August 21, 2006

Financial Tip #1

Don't pay off your mortgage early. Let's say your mortgage rate is at 6%. Since mortgage interest is tax-deductible, your "real" mortgage rate is only 4%. So, if you save an extra $1,000 and want to put it to good use, don't put it toward your mortgage. Put it in a conservative fixed-rate investment for 5-6%, make more money off the investment, and have your assets be liquid instead of sunk in your house. The idea is to do what banks do. Borrow money at a low interest rate, and safely invest at a higher interest rate. Smart investment sense is not always common sense.