re: Pay $1,000 extra to house or invest?

There is absolutely nothing wrong with paying off your house. Saying it is "not the best" thing does not mean its a bad thing, that should be crystal clear. It is certainly the most conservative thing to do and is a great way to most guarantee savings and equity.

For all anyone knows the stock market takes a dive in 2 years while you are paying off your house, and you sell your house in 25 months. In that scenario paying your house off was literally the best investment.

Given that, traditionally most people get about a 7% return in their retirement portfolios on a yearly average. If you take $1000 post tax to pay off your house you are getting about a 3.5% return on that if that is your rate. While at the same time if you put that money into a 401k instead the first year you get an instant tax bracket return plus the stock market. So if you are in the 25% tax bracket you would be putting $1250 into the market and getting about a 7% return for 32% total.

So its pretty simple to see you are potentially trading a 32% return for a 3.5% return. So in year 2 you are looking at $1035 compared to $1337.50.