Pay down or invest

I've been hotly debating with co-workers my strategy of paying down the mortgage versus investing in the stock market. Not surprisingly those with families appear to quietly agree with me. And don't even get me started on that Smith Manoeuvre silliness. Surely if you have $1000 + interest per month to throw into stocks you must also have that much to throw at your mortgage principal.

Sure I know variable rate mortgages are 1.9% but who cares? I say this because, eventually we all have to pay taxes on the gains. Pay now or pay later. At least if you're paying the principal on the mortgage your hacking it down big time. Once you're free and clear, then go crazy on NASDAQ.

I guess it comes down to risk management. Sure, I could find any number of stocks and income trusts that pay 12% dividends, put personally I like to sleep soundly at night knowing I haven't bet my son's inheritance and our home on less of a sure thing. Having said this though, it does not mean that I don't contribute to RSPs and TFSAs (and dabble here and there). Those of excellent savings vehicles for the future and tax shelters. Some wisdom I will be glad to pass down to my son's when it's time is don't believe the hype about "conservative 8% growth until your retired BS". As we have all seen, all it takes is an incident like the sub-prime and you're back to zero (if you are lucky).

I'm sure a lot of you will disagree and the math says I'll come out ahead if I invest instead, but as I mentioned earlier. I love to sleep.