Only if your interest expense combined with other long form expenses are larger then your standard deduction. For example I bought a house in Feburary of 2010 and due to the size of my loan and interest rate (~47,000 @ 5.5%) I do not receive any tax benefit for interest paid. My friend who was married this February was not able to claim interest expense for the first time because his married filing jointly status was more then his interest expense.
I was listening to the Ric Edelman show today and thought of this thread. He described a Dalbar study that was done on the difference between the average stock market return and the average return of stock market investors.
He said this study found that while the stock market has averaged over 9% per year over the past 20 years, the average stock fund investor averaged only 3.8% per year over the same period. That’s because the 9% return depends on holding onto your investments through difficult and scary economic times and many people aren’t able or willing to do that.
If these numbers are correct, it follows that the average person really is better off paying off their house.
Yes. That is absolutely correct.
One sees a similar, though less pronounced, effect when looking at the performance of even a single mutual fund and its investors.
“Buy Low, Sell High” sounds obvious, but human psychology often works oppositely in the stock market.
I once read (and I don’t think it was a joke) that a simple winning stock-market strategy was to go through a brokerage firm’s trashbins, examine orders without weighting for quantity, and simply do the opposite of what investors are doing!