Quote:
Originally Posted by ElDiabloJoe
So, I am curious as to the prevailing conventional wisdom. Is it better to pay off a low interest loan or to invest that cash for growth and pay off the loan monthly? The idea being that while the amount is growing at approximately 7% interest (standard over time, S&P assumption) and the loan is at less interest, when the loan is paid off, there is still some cash growth earnings remaining that would not be there had one paid the loan off in cash up front.
Example:
15 year mortgage at 2.5% (fixed) with a balance of $130,000. If one had the payoff amount in cash is it best to pay it off or set $130,000 aside in a stock market index fund that auto pays the note each month?
Example 2:
Auto loan at 5% (fixed) with a balance of $53,000.
Example 3:
Boat loan at 1.75% (fixed) and a balance of $21,000
|
Well I have no loans and reason I don’t.
I don’t like paying any interest. I rather receive interest. For me if I pay off my loan it’s gone, if I don’t and invest money and lose it now I’m really stuck trying to pay off high interest plus the payment. But, that’s me. They’re no debt like no debt.