Should You Pay Off Your Mortgage or Invest Instead?

When you want to invest, there is always somewhere to put your money. However, if you’re considering paying off debts too, most notably your mortgage, the question then becomes: Where is the best place to put your money – your mortgage or the market? Here are some important factors to consider.

If You Want to Pay Off Your Mortgage

Ask yourself whether you would feel more financially secure if you owned your home free and clear, without an ounce of debt. No doubt anyone with a mortgage would love the idea of living in a home that is wholly theirs, no large monthly payment to make. Unfortunately, the volatile housing market can make this money decision a tricky one. Some things to think about as you weigh the option to pay off your mortgage:

  • When housing prices are not going up, and your place or even your neighbor’s place is appraised at far less than it should be, this up and down is known as volatility.
  • If the value of your home or investment property goes up, you have more equity and are in a great financial position.
  • Your smart investment of purchasing a house can have you thinking you should pay it off because of the volatility of the housing market. Make the smart choice – don’t feel forced into going on direction or another.

You don’t have to figure out on your own whether paying off your mortgage is the right option. Financial experts are trained to forecast fluctuations in the market and support you in developing the best investment strategy.

If You Think Investing Is the Smart Move

Investing your money is just as daunting as paying off your mortgage, but for many people this is the smart move for your financial future. There isn’t one right answer for everyone, only answers that suit every individual in their endeavors. But there are some elements of investing in the market worth considering and talking over with your financial advisor:

  • The S&P 500 stock market index has averaged a 10% annual return annually since 1957.
  • Homes appreciate at around 5%, a lower rate than the S&P 500.
  • Emotionally, paying off your home feels amazing and frees you from the reality of a mortgage payment ever again.
  • If your money goes into the market, you will get a higher rate of return than you would paying off your mortgage.

Make the Right Money Decisions for Your Wealth

Do you want to see your money appreciate at a fast rate? Do you want to pay off a chunk of your mortgage? Is there a right number to put into the market? There are all questions that your financial advisor can answer and tailor to your unique financial circumstances.

Get the help you need to manage risk and maintain your portfolio without falling prey to volatility. Contact Hollander Lone Maxbauer to discuss your financial needs with our team of select advisors and specialists.