If you are fortunate enough to have a few extra dollars at the end of the month after paying your mortgage what should you do?
Sample Mortgage Details
- 5.25%
- 25 year amortization
- $400,000 loan
- loan payments of around $2400
- our user has an extra $600 every month in free cash.
Option 1: Put the money into a dividend paying stock
In this scenario the user decides to pay the mortgage for the full 25 years and invest the extra $600 directly into a dividend paying stock. Our user finds a stock with an dividend yield of 6%, once the appreciation in the stock’s value is included the return amounts to 7.25%.
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