Originally Posted by will76

I wouldn't recommend putting the money into stocks. It's a gamble, you can win or lose. Especially if he doesn't have a lot of experience with stocks. We are not talking about disposable income here, he can't afford to lose this money. You have to remember this is also a guy who "invested" all of his savings into some ponzi scam, unknowingly of course. How much is the current bond rate even going for??

If he pays down his mortgage he is saving about 4% net interest, which is the same as making 4% return on investment without having to pay capital gains or income on the money as he would if he invested it.

The "invest the money" vs paying more towards your mortgage is wise to do but not for most people. It's also called making money off of the banks money. It works better for people who are doing investment/commercial property and are experienced with this type of stuff, no Joe blow the home owner. For a lot of people it is easier and just safer for them to pay down a mortgage and save the money from paying interest, building more equity in their home and then if they have an emergency they can do a HELOC and get some money out.

He is also worried about being upside down and having to come out of pocket (one big lump sum) when he sells the house in a couple years. He is looking for an conservative approach. If he puts that extra money into stocks he could lose it and have nothing. You have to understand people's situations and risk tolerances and what they are looking to accomplish, what works for you doesn't always work for other people or their situation.