No advice can be given in a vaccuum, the other factors in play need to be considered. As Rich pointed out, currency debasement and interest rates should be considered when deciding on a strategy. For the last few years, rate of return for cash has been extremely low, if CD’s were paying 10%, you would be better off with that investment than paying off a 5% mortgage. But that is not what is happening today, so Les is making a sound move today. For the rest of us, for those of us with more mortgage than cash, we need to wait and see.
In the 1970’s, here in So Cal, you could buy a nice house for 30k, by the 1980’s, that 30k would buy you a nice car. During that span, there were periods of 10% return for pedestrian investments. If we enter a similar time period, which we might, you need to change your strategy.
Many people have investments other than retirement accounts while maintaining a mortgage. Each day my investments rise in value, while my mortgage debt decreases. There will come a day, when these two numbers cross paths, when the liquid value of my investments equal my mortgage debt (not including retirement accounts). Will I sell my investments and pay off my mortgage, the answer is “I don’t know.” It all depends on what is going on when that day comes.
I personally think that currency debasement, high inflation and high interest rates are likely in the coming decade, so I keep my options and my eyes open. But if that day was today, I’d do what Les is doing, unfortunately that day for me is not today, so I will keep my eye on the ball until that day comes.
