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Rate of return for mortgage vs investments; debt vs savings

1. Aside from tax deductibility aspect, if you can put your additional mortgage payments into bonds or other investments which might earn a greater rate of return, would you make that investment?

2. What could be some missteps people may take in terms of debt and savings?

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1. Aside from tax deductibility aspect, if you can put your additional mortgage payments into bonds or other investments, which might earn a greater rate of return, would you make that investment?

The simple answer is that if a person can make a higher rate of return on an alternative investment over the rate being paid down on extra principal payments on a mortgage, then the 'spread', or difference between the two rates is profit and worth the time and trouble. Generally speaking, it makes sense to consider the difference between the rates as profit.

But life is never simple, and ...

Solution Summary

The 399 word solution is a practical discussion of debt, savings and rate of return including special emphasis on extra home mortgage payments as compared to savings.

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