For me the choice is simple. It may be the less “sexy” option but it is to aggressively pay down the mortgage as fast as I can.

Jobs are not secure.

Investments are not secure (barring GICs at very low interest).

Yes, even housing prices are not secure.

Picture this though…

What would you do if you had to sell your house in a rush, accepting less money than you needed to because you had problems paying the monthly payments? Then having to pay another $10K to relocate, pay a Land Transfer Tax or whatever else is involved?

What if your spouse was suddenly ill?

You found out you were expecting another child?

Would you move into a smaller house and spend all that stress and expense to do so knowing you can’t afford the house you and your kid(s) have lived in…

Simply put, make hay while the sun shines, because it doesn’t always shine forever.

(I can just see the reponses now telling me I’m too paranoid, or concerned or I should lighten up!)

Fact is I have made and lost in the stock market and I have made and lost in my choice of houses.

The larger issue is that I have to live somewhere and my family needs a roof over their head and I will not risk that for any “gamble” on the hopes of a big investment lucky strike or giving me a couple percent more than the interest on the mortgage or the risk to my family’s habitat.

I have been dumping every extra penny into my house and have cut down our family debt by over $110,000 in 16 months. This may seem like its not getting us ahead because I can’t see some big # in my account, but this debt is real, the payments owed are real and MUST be paid with after tax dollars whether my “investment” is worth it or not.

Of course those that are putting in 5% down or have no equity into their houses should re-think doing this, because if they lose their house to the bank, they would likely lose whatever money was added prior to losing it! I am referring to “traditionally” uninsured mortgage holders for this suggestion.

Early income earners usually fall into lower tax brackets. One must remember that RRSP contributions can be made later and probably should be made later, when you are in a higher tax bracket and have more to gain. Even without this ocurring, if you have been aggressively paying off your house, say with a goal of less than 10 years for repayment, you should be able to dump all the money you want into RRSPs or TFSA’s or whatever suits your fancy later!

Laslty, it is very important to set up a secured Line of Credit on your property. It is only for use in an emergency situation. The interest is low and this is your protection against job loss and/or other sudden need for money. It is the cheapest source of cash allowing you to avoid RRSP redemption penalties or other dipping into loced in savings or stocks which are lower in value than purchased.

Just some (probably too many) thoughts!

Ultimately, both are winning strategies at financial security, but as to how I determine which one is ‘more winning’ depends on risk tolerance, cash flow security, and mortgage interest rate.

I’ll start with mortgage rate. I figure if I can get a better return on my investments than my mortgage interest rate (MIR), investing wins out.

As for risk tolerance, in order for me to maintain a rate of return higher than my mortgage rate, I must be willing to accept certain levels of risk. Obviously, the lower my mortgage rate, the lower exposure to risk I need in order to get my ROI>MIR.

Further to that, I need to ensure I have secure cash flow in order to maintain my regular contributions to my base mortgage payment, and my monthly investment contributions in order to take advantage of dollar cost averaging.

My personal situation is that at a MIR of 1.5% with 10 years left in my amortization, I don’t feel justified in paying any more on my mortgage than I already do. The additional contributions I could make could serve me better by investing, since even now a 5 year GIC is around 3%. Other securities should be able to do even better than that.

Am I completely out to lunch?

Paying off a mortgage is a guaranteed 4-5% return (depending on your rate). Investing in stocks is a risky 6-9% return with the potential to lose half your money in a 6 month period.

I wonder how many people who got decimated in 2008 wish they had plowed their money into paying off their debts.

I have 15 years to work, so I want something tangible at the end, mutual funds are not worth the paper they are written on.

Congratulations. I have heard that paying down your debt / rrsp is more important than your resp. Your children, if necessary, should be able to get student loans to fund their education. You, on the other hand, might not be able to fund your retirement by working, even if necessary. There are things you can do, like let your children live at home longer, that can ease the burden on them – there is little that THEY will be able to do to ease the burden on you. Harsh, yes, but pragmatic.

To Statik:
The most important parts of your posts were left out – how did you make $65k / year at age 18???