BiggerPockets Money Podcast

554: Should I Pay Off My Mortgage or Invest? (We Did the Math)

Aug 13, 2024

Mindy, a savvy investor who made a six-figure profit by not paying off her mortgage, argues in favor of investing. Scott, who recently purchased his home outright, advocates for early mortgage payoff as a path to financial independence. They delve into the pros and cons of each strategy, exploring how individuals approaching retirement can significantly reduce their FIRE numbers. With insights on opportunity costs and tailored financial strategies, this discussion is packed with valuable advice for those navigating their financial futures.

38:29

Episode guests

Scott

Mindy

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Episode notes

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Quick takeaways

Investing instead of paying off a low-interest mortgage can lead to significantly higher returns over time, as illustrated by personal success stories.

For individuals nearing financial independence, paying off the mortgage early can lower the overall wealth required for retirement, streamlining their path to FIRE.

Deep dives

The Mortgage vs. Stock Market Debate

The episode delves into a common debate regarding financial strategies related to mortgages and investment. One perspective suggests that keeping a mortgage while investing the equivalent funds in the stock market can lead to greater wealth over time, especially given low interest rates. The hosts illustrate that paying off a mortgage, while comforting, may not maximize long-term financial outcomes, particularly when comparing returns from historically strong stock market performance. This discourse invites listeners to evaluate their financial comfort levels and their strategic approaches to wealth accumulation.

Intro

2min

Mortgage vs. Investment: Strategic Choices

8min

Mortgage vs. Market: Strategic Financial Decisions

5min

Mortgage vs. Investment: A Financial Dilemma

8min

Mortgage vs. Investment: A Financial Dilemma

9min

Mortgage vs. Investing: Finding Your Path

4min

Navigating Personal Finance: Trends and Community Engagement

3min

Pay off your mortgage or invest? If you’re on the path to FIRE, you’ve probably asked yourself this question. Without a mortgage payment, you could put thousands more in your pocket every month, and your FIRE number would decrease significantly. On the other hand, investing all the money you could have spent on paying off your mortgage may allow you to build considerably more wealth and reach Fat FIRE with more assets to your name. So, which move do you make?

Mindy and Scott are coming on to debate this common investing question. On team “Don’t pay it off!” is Mindy, who just recently made a six-figure profit by NOT paying off her mortgage. How did she do it? Stick around to find out. Scott, who just bought his recent home in cash, is pro-paying off the mortgage (for some), as it may lead you to FIRE much faster than you thought.

In this episode, Scott and Mindy discuss WHO should pay off their mortgage early, the pros and cons of investing vs. going debt-free, and why one move may be MUCH better for those closer to FIRE. Want more money for your future retirement? Sick of your job and want to quit quickly and retire on your terms? We’ve got options for BOTH!

In This Episode We Cover

Whether you should pay off your mortgage early or invest instead

How Mindy made a six-figure stock profit by NOT paying off her home

Why paying off your low-interest rate mortgage may make sense EVEN in 2024

How those close to retirement can shave off a BIG portion of their FIRE number and retire now

Whether you should keep cash in a high-yield savings account instead of paying down a low-rate mortgage

Other BIG cost-saving benefits of paying off your mortgage early

And So Much More!

Links from the Show

BiggerPockets Money Facebook Group

Network with Other Investors on The Path to FIRE Through the BiggerPockets Forums

Finance Review Guest Onboarding