The Mathematical Reason for Paying Down a Mortgage Early

 I’d argue that paying off a mortgage early can make complete sense from mathematical and behavioral perspectives.

This article does not provide any investment advice, but it shares our story and why we thought paying down the mortgage was the right decision behaviorally and mathematically.

We were neither investing nor paying down the mortgage early in our case. We were spending the money elsewhere. I believe this is the reality for most people.

First, A Story

Unfortunately, not everyone (myself included) has the financial discipline of the personal finance community. Logic does not always prevail. Often, life happens. And life is expensive.

The Mathematical Reason for Paying Down a Mortgage

The former rule of thumb was to invest your age into these lower-risk assets.

So, for example, if you were 30-years-old, you’d want to be 70% invested in stocks and 30% in bonds or other lower-risk assets.

Where Besides Stocks Do You Plan to Invest?

If you leave that money in stocks for ten years or more, you’ll likely have more money than by paying down a mortgage.

Going all-in on any investment strategy or asset class has more risk than what we are comfortable taking on.

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