Let's say I have a 100k mortgage at 2%, which I pay aggressively, an extra $100/mo. The rule seems to be: that extra $100/mo could be making 6-8% in the stock market, so I should put it there instead, and consider that very low interest 2% loan 'free money'.
...but here's what I'm not understanding: the yearly (to make the numbers simple) interest on 100k @ 2% is 2k. The yearly interest gained on $100/mo is 8% of $1200 or $96.
So after a year, I've gained $96, but also accrued an extra $2000 on the loan. Why doesn't it make sense to just keep aggressively paying down the loan? What am I missing?
Submitted September 15, 2023 at 09:18PM by BinaryMagick https://ift.tt/naKI8Sb
