If you’re a homeowner, first off, congrats, and second, we know you’re in a pickle. Should you pay off your mortgage or invest? It’s a tough one! Both choices have their benefits. Let’s explore the top three things to consider when making this decision.

Make sure to check out the handy decision tree at the bottom to help you figure it out for yourself!

What’s your rate?

This is the first thing to think about. More specifically, what is the interest rate you’re paying on your mortgage compared with the expected return on your investments?

Let’s say you’re invested 100% in global stocks. Over the past 45 years, your return would have been 9.9%, so let’s use that as an average return. 

If your mortgage rate is 5%, then you’re probably better off investing. You’ll likely make more money investing than you’ll save by paying off the mortgage. 

Are you a risk-taker? Thrill-seeker?

This is less math and more personal preference - how comfortable are you taking risk? Investing has ups and downs, especially in the stock market. 

But, paying off your mortgage is a sure thing - no risk! You know exactly how much you’ll save in interest. 

Got goals? Got time?

Paying off that mortgage probably isn’t your only financial goal. What about retirement? Or that new car you’ve been eyeing (2024 Aston Martin DB12 in British Racing Green)? Or your kid’s education? Jk, we know you’re more focused on the Aston.

If you’re young and saving for retirement many years ahead, it’s probably a better option to invest in the stock market. But if you plan to retire soon and want to reduce your monthly expenses, paying off your mortgage could be a better move.

Putting it all together

Here’s how you can figure out what’s best for you. 

• If you have a low mortgage rate and are comfortable with some risk, investing might be the way to go. You could potentially earn more in the stock market.

• If you’re uncomfortable with risk and like the idea of a guaranteed return, paying off your mortgage could be better. You'll save money on interest and have one less debt to worry about.

• If you have specific financial goals, like retiring early or reducing monthly expenses, consider what helps you reach those goals. Sometimes, a mix of both paying off the mortgage and investing is the best approach.

More simply:

Clear?

Crystal. Every situation is different, so it's important to think about your own financial needs and goals. Making the right choice can help you achieve financial peace and reach your goals faster. Whether you decide to pay off your mortgage or invest, understanding these key factors will help you make a smart decision.

Remember, there’s no one-size-fits-all answer. It’s about what works best for you and your financial journey.