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Originally Posted by fotze
I think the paying off debt vs investing thing that made me lean to the debt side, was that paying off debt has zero percent risk. 100% chance of what you are doing with that money is going to what you want. All investments have significant risk. I'm not sure if the average person knows the math either. If you plop $20k on your mortgage, every morgage payment from that point on, you are saving i.e $150 that goes to principle and not the interest.
Couple that and my RRSP's and safe investments never making me any money anyway, it made it a pretty easy decision.
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Quote:
Originally Posted by jonesy
you're such a chicken
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I believe the term is risk adverse. Have to agree that paying off your mortgage is much safer than investing. As some have mentioned, paying down the principle in the mortgage also forces you to keep the money as equity as opposed to a 'savings' account that can be easily spent.
Additionally, I think alot of people overlook the interest savings from paying down a mortgage. All they see is a fairly fixed payment every month. What is not considered is the fact that as the mortgage is paid down, the interest decreases. I'm not saying a reasonable person doesn't know this fact, but I believe it is very easily overlooked in a budgeting process.