Chap 6 Pay Mortgage or Invest

Chap 6 Pay Mortgage or Invest - Pay off mortgage or invest...

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Pay off mortgage or invest? 11:45 PM CST on Monday, February 9, 2004 By SCOTT BURNS / The Dallas Morning News Before the stock market collapse, many readers who could pay off mortgages put the money in the stock market instead. They weren't stupid. Quite often their investment advisers had told them to take the investment option. Their advisers argued that paying 6 percent interest was smart when you were earning 20 percent. Even after the bear market, lots of people are still trying to answer the question. Witness this e-mail from D.K.: "If I inherited $60,000, would it be better to leave it in an existing investment account or use it to pay off a 15-year, $60,000 mortgage at 6.25 percent? The investment account is 80 percent mutual funds and 20 percent bonds earning 6 percent. I pay about 20 percent of my income in taxes. "This question involves interest expense avoidance (I hate owing people money), more money to invest in my company 401(k) plan, and peace of mind knowing my house is paid for – I am within eight years of retirement." The answer: What you do depends on your age. In this case, go for the sure shot first.
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