on your returns in the stock market
But if my mortgage rate is 2.5%, isn't it better to invest instead and let the mortgage run its course? An S&P 500 index will gain 10% per year on average.
agreed. if you're willing to take the market risk. however, the odds are very much in your favor, over the long term. Here's another one..... if your mortgage is truly 2.5% and you get a tax advantage, and fixed income (CDs, bonds, etc.) return more than 2.5%, then it is a near guarantee to just use the money to invest in fixed income assets, FDIC insured, that pay above that mark. just math, with monthly transfer from your account. no emotion.
Thanks Jgmatp, but I'm in the UK.
Jonathan Gledhill same here and my mortgage is 1.25% and no fixed term. I am leaving it alone
@@Simon-jj2pu damn you and Jonathan both have outstanding rates!! That is a truly fabulous rate that I wouldn't mess with. Ride that baby to the wheels fall off. I thought mine was good at 3.25%, but you're two points lower! Whew! That's smoking! @Jgmatp is giving good advice IMO. I'm certain you'd be able to find fixed income assets with either comparable or better rates than your fixed rate of 1.25%. I'm jealous! LoL You got into your mortgage at the best possible time, or did you have a restructure after a bankruptcy or something? It's just unbelievably low.
Sergio Gonzales don’t forget I am in the UK, got a good deal in 2006. Base rate plus 0.5%
Thank you Wess.You have answered my life long question.
I appreciate you sharing your wisdom