Optimal Finance Daily - Financial Independence and Money Advice 3009: When to Prepay Your Mortgage Instead of Investing by Chris of Keep Thrifty on Financial Risk Tolerance
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Jan 18, 2025 Explore the debate of prepaying your mortgage versus investing in the stock market. Discover the stability of mortgage prepayments contrasted with potential investment risks. Learn how historical performance and personal risk tolerance affect financial choices. The speaker shares their journey to reducing mortgage debt, encouraging listeners to evaluate their financial priorities before making major decisions. Ultimately, it’s about finding harmony between financial security and growth.
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Sub-$100,000 Mortgage
- Chris from Keep Thrifty celebrated reaching a sub-$100,000 mortgage balance.
- Their aggressive prepayments significantly accelerated their payoff timeline.
Prepayment vs. Investing
- Evaluate prepaying your mortgage versus investing by analyzing potential returns.
- Consider that prepayment offers a guaranteed return, while market investments are volatile.
Guaranteed vs. Volatile Returns
- Prepaying a mortgage guarantees a fixed return, unlike the fluctuating returns from market investments.
- While a good index fund might average 8% annually, actual returns can vary significantly.