Should I invest or pay down my mortgage?

Paying down debt is a wonderful thing. Every time you pay down your principal it is a saving made on interest and this equates to a guaranteed return made down the track. It’s also what most of us are taught to do by our parents while growing up, but it is important to look beyond simply paying down debt.

While debt reduction feels good and investing can feel scary in the short term due to volatility, it’s necessary to weigh up the short term benefit of security with the long term objectives of growth, as a diversified portfolio of growth investments will likely outperform the interest cost saving on your mortgage.

Some of the important considerations to weigh up include:

  1. What your equity position is
  2. What investments you are considering
  3. What your objectives are for the short, medium and long term i.e. what do you want to achieve?
  4. What your cashflow position is
  5. Whether your current debt is tax deductible or not
  6. What your risk tolerance is
  7. What your current age is

If you are getting closer to retirement, we will always weigh up debt reduction vs extra super contributions for our clients as well, which can be a strategy that makes sense.  

Speak to one of our degree qualified advisers about how this relates to you.

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The content of this presentation is intended to be general information only and has been prepared without taking into account any person’s objectives, financial situation or needs. Each person should consider its appropriateness having regard to these matters or obtain relevant professional financial advice before making any financial decisions.  Examples are illustrative only. Each person should obtain any relevant professional financial, taxation and social security advice before making any financial decisions.