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Originally Posted by Shazam
Sigh. Absolutely goddamned terrible advice. You know it's terrible when Sliver gives the best advice.
No, just because GICs are paying out @ 6% doesn't mean "you're throwing money away!" if you're paying down the mortgage.
Yeah, hey, so you're going to buy a GIC? What, $5k? $10k? $25k? How much mortgage do you have left? $400k? Yeah, paying down the mortgage is BY FAR the best thing to do, because the ** absolute ** amount of interest is way, way, way more.
The calculus only works if the amount of interest you're going to get on the GIC is more than the amount of the interest you're paying on the mortgage.
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That doesn't make any sense. The comparison isn't the the interest earned on a GIC vs. the interest paid on the whole mortgage; it's compared to the marginal interest paid if you don't put that GIC amount towards your principal right away.
Yeah, the amount you end up with after tax isn't all that much (so it might not be worth doing), but you're talking like you'd be losing money in the end if you put it in a GIC which is absolutely not true.