No. of Recommendations: 9
If you have a mortgage below 4.5% and are thinking of paying it off, don't. Instead put that money in one of these.
These numbers are not quite correct, because of taxes, and because of the current tax law. For example, my mortgage is 4%. If I buy a 20-year treasury bond at 4.86%, then I will receive interest twice a year, and I will pay 24% in taxes on that interest (and in some years even 32% or 35% depending on income that particular year). So my effective return is likely to be 3.69% in 2025. That's less than the 4% mortgage. For the FHLB bond at 5.89%, the numbers are a little better at 4.48% effective return. But it's really moot because I only have a few months left on the mortgage anyway.
I do however regret not doing a large refinance with a substantial amount of cash taken out, back when rates were under 3%. We discussed it here, and I even discussed it with my wife, but she was uneasy about it (understatement), and I already had un-deployed cash sitting in an account, so we didn't do it. Partially using my advice, one of my siblings refinanced around then and they now have a 2.75% mortgage rate for the next 13 years or so.
