ACCOUNTANT EXPLAINS Should You Pay Off Your Mortgage Early or Invest for Retirement

[@GabrielleTalksMoney]

Get the Financial Freedom Template ➡ www.gabrielletalksmoney.com/product-page/financial-freedom-template

[@tatianastarcic]

Prices are too high. With rates not subsidised in ’24 and mortgage still high , currently seeking alternatives to maximise savings without an RV move or taking a loan. I’m seriously contemplating the latter.

[@richardhudson1243]

The best course of action if you lack market knowledge is to ask a consultant or investing coach for guidance or assistance. Speaking with a consultant helped me stay afloat in the market and grow my portfolio to about 65% since January, even though I know it sounds obvious or generic. I believe that is the most effective way to enter the business at the moment.

[@richardhudson1243]

If you lack market knowledge, your best bet is to seek advice or support from a consultant or investing coach. Contacting a consultant may sound simple, but it's how I've managed to stay afloat in the market and increase my portfolio to roughly 65% since January. It is, in my opinion, the best way to get started in the industry right now.

[@winifred-k9e]

Glad to have stumbled on this comment, Please who is the consultant that assist you?.

[@richardhudson1243]

My Financial adviser is ‘’Melissa Terri Swayne’’ she’s highly qualified and experienced in the financial market. She has extensive knowledge of portfolio diversity and is considered an expert in the field. I recommend researching her credentials further. She has many years of experience and is a valuable resource for anyone looking to navigate the financial market

[@LUCIASMITH-d1z]

Thank you so much! This is exactly what I needed right now. I wrote her an email and am waiting for her reply. Hopefully, she responds soon. I plan to start the year on a strong financial note.

[@Aarrenrhonda3]

My husband and I were fortunate enough to be able to pay off our mortgage early. We were both still working, and took the payment amount that we had been using to pay off our mortgage faster and we put it straight into investments. We were able to retire early because of almost 7 years of putting away what would have been our mortgage payment as well as maxing out our 401K/403B plans. Thankfully we were taught by both of our parents the value of living within our means. Thank you for your advice. I know it will help people. we are interested in investments that could set me up for retirement , I mean I've heard of people that netted hundreds of thousands during these crash, I listened to someone on a podcast who earned over $650K in less than a year, what's the strategy behind such returns?

[@Peterl4290]

Investing without proper guidance can lead to mistakes and losses. I've learned this from my own experience.If you're new to investing or don't have much time, it's best to get advice from an expert.

[@larrypaul-cw9nk]

Keeping money in the bank is like paying banks and the Govemment. Here's how it works: The bank gives out your money as loan, and charge interest obviously higher than inflation rate, and then give you, the depositor, interest lower than inflation rate. That means net loss for you. That is why I prefer to invest, and on average, my advisor makes returns that always beats inflation!

[@sabastinenoah]

How can one find a verifiable financial planner? I would not mind looking up the professional that helped you. I will be retiring in two years and I might need some management on my much larger portfolio. Don't want to take any chances.

[@larrypaul-cw9nk]

Annette Christine Conte is the licensed fiduciary I use. Just research the name. You’d find necessary details to work with a correspondence to set up an appointment..

[@sabastinenoah]

Thank you for the lead. I searched her up, and I have sent her an email. I hope she gets back to me soon.

[@azteca6695]

I got my house when I was single. I managed to save 3 months of emergency fund. 2 yrs after I moved in, I was diagnosed with Cancer. The following year after. New management came in I lost my job. As I was going back to the hospital and Dr's to check for any remaining cancer cells. I used that emergency fund to pay for my monthly expenses. After I was cleared to go back to work. I decided to up my monthly expenses, just in case. After I got married my husband and I paid off the mortgage, pay for our funeral expenses. We are now putting more into our investments/saving. I've been told I could of used that money to invest. But nothing gives me peace of mind, having the mortgage paid off, and not burdening my family with my funeral expenses and arrangements.

[@mkhatame86]

You are strong human, stay safe ❤

[@RichardColwell1]

This was emotional to read. Thank you.

[@2cents177]

Paying off mortgage earlier would buy yourself peace of mind to take better job which could easily generate more cash flow than investment for most of people. Return of investment is not guaranteed!

[@AsianVideoGamer]

If you're less than 40 then contribute to retirement investment. If you're 40-60 then 50/50. Once You're 60 then pay of your mortgage or sell that house and downsize. Live off dividend plus pension rest of your life while doing work you want to do regardless of pay. Any age above 45 you're vulnerable to ageism from companies and laidoffs can literally kill you if you don't have cash and house poor

[@TheFirstRealChewy]

Yup! When you are young the sky is the limit. When you are older you realize that the sky has limits. Its a good idea to look at the age group of the people you work with. If you are feeling like the oldest person in the group then it's time for you to change things up, unless you own the company.

[@owaisaa1188]

Paying mortgage at the age of 60 is essentially paying for a coffin.

[@AsianVideoGamer]

@@owaisaa1188 hopefully by 60 you have enough equity on your house to sell it and downsize if you couldn't pay it off between 40-60. Very important to put as much money as you can snowballing otherwise you'll never out pace inflation

[@totaleclipse99]

Love the video. I purchased the templates to show support. Just a tips: keeps in mind your target audience may not be very financially fluent so I would suggest you slow down a bit. Break up the videos if you have to. I love the clean and clear presentation format of the video. Keep up the good work and keep going.😊

[@Knowledgeabletuber]

I paid my house off, the property value is 225k.Then bought a second home for 355k and renting out my first home to put the extra on my second home to pay off quickly. Pay off will take me 3 years

[@janebaker4912]

And with both paid off you'll have over half mill in assets and no mortgage obligations and passive income from rent!

[@dancedricarevalo5326]

Not all heroes wear capes. Some are in KZbin. Thanks you and I appreciate your efforts!

[@motive7475]

One thing that you need to consider for some people, when I paid of my house early to offset the interest rate deduction I added that to my 401 k which is tax deductible. It’s not a complete offset since I’ll pay taxes in retirement but it made losing that tax deduction more manageable. In the USA we can contribute up to 20k a year which I increased once I payed the house off

[@rawjor]

Max and Contribute to TFSA yearly. Use the money in TFSA to buy S&P500, wait and win. (take advantage of new FHSA if looking to buy your first home). Open these two accounts before RRSP. Advantage of stocks: no maintenance/repairs, highly liquid, tax free, beats housing appreciation. Set it and forget it. This is coming from a owner of two rental properties but also have stocks. My investment would have been similar but the amount of work and headache to maintain rental properties is significantly higher than compared to stocks.

[@TheFirstRealChewy]

If your decision is based only on math, invest the money if it gives a higher rate of return than your mortgage interest rate. Factor in PMI if you are paying that. However, for most people it won't be based only on math. Experience has tought me that things don't always go as planned and plans change. If you were forced into retirement today, would you rather have more money invested or a paid off house? The answer is that you don't want to have to make a choice.

[@Username_CC_]

More money goober lol

[@jmb9701]

@@Username_CC_ I mean, in the market your life savings can dip by 30-50% over a period of 5-15 years. You wanna wait that long to cash some money out to survive?

[@anthonyplaysbass]

Paid off house.

[@anthonyplaysbass]

Mortgage paid off at current interest rates is better than investing. Its a guaranteed 6-6.75% return compared to investing which maybe net 3-6% after taxes. So.... But all the ETF bros will say "invest invest invest!" Having a portfolio wont put a roof over your head if you get the arse from your rental or your job and the bank takes your home out from under you. Mortgage paid off = ultimate peace of mind. Plus the disgusting amount of interest they charge if you choose to let the loan fully mature - thats another down payment or a small house in itself you're paying to the banks.

[@bexprefersgin6119]

This was SO helpful - thank you so much for this well produced and thoughtful video. It has really helped my family make an important decision about what to do.

[@richcasanova]

Wow. Helpful contents and a free financial template. Thanks.

[@papa7866]

this was such an amazing and well done video/breakdown. thank you so much for all your efforts!

[@GabrielleTalksMoney]

Thank you!

[@nikkiteareacts]

With the direction the future is going and how things are right now, investing your money into your retirement is probably the better option. The time to buy a home is no longer an option for many people I know in their 20s and 30s.

[@catalinaleungszeto6178]

And also if 20k goes to rrsp account ( assume there is rrsp room ), AND REINVEST the tax refund , OR USING the tax refund to pay lump sum towards the mortgage, the benefit outcome should be even bigger …

[@Aubatron]

Only if net income is at or above 60k. If you make less than 60k, if employer matches rrsp, then do that. If they don’t, it’s better to put that money into either a First Home Savings Account, or a TFSA.

[@shiyanjin8703]

Thanks for making the content. However, I'm not sure if I agree with the net positive benefit of prepaying in the example. In theory, as long as the annualized investment return is higher than annualized mortgage rate during the rest of mortgage, it's better off investing instead of paying off mortgage. In reality, one of the considerations for the investment at mortgage renewal is where the market in which the fund will be invested is heading, i.e. you wouldn't want to invest if the market is significantly overpriced.

[@KS-jg6bx]

If you can pay off your mortgage in 5 years, then do it as fast as possible. Whatever she is saying is based on an "Extra payment to your mortgqge. Not paying off 20% per year.

[@laidav]

Can you put a number on peace of mind? How can one factor that into their quantitative analysis?

[@vincentchuvc]

I like to do both sequentially using the smith manoeuvre. No new capital is required and I can capitalize the interest too

[@Demonhgg]

Hi Gabrielle, I am your loyal fan just very much because of your sound, I love it and your tone or punctuation. 😮Ok, I recently got in a public accounting firm ( mainly do partnership tax returns) and having a difficult time understanding rolling retained earnings inside the CCH engagement, just don’t know why inside the engagement, that the parters’ capital acct need to be the PY amount while the TSR is showing Current year end. I really wish if you could share some insight on this if you have done any partnership or s corp returns. I think you must be the expert to go to! Thank you !

[@WhiteFurySpitz]

Mortgage is expensive. The piece of mind is expensive. Focus on earning a lot of money for less time possible. Invest in yourself. Upskill and be healthy. Enjoy this one life you have.

[@desertwind666]

Doesn’t paying off house have a compounding effect too? The amount you pay extra not only reduces the interest but means future repayments go less to interest and more to house? Did this also account for investing immediately after paying off house against the fact investor would need to keep paying for house.

[@mkhatame86]

You are smart and an intelligent woman, but I think you should make your videos more concise. Thank you for your work and wisdom

[@HR-uf1zn]

Hi Gabriella, I am new to Canada, I need to invest. I have already opened an account with Wealth Simple. What do you recommend that will enhance my knowledge?

[@leehaskins307]

I think MOST people never pay off there mortgae becuase the move UP thru life… and the price keeps going up…. most dont ever pay off mortgage to retire…. only way is it buy a home early in life and live in that house ur whole life… very rare...

[@chilieu2621]

Thanks for the video!

[@Ryan-pu1dq]

After a lump sum prepayment, does the monthly mortgage payment reduction occur only after renewal? Thanks for the video!

[@GabrielleTalksMoney]

Usually that's the case when you renegotiate your mortgage, since you are determining a new monthly mortgage amount. Otherwise, if you prepay during a closed term, a greater portion of your monthly mortgage will go towards paying off your principal than before.

[@johnstouchpad6437]

Doesn't really depend on how much you still owe, like 5,000 vs 10,000 compared to say 100,000 or 150,000 as an example plus your interest rate?

[@T_Le]

You can't go wrong with both options. Just dont buy a new car.

[@catalinaleungszeto6178]

Excellent and detailed explanation… ( even a lot of numbers , I guess people need a clear mind before listen to this video)) lol

[@MDog_FPV]

Could you do an example on Investing AND Paying off Early Save and invest the amount you would pay extra every month (instead of paying down, invest every month @ perhaps 8% return?), once it is large enough pay off the mortgage in one lump sum (Maybe showing how it grows over 15-20 years). Now that the Mortgage is paid off, you have the entire amount of mortgage and what you were paying down to invest every month. (Compare this method to regular mortgage and a typical pay off early you have described.

[@PolineChan]

Wouldn't monthly reduction already be considered the interest saving? That is you pay off $20k of the principle, so you don't pay interest on that portion. That's why total payment reduction is 33k instead of 20k. I think you are double counting by including another $13k

[@GabrielleTalksMoney]

This was also a point I was contemplating. However, I came to the conclusion based on the benefit of 20k prepayment at mortgage renewal time, which takes into consideration (1) interest savings from reduced interest payments due to lower principal (2) savings from reduced monthly payments are treated separately and is strictly cash flow difference and not related to interest (3) compounded income is from the invested savings and not directly linked to mortgage itself. Hope that clears it up!

[@shiyanjin8703]

I am thinking along the line too that I felt there migjt be double counting of the benefit of the paying off mortgage. I will do some more thinking then come back.

[@anniehsu9792]

I believe we are double counting the mortgage interest saving. Conceptually this doesn't make sense. When prepaying we are effectively investing the 20k at 5.5% then investing the interest from it at 7.05%. how can that end up more than investing the entire 20k at 7.05%?

[@anniehsu9792]

That 33019 is already benefit from both interest and principal repayment. 20000 + 13018 from mortgage interest saving.

[@Rick-s5d]

I think this analysis gave an incorrect answer. To keep it simple we should really be looking at scenario A and scenario B for Investment balance at the end of the 20 year period. Scenario A: Lump sum Invest $20,000 and you will have $80,775 total at end of the 20yr period (assuming 7% annual return rate, compounded monthly). Scenario B: Invest $138 monthly payment decrease, every month over the 20 year period = $71,888 total at end of the 20yr period (assuming 7% annual return rate, compounded monthly). With both scenarios the mortgage balance is zero at the end - it does not matter how much interest was saved or paid - what matters is the end result - we really should be thinking in net worth terms here. Scenario A is better because you have $8,887 more in your investment balance in the end. To take this a step further, I ran the same analysis for my own home which has a 3.8% interest rate (only variable that changed). Scenario A now gives me $18,785 more in my investment balance at the end. 7% is a conservative assumption for stock market returns. If you assume 10%, Scenario A would give me $56,196 more in the end. These differences are not as small as many people would like to think, and it really makes a case against paying off mortgages early when the interest rate is significantly lower than expected investment rate of return.

[@touxiong6055]

Payoff because investing is not guarantee profit.

[@hiram.j]

With PAYING OFF MORTGAGE SOONER, a CON is the loss of compounding effect but an unmentioned PRO is a _gain_ in the compounding effect of reducing the mortgage principal to produce increasingly less/lower interest payments. So the concept of a "compounding effect" is neutral in this case.

[@wjperdue]

Your mortgage payment doesn't change unless you refinance. otherwise, you just payoff earlier.

[@lauraitanyi8911]

It changes in Canada after each term.

[@TheFirstRealChewy]

Annual living expenses of $24K in early retirement after paying off the mortgage. How do people arrive at these numbers, even as an example? Based on my calculations the cost of cost of property taxes, homeowners insurance, HOA fees (for many), and healthcare premiums alone would take a huge chunk out of that if not all of that.

[@Azel247]

Seems reasonable to me. As a 2 person household we spend 3500/mo excluding mortgage, so one person at 2k is fine. Btw this is Canada, so no healthcare premiums. At any rate, it shouldn't affect the mortgage vs. investment calculation but it does affect the income required section (I think?)

[@BarbaOlof]

The exact number is hard to know for sure depending on circumstances for each particular household. One thing is for sure though, and that is that KZbinrs in the personal finance field use numbers that are appealing. Appealing numbers gives more positive reactions and recurring views. I think…

[@alexyida]

Mortgage prepayment while the rate is high

[@shinyl7947]

Like!! thank you for sharing

[@lovetacoma8604]

invest in stock is better

[@christinelu7949]

What should we do if we have super low mortgage interest of 2.75% and the high yield saving rate of 5.25%. Shall continue to pay more toward mortgage or put money in saving until the high yield diminishing?

[@GabrielleTalksMoney]

2.75% is a great rate. My video focuses more on those who's mortgage renewal is coming up and will need to deal with higher mortgage rates of 5 to 7%

[@Username_CC_]

So you ignored the principle of the invested money but counted the contributions and interest of the mortgage money invested... Math aint mathing.

[@annalee2441]

🙏🏻

[@justwait9822]

Invest in what, this market is trash right now.

[@misssophiamae]

That’s exactly the time to invest in the market- dca the index!

[@sunkneee]

She gave no definitive answer, just some general knowledge. So I'm still left with no answer to this question .

[@freakymeltdown1]

Maybe you need to ask a question first? 😅

[@dexteranime7906]

Ur so beautiful 😍😍

[@unclelive6918]

Simp

[@dexteranime7906]

@@unclelive6918 so I can’t admired someone beauty? How about you quit judging and say something good

[@ShannonCanning-u7v]

@@dexteranime7906 I agree with the other guy. Don't be a simp.

[@dexteranime7906]

@@ShannonCanning-u7v say it to my face

[@josephantolin9298]

@dexteranime7906 Yea, quit being a simp. Pathetic loser. She ain't even pretty.

[@thefinancedude9100]

You do realise that the thr market does not return 7% per a year it Average 7% over a set period of years. By using the average return on a compound interest calculated it does not represent the market. Stop using the average return

[@shiyanjin8703]

Aside from the conclusion which I don't fully agree. I don't see too much wrong with the 7%. 7% is just a part of the illustration. Everyone will have their own opinion on what that is and could be achieved in the current market.