Should you pay off your home loan or invest the money?
The higher interest rate e cycle begs the question: is it currently better to use your investable funds to pay off your mortgage or to add to your retirement savings?
The tax benefits of using investible funds for your retirement include the ability to deduct a portion of your contribution from your annual tax.
Recent interest rate hikes make the returns you earn on interest bearing investments somewhat more attractive. But this will be negated by the effect that a higher prime rate will have on your debt.
Ferdi Booysen, Head of Strategic Relationships at Old Mutual Wealth, says although it’s always hard to give an unequivocal answer given everyone’s unique circumstances, generally, the cards are stacked against early settlement of your mortgage when compared to increasing your retirement savings.
But there are some points to consider on both sides of the equation in order to best weigh up the odds.
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