Invest or pay off Mortgage then start investing?

Hi Mitchell. This is a fantastic question which so many people grapple with and it’s also hotly debated.

At the end of the day, there is no right answer, and each option has both pros and cons. So it’s very dependent on the priorities of the individual. Here are some things to think about…

— The long term return from shares (10+ yrs) has historically been higher than the average mortgage rate (except for that weird time in history when Paul Keating was PM – not a political comment).

— If you had to choose, would you rather have a larger investment portfolio or have a mortgage-free home?

— How a debt-free home will reduce your ongoing expenses, which you may find to be a great stress reliever.

— A growing investment portfolio could provide growing amounts of passive income, which over time could cover a greater share of your mortgage repayments.

— Having a debt-free home could come with psychological benefits, but on the other hand, this basically ties up a person’s entire net worth into a single asset, giving them no diversification or benefit from other investments.

By the way, I wrote an article about this in much more detail which might help you work through this further if you’re interested: https://strongmoneyaustralia.com/paying-off-y...

Hope that helps, and all the best :)

Dave