Interrupter CheckmarkInterrupter IconFacebookGoogle PlusInstagramGroupRamsey SolutionsTwitterYouTubeExpand MenuStoreCloseSearchExpand MenuBackStoreSign in

Ask Dave

Why Pay Off Home Instead of Invest?

Dave explains that the biggest factor as to why you should pay off the home, rather than invest in 12% annual mutual funds, is risk.

QUESTION: Why should a listener pay off his home if he can put the money in a 12% annual increase mutual fund?

ANSWER: With this plan you’re not considering the taxes that you pay on the investment, which will bring your investment down to about 9%.  You’re also leaving out risk.  An investor who fails to factor risk into the equation is naive.  A borrowed home adds substantial risk to your portfolio versus a paid-for home.  Remember, the borrower is slave to the lender.