Should the extra money have gone to the mortgage, or the market?
Enter your mortgage as it stood on a past date and the extra you could put toward it. This replays what actually happened, month by month, with real S&P 500 history.
Net position = investments minus what you still owe on the mortgage (plus the home's value, if included). Every path spends the same cash each month.
How this works
- Pay down mortgage: the extra goes to principal every month, cutting interest and the payoff date. Once the loan is gone, the whole monthly payment plus the extra gets invested in the S&P 500.
- S&P 500: you make only the regular payment and invest the extra at the start of each month. If the loan ends during the period, the freed-up payment gets invested too.
- Fixed return: the same as the S&P 500 path, but growing at a steady rate, like a savings account, CD, or bonds.
- Return on the extra money is the yearly rate at which the extra payments grew into the advantage they produced over making only the regular payment. For paying down the mortgage, it lands near your interest rate.
- Kept pace with inflation: the same extra money, growing exactly as fast as prices rose (like inflation-protected bonds). A path below this line lost buying power.
- Tax investment gains: taxes the growth in every investment balance at your rate, as if you sold everything that month. Long-term capital gains are 0%, 15%, or 20% for most people. Selling a primary home is usually tax free up to $250,000 of gain ($500,000 for couples), so the home isn't taxed.
- Today's dollars: shrinks or grows each month's numbers by how much prices changed between then and the latest month, using the Consumer Price Index. Final values don't change (they're already in today's dollars), but earlier ones do, and returns are shown after inflation.
- Home value: grows with the FHFA House Price Index for your state (or the national average) from 1975 on. It's the same in every path, so it lifts each net position equally and doesn't change which choice wins.
- It leaves out the mortgage interest deduction, PMI, property taxes, insurance, and fund fees. S&P 500 values use each month's average price, so short-term swings are slightly smoothed.
S&P 500 history: Robert Shiller's public dataset (via datahub.io). Inflation: Consumer Price Index from the Bureau of Labor Statistics (via FRED). Home prices: FHFA House Price Index. Everything is calculated in your browser; your numbers never leave this page.