Back to Exchange
INVESTING STRATEGY

Invest or pay off Mortgage then start investing?

Coming from a family where everyone always said pay off your mortgage asap and be debt free. It is hard to change my mindset to accept the interest for 30 years while I am investing. My question is. If I am able to pay off my mortgage relatively quickly (8-10 years). Should I pay that off then invest heavily everything once I am debt free? I guess the current rising interest and worldwide uncertainty is pointing me to pay off mortgage at the moment. Too short sighted?

Profile Picture
Mitchell Thompson

25 July 2022

Like
1

5 Comments

Small Profile Photo
Dave Gow - Strong Money Australia

INVESTOR

over 2 years ago

Hi Mitchell. This is a fantastic question which so many people grapple with and it’s also hotly debated.

At the end of the day, there is no right answer, and each option has both pros and cons. So it’s very dependent on the priorities of the individual. Here are some things to think about…

— The long term return from shares (10+ yrs) has historically been higher than the average mortgage rate (except for that weird time in history when Paul Keating was PM – not a political comment).

— If you had to choose, would you rather have a larger investment portfolio or have a mortgage-free home?

— How a debt-free home will reduce your ongoing expenses, which you may find to be a great stress reliever.

— A growing investment portfolio could provide growing amounts of passive income, which over time could cover a greater share of your mortgage repayments.

— Having a debt-free home could come with psychological benefits, but on the other hand, this basically ties up a person’s entire net worth into a single asset, giving them no diversification or benefit from other investments.

By the way, I wrote an article about this in much more detail which might help you work through this further if you’re interested: https://strongmoneyaustralia.com/paying-off-y...

Hope that helps, and all the best :)

Dave

Like
3
Reply

4000 characters left

Related posts

exchange image
Investing Strategy

What happens if, in 30 years when I have hundreds of thousands or even millions of dollars in shares, nobody wants to buy them?

Hi there! What happens if, in 30 years when I have hundreds of thousands or even millions of dollars in shares, nobody w...

exchange image
Investing Strategy

Best way to invest $10k for long-term growth?

Hey everyone! I’ve recently set aside $10k that I’d like to invest instead of letting it sit in my bank doing nothing. ...

exchange image
Investing Strategy

I've heard that most people would only invest in VDHG if they had to choose one ETF. May I ask why?

Hi everyone, I’m quite new to the platform, and so far I have only invested in VDHG. I've heard that most people would...

Home