Kornel Szrejber – Paying off a Low-Cost Mortgage Can Increase Your Opportunity Cost

Kornel Szrejber is the host of the Build Wealth Canada Show. He has been featured for paying off his mortgage in only six years while still in his 20s and becoming one of Canada's youngest retirees at the age of 32. He now runs his popular personal finance and investing podcast created specifically for Canadians. Kornel interviews top personal finance experts to share their best practices, tips, and tactics when it comes to investing and personal financial planning in Canada. He also runs Canada's largest personal finance and investing conference.   “We sort of just, got scared, let fear take control, buried our heads in the sand, and said, let's just pretty much ignore the stock market and go for this short thing of paying off a mortgage.” Kornel Szrejber   Worst investment ever Ready to be financially independent Kornel and his wife set out to be financially independent straight out of university. They were smart about their money right off the bat. While other young couples were enjoying the benefits of having well-paying jobs straight from college, Kornel and his wife decided to live off one of their salaries and use the other one to pay off their mortgage quicker. Fear got the best of them They were also considering to save for retirement, but before they could make a decision the 2008 financial crisis hit. Investors were freaking out because they were losing hundreds of thousands of dollars in their investment accounts. As young graduates, they didn't know much about investing in public markets or opportunity costs. And so they got completely scared off from the markets and decided to go for the sure thing, which was paying off their mortgage. When one good decision leads to a missed opportunity They did manage to impressively fully pay off their mortgage within six years, something that is rare in Canada. They even got featured in both of the major personal finance magazines in Canada, some large blogs and podcasts, and in a book. But despite this nice milestone, they missed out on an important investment opportunity. At the time they were getting the mortgage, interest rates were at historic lows, and therefore, they had a guaranteed rate of return. On the other hand, the markets went incredibly up after recovering from the 2008 financial crisis. Getting rid of their mortgage debt gave them good peace of mind. But by ignoring other investment opportunities, they increased their opportunity cost. Had they put some of the money they used to pay off their mortgage in the stock market, it would have far exceeded the interest payments that they were paying. Lessons learned The best time to invest is when the market is at the bottom