Should You Pay Off Mortgage or Invest?

Paying off your mortgage and investing your hard-earned money are both commendable goals. But is one better than the other? Which pursuit makes more sound financial sense?

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Common sense suggests paying off debt should be the priority. Why?

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In part because it simply doesn’t feel good to owe money. It’s called a burden of debt for a reason.

Indeed, approximately 40% of individuals with bad credit card debt say it impacts their happiness, and 20% say it harms their health.

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The First Impression

Although mortgage rates climbed to 5% recently (for the first time in 10 years), they remain incredibly low from a historical perspective.

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At the same time, the S&P 500 Index, which acts as a benchmark for the US stock market, has delivered an average annual return of 10.7% over the last 65 years.

Most people would take that extra 5.7% in a heartbeat. Surely, then, savvy homeowners are better off paying the minimum on their mortgages and investing whatever’s left in stocks?

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