LogFAQs > #983261402

Whatever you think your ROI would be if you invested it, you should just assume it will be much less than that. You have to be prepared that if were to get much less than the expected ROI, would you still be happy with your choice.

You are being INSANELY optimistic if you think you will get 15%, and you are being too optimistic if you think it will be 10%. I see people throw this around when comparing the returns on anything "well the S&P on average does 10% per year" - yeah maybe but it also has years where its down, so depending on your time horizon, the worst case isn't just that your return is 5% instead of 10%, it's that that you are -10%, or if you go really dumbly into crypto or meme stocks or FUBO options, could be more like -95%

So this is to say, you should compare the interest on your debt to a very modest return. IMO, the good rule of thumb is that if interest is below 5%, it's probably safe to just keep making the normal payments and let it run its normal course. At 5%, now you are reaching the point that you probably aren't going to be exceeding the cost of interest that much with any investments you do. At 10%, just pay off your debt dummy. At 20% for the love of god pay off your debt.

After all - stocks are one potentially lucrative investment opportunity - but another good way to build money is with bonds or other guaranteed interest streams - and those are always going to be similar to your mortgage. So paying off your mortgage is comparable to taking one of those investments.

Also keep in mind that putting extra money into your mortgage is A LOT more valuable early on than it is later due improving the impact the your monthly payments are having over interest.

Overall... if you have a mortgage, you should make sure you have a decent emergency fund but after that, putting money into the mortgage is a nice safe good idea.