ST Alpha - "I understand the power of compound interest, but paying off a mortgage is only earning 6% (less because of the deductibility of interest), of course.." (Reading a Post)

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In response to "LIR: ceregon take the prepaid rent, put it on the mortgage" by zeitgeist

I understand the power of compound interest, but paying off a mortgage is only earning 6% (less because of the deductibility of interest), of course..

Posted by ceregon Dec 1 '08, 10:36

..these days finding investments that produce 6% (or 4.5%) return safely are hard to find. It's just rough for me because I'm used to earning 10-12% per year on investments (and yes, I'm down this year like everybody else, but with selling calls each month I have cushioned the blow somewhat).

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I was gonna say, what investment will pay that high? -- nm - loosilu in Algiers Dec 1, 10:40
but by reducing the principle, you're getting that 6% over the entire remaining period of your mortgage. -- nm - znufrii Dec 1, 10:39 2
- for example: if you pay down the pinciple by $10,000, you can save up to $40,000 in interest payments over the life of a 30-year mortgage - znufrii Dec 1, 10:47 1
  - (this is if you make the extra principal payment at the beginning of the loan, and still keep your monthly payments as they were) -- nm - znufrii Dec 1, 10:48

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I understand the power of compound interest, but paying off a mortgage is only earning 6% (less because of the deductibility of interest), of course..

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