Is it wise to sell company stock to pay down a mortgage?
Is it wise to sell company stock to pay down a mortgage? Say, you have ,000 and a 0,000 mortgage. Is it better to continue to assume the risk over the long haul or cash in at a reasonable amount. I could doubled the value of my initial investment at the time of this writing.
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Simply if your stock is still rising in price keep it. If it is falling in price sell it and pay off your mortgage.
To know when to do this is very easy. If it is currently rising you can put a trailing stop loss on it and sell it when it drops and hits your stop loss.
A second easy method is to draw an uptrend line under the increasing price and then sell when the price drops down below the uptrend line, as per the chart below.
This will enable you to capture the bulk of the price movement upward and sell before the price drops too far down. You can then use the profits (after tax) to pay down your mortgage.
Of course if the price is currently in a downtrend sell it ASAP.
If by "Company Stock" you mean "stock in the company I work for" then absolutely sell your stock. It is too big a risk to have your investments tied into the same company that is also providing your salary.
If you mean stock as in general investments, I like to look at it this way. If you have ,000 stock and a 0,000 mortgage you ask this question:
If I had a ,000 mortgage would I borrow an additional ,000 against my house to invest in the stock market?
If the answer is yes, then you are taking a risk consistent with your tolerance for risk. If you answer no, then your tolerance for risk says you'd be happier paying down your mortgage.
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