|Smart investor retires early|
"Eliminating debt, high interest debt is one thing and paying off mortgage debt, low interest obligation is another one" notes Konstanting Kuligin of myrrsp.com
Kevin O’Leary says maximizing your mortgage payments will be the safest investment you’ll ever make, but again, he was only in the mortgage lender business for only a few months, so his statement might not been well funded.
Real experts don’t always agree. Many will tell you: “It is more complicated than that” What, for example, is your earnings, your risk tolerance or your level of discipline when it comes to save? Which direction will you go for greater tax advantage? Yes, tax advantages are one of the main components of every investor to consider.
If you use the $5,000 to pay down the mortgage principal over the next 16 years while (4% interest) maintaining the normal monthly payments, you will have the whole amount paid off in 16.4 years (shaving off almost 9 years) you save more than $56,000 in interest
$5,000 in a portfolio that returns 6% annually in a tax-free savings account, your portfolio would be worth $136,064.40 after 16 years. Than think about what can you make in a double digit return environment, when your investment funds create double digit return, tax free and the unpaid tax portion will also bring new profit.
“Double digit return, though it carries some risk, can weather some fluctuations and still be better use of your RRSP funds than paying down your mortgage, the cheapest money you will every borrow” he says.
“The bottom line is that the pay down is the best option if you are the conservative type and/or don’t have a lot of investing acumen. If you are comfortable with investing into deals with protected capital and great return, secured by prime real estate– but be sure the money is tax-sheltered.” president of MortgagePRO Ltd. Zoltan M. Padar a mortgage brokerage head quartered in Calgary, Alberta, explains the ins and outs of investing into real estate backed mortgages, where you are the bank, "beatthe bank, be the bank, it is not a secret, banks most favorite investment vehicles are mortgages, as well as the most lucrative" he added.