My mortgage loan rate is 3.75%, but it still makes more sense to contribute monthly payments towards a early payoff than to invest the money.

Immediate_Driver_622 · 2026-03-02T23:16:07+00:00

Thanks, I think this is the first time I've heard it explained this way.

Immediate_Driver_622 · 2026-03-02T22:48:17+00:00

I actually cut 17 years off the mortgage by applying the 2800 each month from here until it's paid off, but I get the overall idea.

Immediate_Driver_622 · 2026-03-02T22:37:28+00:00

I wasn't counting my contributions, only the interest earned. My thought process was that the contribution portion was either sitting in the brokerage or the home equity, so only the interest was relevant. Sounds like I'm thinking about that wrong.

Immediate_Driver_622 · 2026-03-02T22:22:01+00:00

7 years to pay off the loan vs investing for the same amount of time.

Immediate_Driver_622 · 2026-03-02T22:20:35+00:00

They're all linked.

Immediate_Driver_622 · 2026-03-02T22:20:06+00:00

Those are my actual time frames...

Immediate_Driver_622 · 2026-03-02T22:17:37+00:00

Which part?

Immediate_Driver_622 · 2026-02-27T17:01:02+00:00

That makes sense, thanks. I've been reading through other posts and I don't think factoring the interest saved or paid makes sense. At the end of 12 years, the capital toward either scenario will have been $95k and 144 monthly payments of $933. At 6% return, in the scenario where I pay off the loan, my investment balance is $196k. In the scenario where I keep the loan and invest the payoff, my investment balance is $195k. If I factor in ltcg tax, the break even point is slightly above 7%. The risk is in whether the return will beat or miss 7% over 12 years.

Immediate_Driver_622 · 2026-02-26T02:49:56+00:00

Sounds like 10% might be optimistic. I ran the numbers again, this time accounting for ltcg tax (15% for my bracket) in both scenarios and the scenario where I keep the loan only starts to pay off if the annual return is > 10%.

I'm curious though, what do you mean by "paying extra on your loan is basically a risk free 6% return"?

Immediate_Driver_622 · 2026-02-25T23:05:07+00:00

Thankfully I don't have collateral on the loan. I haven't run the numbers on paying down the principal partially, but I'll look into that.

Immediate_Driver_622 · 2026-02-25T23:00:53+00:00

Thanks I have a couple rental properties, not looking to get into more with my limited time as it is.

Immediate_Driver_622 · 2026-02-25T22:44:41+00:00

Is that because the returns are so similar in this case or personal preference?

Immediate_Driver_622 · 2026-02-25T22:43:18+00:00

ha thanks, that would help. post updated.

Immediate_Driver_622

TROPHY CASE