Looking for advice from people who’ve actually been through this. My wife and I have big chunk of our net worth is tied up in big tech stocks (Microsoft). We bought a home coupe pf years ago and have about a $1.08M mortgage at ~6%. Our combined income is in the $450K range, so we’re comfortable, but a lot of our wealth is still concentrated in tech stocks.
We’re trying to decide whether it makes sense to sell a significant portion of our stocks to aggressively pay down the mortgage or just stay invested and pay it off over time. On one hand, paying it down feels like a guaranteed ~6% return and gives peace of mind. On the other hand, selling means losing exposure to potential upside, and tech stocks (especially MSFT) have been strong long-term performers. We’re currently leaning toward a middle path where we sell maybe 40–50% of our RSUs, reduce the principal, and keep the rest invested while continuing to make extra payments.
Curious how others have approached this, especially if you’ve actually sold investments to pay down a mortgage in this rate range. Do you regret it or feel it was the right move?
Appreciate any real-world perspective
Pay off mortgage early vs keep investing Tech Stocks)
byu/No_Comment_1037 inpersonalfinance
Posted by No_Comment_1037
6 Comments
Kind of sounds like you’ve taken on a lot of risk by being heavy in a particular sector and a particular company. Diversifying would be a good idea, whether or not that means paying off your mortgage is up to you. The 6% interest rate is kind of borderline as to whether you’d do better in the market, risk adjusted.
debt or invest: https://www.bogleheads.org/wiki/Paying_down_loans_versus_investing https://reddit.com/r/personalfinance/comments/16jcmnh/_/k0qox0x/?context=1 https://reddit.com/r/personalfinance/comments/zssug0/_/j1ddljd/?context=1
I have investments and a 6% interest loan (although it’s 750K conventional), so I guess I can speak on my approach. Some factors to consider:
* The basic math is pretty simple — if the interest rate is higher than what you’d expect from returns, then it’s better to pay off the mortgage.
* You might be able to refi at a lower rate someday. If you pay off a lot of the house now, you’ll take a bit of a penalty with higher rates if you want to cash-out refi or heloc. So the money (AFAIK) isn’t easy to liquidate without a penalty.
* If you do refi and pay off enough, you might be able to refi as a conventional (assuming you’re jumbo). Rates are going to be a bit better than a jumbo. When I compared two years ago, it was about 0.5 points different — enough for me to pay quite a bit extra for the conventional rate. However, rates are currently close to 6%, so you’re not going to get much benefit there.
So overall, probably not worth taking similarly performing liquid assets into illiquid. I’d wait until rates drop and then pay enough to get a conventional at the lower rate.
I’m in a similar predicament as you and I’ve done some rough math that perhaps someone else here can confirm or tell me I’m wrong.
My mortgage rate is just below 6% with about 27 years remaining. The savings in mortgage interest on selling shares is roughly the same value as the stock sells for – meaning the stock would have to appreciate 100% for me to “break even” on the mortgage savings.
Tech stocks will eventually tip over. Your home won’t… As badly.
If you had a fully paid for house, would you get a mortgage on at 6 percent so that you could buy MSFT stocks?