pay off mortgage or invest (which would be safer)

Oracle investfool
Oct 16 33 Comments

Have 600k in cash/stock . should i pay off mortgage or invest it . i want to be safe, if a recession comes .
3.75 fixed mortgage -26 years left
always made more than 8-10% on investments (index funds/ dividend stock picks)

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TOP 33 Comments
  • Roku cruella
    Depends on interest rate and how much u expect to make from investing.
    Math is simple.
    Oct 16 4
    • Oracle investfool
      OP
      Added details and rephrased the question . Target is to be safe if a recession comes
      Oct 16
    • Amazon / Eng
      takeiteazy

      Amazon Eng

      BIO
      Just taking it easy
      takeiteazymore
      Math is. Risk assessment isn’t.
      Oct 16
    • Oracle investfool
      OP
      Basically Unable to quantify the risk of recession . (It’s been coming for a decade now ..)
      Oct 16
    • Roku cruella
      Yea. That’s a tough one
      Oct 16
  • New / Mktg
    SrZeroCool

    New Mktg

    PRE
    IBM
    SrZeroCoolmore
    Cash is King in recession. If you pay off your mortgage, and your neighbors foreclose, your home value will drop
    Oct 16 4
    • Oracle investfool
      OP
      That makes sense . So keep the mortgage and save cash this is the state I am in now.
      Oct 16
    • New / Mktg
      SrZeroCool

      New Mktg

      PRE
      IBM
      SrZeroCoolmore
      Yes. Right now you have a really cheap loan and wont be able to borrow with the same interest rate in a recession.

      In a recession, it's better to rent because housing takes a hit but you offset that with a low rate. If you plan to stay there long term then you're good
      Oct 16
    • Lyft kingbobbb
      Just buy out your neighbor's home
      Oct 16
    • Google LizardFoot
      You're saying to sell the investments and just hold cash in hopes that a big recession starts?
      Oct 16
  • Oath OPnd70
    Why be responsible when you live only once? Party it up big time!
    Oct 16 0
  • IBM fFfd42
    Agree with @cruella, with the only other exception being how much you hate being in debt. If it stresses you to have a mortgage, for whatever reason, and you would be able to live a happier more comfortable life without it, it might be worth it for you to do that even if the math is a little more favorable to keep investing/paying monthly.
    Oct 16 2
    • Autodesk fomo!
      Since its all assumptions. What happens if the housing bubble crashes so much that, his home value falls below the mortgage owed(happened in 2008) Wouldnt it be best to let go of the house to banks and buy other cheap houses with the cash?
      Oct 16
    • IBM fFfd42
      I would say it depends on whether they would want/need to move in that situation. If they are at a stable company or location, then that drop in value would be temporary and also not having to pay a monthly mortgage means you have that extra money as cash flow. If they are very worried about a recession and being laid off and not being able to find new work in that area, then yeah... you’d want to remain liquid and easily movable... but you also probably shouldn’t have purchased a home
      Oct 16
  • Symantec gh4852z
    Invest it and use all gains to accelerate your mortgage pay down. Mortgage gets paid off faster (increasing equity, widening value/debt gap) and principal investment will still be there when mortgage is paid off.
    Oct 16 0
  • New pkbob
    I would save for cash for recession time. When assets that have underlying value go down time to buy them. Rest of the cash bring down the debt if you are goals are debt independence
    Oct 16 0
  • Qualcomm / Eng
    QjOi25

    Qualcomm Eng

    PRE
    Broadcom Ltd.
    QjOi25more
    Assume you had the mortgage paid off. Will you borrow against your home to invest in stocks? Essentially that is what you are doing if you don’t pay off the mortgage.
    Oct 16 0
  • Intel adbC65
    Market is at the richest valuation in the last 140 years except for a few months in 1929.

    Do you itemize? That brings the effective rate down below 3%.

    If you don’t, no reason you couldn’t do a 50/50 split.
    Oct 16 1
  • Intel c8r20t
    How about you distribute your 600k and pay X of the house debt, keep Y in cash, invest Z in stocks. That way your mortgage payment (and total interest?) is significantly reduced for the remaining 26 years
    Oct 16 0
  • Amazon / Eng sherpas
    Pay off mortgage is equivalent to a zero risk, minimum liquidity investment. The return rate based on my math is roughly same as your mortgage rate, you will have your extra payment in your home’s principal, and your return is less interest you paid. So it really depends on how you want to diversify your investment.
    Oct 16 1
  • Netflix I🤳🏻guy
    I would start pull money out of the stock market and just keep the cash. There’s a reason by Warren Buffet is war-chesting right now.
    Oct 16 0
  • Google eOFy64
    Pretend you were to invest all of it in stocks and bonds, figure out the ratio you’re comfortable with. Take the money you would’ve invested in bonds and put it in your house, the 3.75 beats any bond. Rest in stocks and don’t touch it, cash liquidity is king.
    Oct 16 0
  • Lockheed Martin yyrts
    The impact of a recession on Bay Area restate is going to be devestating but then stop will investments. Keep your money under your parent's mattress?
    Oct 16 2
    • Oracle investfool
      OP
      That’s what I have been doing so far . Keeping cash/ stable stocks but I was not sure if that’s a good medium/ long term strategy .
      Oct 16
    • Cisco chuckR
      Refinance too. Your rate looks high.
      Oct 16
  • Salesforce diurhdngr
    How much loan is still remaining in terms of $value?
    Oct 16 1
    • Oracle investfool
      OP
      700 left on a 1.4 mill house
      Oct 17
  • New / Eng
    annon1234

    New Eng

    BIO
    Hvac engineer.
    annon1234more
    26 years is a long time frame. Recession or not, I would expect the market to grow greater than 3.75% over 26 years. However, feeling debt free is pretty good. If you’re worried about recession, I agree with earlier post on putting x y z in different areas and diversify. You can also do REITs or HIGH dividend ETFs to get close to the 3.75% in just dividends let alone growth.
    Oct 16 1
    • New / Eng
      annon1234

      New Eng

      BIO
      Hvac engineer.
      annon1234more
      You’ve got a chance to use your leverage...
      Oct 16
  • Procore Obama2024
    Debt is never a good idea. Pay of your home.
    Oct 16 0
  • Stanford Health Care $/$
    Use it to save 3-6 months of expenses for emergency, use the remaining to pay off any other debt and mortgage. The rich rule over the poor, and the borrower is slave to the lender.
    Oct 16 0

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