But it is much better to pay off your mortgage than
- to invest in an investment product as it would have to make a very large return before tax and expenses to be better.
- as most people do, leave it sitting in a deposit account earning very little
- as many do, to just blow it on things you don't really need.
Hi Brendan, is there any data on this? You state most people leave excess income sit in a savings account. I would be curious to know how many people who can overpay their mortgage actually do it?
I set-up an investment portfolio. It does well and makes 6%. I’d be doing well to get away with fees of 1%. And then call tax 40% of the gross. That’s 2.6%. Taxes are not an exact science but taking 40% as a blend of 33%, 41%, and 52% shouldn’t be too far off.
So in essence, break even is a waste of time considering the risk attached to it.
Considering the risk and the admin hassle, i would want to be very confident of netting at least 1% more, over time that might just compound to be worthwhile. How many investment options can claim confidence in a 7.5% return?