It depends not just on cash flow but also on where you are with your market investments.
If you are where you want to be with your investments at the time when the question arises, you should logically pay the mortgage. If your investments are underfunded for that particular point in time you should invest more.
This presupposes an overall financial plan.
For example, my retirement plan includes an income floor with a bridge to social security and pension, a rental property, a payed off mortgage and 500k upside portfolio. The last few years pushed my market investments ahead of schedule so I funded my guaranteed income and I'm halfway through with the mortgage. If the market goes down, I will switch gears.
I think all that is pretty logical and does not require a crystal ball, but only in light of the overall financial plan.
I can't say I'd agree. Just because you are "on plan" with whatever you've decided your plan is doesn't mean it's any less mathematically advantageous to invest in the stock market or that the benefits of paying off the mortgage are greater than they would otherwise be. You are still faced with the same choice, but you're simply ignoring it because you feel your investments are "good enough." Your crystal ball is still present, merely obfuscated by current value numbers and a lot of initial crystal-ball gazing at plan creation time. But like I said, it's whatever makes you happy, so feel free to keep doing that too.
You are right in saying that the math does not change and that one is still faced with the same choice. However, the existence of an overall financial plan and goals should influence the kind of choice one makes.
An overall financial plan does not require one to sit down at some point and use a crystal ball.
It is actually a process which is determined by your assets and risk tolerance. (I am not talking about the silly risk tolerance assessment tool used for investment advice) I mean the risks which extend to others which one is really not entitled to take unless these others truly understand them and agree with accepting them. An overall financial plan requires one to sit down with your SO and find out where you are. I can tell you that our conversations went immediately beyond any mathematical projections upon where the highest returns were to be found. It got pretty detailed and actually very actionable very quickly.
When you are just starting out in your career, all you need to do is to show up for work, load up on term life, health and disability insurance and start pouring money into market investments and pay your premiums.
The biggest risk you are facing is an underfunded retirement and mathematical projections are in agreement with your plan.
I am much farther down the road and my investments now make up a much larger part of my assets particularly when compared with my future earning power. I have also found that my wife does not relate to market investments as I do. Whereas I am quite comfortable with letting things ride and adjust spending on the go, my wife does not relate to this at all. If I died tomorrow, there would be no one to manage the investments. My wife also puts a premium on being FI as soon as possible - much more than I do.
So the plan had to change because valuations are allowing it. What needed to be done was easily quantifiable: basic cost of living to be covered with guaranteed income, pension, social security, and rental income. The mortgage is covered by my life insurance from work. But for FI with both of us alive, the mortgage has to be payed off as it is the FI limiting factor.
Now, my wife also is very eager to do some traveling during retirement - but at this time valuations do not support setting aside a potentially very large but basically not really quantifiable sum for travel expenses. Naturally, the funds marked for these kinds of expenses remain in the market.
But again, at some point, valuations may support setting aside the fun funds as well.
What you have here is an individualized retirement plan which at this time includes deferred annuities insuring a sufficient floor income. The need for these insurances may decrease over time, again depending on investment returns.
If I was on my own, my plan would develop along different lines. I am much more comfortable with mathematical projections and would just let the investments float some more. For my wife this would be akin to gambling.
In my view an overall financial plan is a work in progress and the more assets are already accumulated the less it should depend on market projections. This assumes a mechanism of assessing what constitutes enough. Sitting down with your SO and going through your expenses, assets and insurance needs as well as attitudes toward investing can give you surprisingly quantifiable goals.
Of course, all these things are value judgements but that is not a negative.
Compare that to a strictly mathematical approach where there is only one value judgment: more is always better.
My wife has a different opinion: enough is better than more. Maybe not perfectly logical but most certainly perfectly sane.
I recommend to sit down with your SO before making a decision about paying the mortgage vs market investments. You may be surprised how small the role of projected ROI is in the decision process.
Peter