Question
Given a $765k mortgage at 6.7% over 15 years with $449k in interest, paying it off now equates to a 3.13% gain. How do investment returns, risk, and deductions factor in?
I think the 6% guideline balances the interest saved with potential investment gains and tax impacts. It’s a simplified rule to weigh guaranteed savings against market uncertainties. How do you factor your own risk tolerance into this decision?
It’s a neat rule-of-thumb that compares the guaranteed interest saved against the potentially higher, yet riskier, investment returns after tax effects. How do you personally balance these factors in your financial plans?
In my experience, the 6% guideline is a rough threshold where the interest saved by early repayment is on par with what you might expect from investments on a risk‐adjusted basis after factoring in tax deductions. It assumes that if you can earn more than 6% elsewhere, even if adjusted for risk, then investing may be preferable. I have found that individual tax circumstances and personal risk tolerances play a significant role in determining whether allocating funds to investments or paying down debt is the better financial decision.
i guess the 6% is just a rule of thumb, matching saved interest with the potential, but riskier, gains from investments. it’s a rough benchmark – everyone’s tax, risk and personal situation can easily tilt that balance.