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To all fellow IQVIANS, how is it going?
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Not advisable. Cashing out investments means you will have tax to pay in your gains, so less cash than you think free to go towards mortgage. 5% is about half of the average assumed S&p return, as mentioned, you'll be better in the market. Keep your investments, if you want to pay the mortgage off early, start diverting what you would put into your investment account as extra towards your principal as you are able. Signed, a financial advisor
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That’s fair. The tax hit is a good point. I guess the emotional side of being debt-free sometimes clouds the math for me, but your logic definitely checks out.
Do not pay off your mortgage, especially if you still get a tax benefit. Having a debt free home exposes you to title fraud which is on the rise and unfortunately almost nothing is being done to stop it. Also not having a loan or mortgage makes it very hard for you to get a loan or mortgage (insane I know) You have to use credit to get credit. You have to really crunch the numbers to figure out how much mortgage you benefit from at tax time.
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Wow, I hadn’t thought about the title fraud part. That’s a little unsettling. Would you mind providing a bit more insight? It does make sense that keeping an active mortgage could actually have some hidden benefits.
I wish I had saved it, but there was an article about a couple that crunched all the numbers to that. The takeaway, as tempting as it is, there’s just a lot to it. We also aren’t exactly set up to be debt-free, which makes a lot of things harder.
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Yeah, that really sums it up. As nice as “debt-free” sounds, the system isn’t exactly built to reward it I suppose...
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Logically, if you’re reasonably able to keep making your mortgage payments it’s best to keep your after tax investments as they are. However, personal finance is not just logical, it’s also emotional. If it will give you better peace of mind, it won’t be the end of the world to cash stock in to pay it off.
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Well said. Personal finance decisions aren’t purely logical. There’s always an emotional layer that makes the “right” choice different for everyone.