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Another view on Pre-paying your Mortgage

This month’s Consumer Reports has an article “Your mortgage, It rarely pays to prepay”. They think it doesn’t, suggesting that since the stock market (measured by the S&P) has averaged 10% per year over the last 20 years, that it would make financial sense to choose investing in the stock market over pre-paying your mortgage. On one hand, there’s a neat logic to this. But, as I posted in my blog article Disappointing Results, we see that despite the 11.8% return of the S&P cited by the study, the average equity fund investor only saw a return of 4.3%. In that case, CR might rethink their numbers and their blanket statements offering what may be unsound financial advice.

Whatever you decide, the decision has to be based on your individual situation, your risk tolerance, and investing style.


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