Pay off debt or invest?

Market real estate At the present time, there are constant fluctuations, housing prices are also increasing rapidly. Paying off debt or investing is something everyone cares about, whether you’re in the US or Vietnam.

However, real estate and investment advice has always been controversial. If you used to be very cautious about advice regarding this issue, things are probably making you even more confused now. The reason is because, sometimes, there is advice that used to have a lot of value, but now, it is no longer relevant.

“Pay off your mortgage as quickly as possible,” says Jack Cotton, a senior realtor with Sotheby’s International Realty in Osterville, Massachusetts. position.

A few years ago, this was considered “golden advice”: “The house is a reflection of your financial freedom. Often, you hear advice like paying off your debt as soon as possible. However, this is especially true in cases where student loans. Then the sooner your debt is paid off, the less interest you will have to pay, so you can save a lot more money.”, Cotton explained.

But that is not the case with real estate.

In addition to the real estate market, other portfolios including: properties, stocks and bonds, real estate or even cryptocurrencies have also seen a lot of volatility in recent months.

While you can be proud of owning your own home, you’ll probably feel pressured and exhausted every time you think about how much you’ll have to pay off your mortgage each month for the next few decades. Consider how well the stock market has performed in recent years, and you may feel like you’re missing out on 1-0-2 investment opportunities.

Pay off debt or invest?

You can dream of a day when you don’t have a mortgage hanging over your head and are struggling to make payments each month. Going debt-free can be an admirable goal for many people, but it doesn’t make much sense financially, especially in today’s context, when mortgage rates are so low.

“Recently, mortgage rates have seen upward revisions, but mortgage rates remain at historic lows. As interest rates and home prices rise, affordability becomes a significant barrier. For potential homebuyers, especially as inflation is likely to put a strain on consumers’ budgets, this advice makes less sense.”said Cotton.

Mortgage rates are at historic lows, which means this is a great time to refinance. If you last mortgaged or re-mortgaged your loan many years ago, you can potentially save quite a bit of money by using a lower-interest and/or reduced-time refinance method. your mortgage term.

That means you should consider using other investment channels. Reinvesting allows you to spend less on your mortgage overall while still taking advantage of the higher returns in the stock market.

“From a financial perspective, it’s better to invest your money than earn more to pay off your mortgage faster,” he said. Cotton said.

Over the years, the average stock market return has been significantly higher than mortgage rates, meaning you’ll make decent money on the spread.

Unlike investing in a home, where your money is tied up, investing in stocks, bonds and other market items means you can easily sell and use them. Use your money if you need it.

Choosing to invest your money may not be the best choice if you don’t like loans in your name, but it is also an idea that many people are interested in and spend a lot of time thinking about. ; especially in a financial world with many “vertical” changes after the pandemic – inflation is increasing faster than ever.

According to apartmenttherapy

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