4 ms·

Market returns are not guaranteed, unlike a fixed mortgage rate.

• refurb 6y ago
  Sure, but the return on paying off a 3.5% mortgage, after interest tax deduction is maybe 2.5% which adjusted for inflation is ~0 to 0.5%.
  • repsilat 6y ago
    Inflation affects both in the same way and by the same amount. Ditto taxes, mostly. It's probably best and simplest to compare nominal returns.
    • refurb 6y ago
      Assume an inflation adjusted average return of 3% on your investment and a 20% long-term capital gains you end up with 2.4% return versus 0 to 1% for prepaying a mortgage.
  • sbdbdne 6y ago
    You can. Only deduct (married) if you pay more than 10-15k of interest a year? Or am I missing something (itemized deductions is now at 20k limit or so). Edit: and since you need to pay taxes on dividends in bank accounts, you would need something like 3.5-4% interest to match the gains from prepaying the mortgage at 2.75%?
    • refurb 6y ago
      Interest would never match it. But ignore the interest deduction. Even if you got a 4% return and paid long term capital gains you’d be ahead.