Should I Pay Off My Mortgage or Invest in ETFs? My Dilemma Explained

Depending on your financial situation, at one point in your life, you might have asked yourself whether or not you should pay off your mortgage early. As it’s almost always your biggest monthly expense, there are plenty of reasons in favor of getting rid of this expense once and for all. 

This is exactly what one Redditor posting in r/DaveRamsey is currently contending with, as they determine which of the two options is better: paying off the mortgage or investing in Vanguard ETFs and going along for the ride. There is no doubt that both sides have positive and negative aspects, so let’s take a look. 

Should I Pay off My House? 

For this Redditor, they have both the Dave Ramsey devil on one shoulder and an angel on the other. They know that Dave would say yes, if you have the cash to pay off the mortgage, you should absolutely do so, and free yourself from debt. However, this individual also recognizes the opportunity this cash presents. As they look to sell a second home in 2026, they know that the proceeds from this sale, along with some other funds set aside, will be sufficient to pay off their primary mortgage. 

On the plus side, they won’t be touching their Roth IRA or other investments, so we are not talking about tying up everything in either paying off the mortgage or investing the money. The Redditor says they have “low six digits” of other investments that will remain untouched. 

However, the current primary home is carrying a very affordable 3% mortgage rate, and they recognize that dropping the money from the second home into a safe Vanguard ETF represents a much bigger opportunity — historically, when accounting for property taxes, insurance and maintenance, real estate returns lag the stock market. Of course, with two voices talking in their ears, this individual also recognizes they have a bit of FOMO around paying off the mortgage. So, what should this person do? 

This Is a Risk vs. Reward Decision

Unfortunately, we don’t get concrete numbers from this Redditor, so it’s hard to do some specific calculations to look at how more interest they owe, etc., to help come to the best decision. This said, I recognize the difficulty in this question, and I’ve actually been down this road before. My wife and I have questioned whether or not to pay off our mortgage in the past, and ultimately decided against it for the same reason this Redditor is considering. 

First things first, what I would want to say to this individual is that they need to start by looking at the total interest amount they have left on the home versus any potential gains from investing. Let’s do a hypothetical and say that they purchased the home for $360,000, put 20% down, and did so on a 30-year fixed loan at 3%. This would give them a monthly payment of around $1,214, including principal and interest. Assuming they bought the house in 2055, and it’s paid off in October 2055, they would pay around $437,119 as the total cost of the loan, meaning $149,119 in interest payments. 

Now, let’s say that they take this $360,000 in proceeds from the second home and invest it over the next 30 years, at a 6% rate of return, and contribute nothing else over the same period. In year 30, they now have $2,067,656 in the bank, a massive leap over the amount of interest they would save by paying off the loan. 

There is absolutely no question in my mind that in order to make the best decision, you have to look at the long-term potential of your investments compared to the peace of mind of being mortgage-free. Also true is that there is almost no scenario in which a $360,000 house appreciates enough over 30 years to be worth over $2 million, so even if you argued that they would earn something through equity, it won’t be enough to counter the compounding investment earnings. 

Investing Is the Smarter Decision

This might be a different discussion if the Redditor already had $2 million in investments and was simply trying to decide if this number was worth growing even more to enjoy a more comfortable retirement. However, since they don’t have a solid retirement amount already in place, investing this money is going to yield a far greater overall return than paying off the mortgage.

Yes, there will be peace of mind from knowing you have more cash free each month to play with, travel, entertain, or even invest, but it’s the lump sum that is going to yield the biggest return here. Dave Ramsey’s advice on paying off your mortgage is solid and something many people can and should consider. This said, if you really want to make the most of the money you have available, there is almost always going to be more of a return from the market than from real estate.