Mustachians,
My wife and I need your advice. We're very fortunate to have hyper-local jobs which we both enjoy, we live below our means, and we're fortunate in many ways. We've come into a large amount of cash ($400k) and we're trying to figure out what to do: pay down our mortgage or invest in the market. We live in the Bay Area - thus the large mortgage. Our interest rate is low, approx 3.75%, and the 30 year mortgage ends in 2042.
If we don't do anything differently with the mortgage today, the total interest we will pay is ~$580,000.
If we pay $300,000 right now:
We will no longer have mortgage in 2032 (10 years earlier)
We would save ~$254,000 in interest
If we pay $400,000 right now:
We will no longer have mortgage in 2029 (13 years earlier)
We would save ~$302,000 in interest
The question is - Should we invest more heavily in the market or pay down the mortgage? If we invest $300-400K in the market and make ~5% a year for the next 10 years we would make an additional $188k - $250k. In 20 years it would be ~$500k- $660k.
Our current investments are all in various Vanguard low cost funds and we've been dollar-cost averaging $25k each month into Vanguard. But at this rate, it will take us 1 1/2 years to get that money into the market.
Thanks for your time and your thoughts!