No. of Recommendations: 3
Of course it is a personal choice, but my whole problem with paying off a mortgage with a low interest rate is that once it is paid for all you have is a house. Sure, you can sell it or take out a home equity loan if you need cash, but for the most part, it is pretty much illiquid. If times got tough and you lost your job, no bank will give you a home equity loan.

The shortcomings to my plan of investing the money is that...

1. The market will not perform as well as the interest rate on the loan, currently 6.625%. What are the chances of that happening? According to Jeremy Siegel's "Stocks for the Long Run" over a 20 year period, stocks outperform bonds 91.7% of the time. Over a 10 year period, stocks outperform bonds 80.1% of the time. Those are pretty good odds if you ask me.

2. You actually have to invest the money. One huge part of my plan is that you HAVE to invest the money. You can't go out and buy depreciable assets like cars, boats, and stuff like that. If you do that, you are much better off paying off the house.

Some things to think about.

JLP

http://AllThingsFinancial.blogspot.com
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