38-Year-Old Engineer with NT$30K Extra Monthly: Pay Off Mortgage or Buy ETFs? A Real Case Study

With an extra NT$25K per month, should you pay off your mortgage or buy ETFs? This question, posted by a 38-year-old engineer on PTT (Taiwan’s largest online forum), echoes what many people are wondering.

38 years old, tech industry engineer, NT$70K monthly salary, just bought a home, single, and NT$20-30K sitting around with no clear plan.

This “decent income but unsure what’s next” situation — I’m guessing a lot of people can relate.

Quick Overview of the Case

Let’s lay out the numbers:

His question: Should the extra NT$25K go toward the mortgage or into ETFs?

Good question — because the logic behind these two options is completely different.

First Things First: Is the Emergency Fund Enough?

Before answering “mortgage vs. ETF,” let me ask a prerequisite question:

Is the emergency fund sufficient?

With monthly expenses of NT$20K + mortgage of NT$20K = roughly NT$40K in fixed costs, the emergency fund should be at least 3 months = NT$120K, or more conservatively 6 months = NT$240K.

His current savings of NT$500K minus NT$240K for the emergency fund leaves NT$260K available to deploy.

This part checks out — no rush to top up the emergency fund. But that NT$260K isn’t for reckless investing either — keep it as “flexible capital” for now; we’ll come back to it.

One note: “3-6 months” applies to salaried employees with stable income. If you’re self-employed, commission-based, freelancing, or expecting major expenses soon (car, baby, wedding), bump the emergency fund to 12 months — because your cash flow has more uncertainty and you need a thicker cushion. This case is a salaried tech worker, so 6 months is fine.

Mortgage vs. ETF: How to Choose?

The core logic is actually simple:

Compare mortgage interest rate vs. expected investment return

Current mortgage rates in Taiwan are roughly 2.5%-3%. The long-term annualized return of global stock market ETFs is historically around 7%-10%.

So in theory: The long-term expected return from ETFs is higher than the interest saved by prepaying the mortgage.

I’ve walked this same path myself. Before buying my home, I did a full financial plan (and helped some friends with theirs, plus attended AFP-related training). The conclusion was clear: with mortgage rates this low and expected returns that much higher, the money should go toward investing. I hesitated briefly, but ultimately stuck with investing the surplus — looking back, that was the right call.

But “in theory” and “in practice” are two different things. There are several real-world factors to consider —

1. Mortgage Savings Are “Certain”; ETF Returns Are “Uncertain”

Prepaying the mortgage = guaranteed savings of 2.5% interest. Buying ETFs = expected 7% return, but short-term losses of 20-30% are possible.

If you have low tolerance for market volatility and can’t sleep when you see paper losses, the “psychological value” of prepaying is actually quite high.

A common misconception to clarify: many people see “2.5% vs. 7%” and think the gap is huge and straightforward, but forget that 7% is the long-term annualized return — a historical average over decades, not a guaranteed annual figure. Short-term drops of 20-30% are normal. Additionally, foreign ETF dividends face withholding taxes, so the after-tax return is lower than the headline number. The actual gap isn’t as dramatic as it first appears — but over the long term, ETFs still come out ahead.

2. His 40-Year Mortgage Has a Relatively Low Rate

People with 40-year mortgages typically want to keep monthly payments low and preserve cash flow. This logic is sound — a mortgage is “good debt” because the rate is low, the term is long, and there’s no rush to pay it off.

Keeping money invested generally yields better results over the long run than rushing to pay off the mortgage.

3. My Recommendation: Don’t Choose — Do Both

With NT$25K per month, here’s how I’d split it:

This way you don’t give up the compounding opportunity of long-term investing, while still actively reducing debt. You get the best of both worlds — no need to force yourself to pick just one.

I know an engineer friend, a few years older than this case, who also just bought a home. Income was solid, but he chose to throw all surplus cash into prepayment. Years later he told me: “The mortgage went down fast and I felt lighter — but looking back at how slowly my assets grew, I realized I missed several years of compounding.”

Here’s a quick calculation: a lump sum of NT$2M at 7% annualized over 20 years becomes roughly NT$7.6M. If you delay that by 5 years because you prioritized mortgage repayment, that 5-year gap alone costs nearly NT$2M in final value. The price of compounding isn’t “losing money” — it’s “not starting” or “starting a few years late.”

Of course, plenty of people advocate for “debt-free peace of mind,” believing that clearing the mortgage brings psychological comfort and financial simplicity. That’s not wrong — for those sensitive to debt or with variable income, sometimes the peace of mind from reducing debt is worth more than the on-paper return difference. There’s no right or wrong here, only what fits you.

How to Choose an ETF?

If you decide to invest in ETFs, what’s right for this engineer?

Someone on PTT suggested “1/3 in 0050 paired with 2/3 in VT” — that’s actually a pretty reasonable combo.

But personally, I lean toward just going with VT.

The reasoning is simple:

• VT already covers 50+ countries with over 9,000 stocks, including US, Europe, Japan, and emerging markets
• 0050 only holds Taiwan’s top 50 companies — concentrated single-market risk
• VT’s expense ratio is just 0.07% — super cheap
• One ETF handles everything for lazy investors

If you have particular confidence in or attachment to the Taiwan market, adding some 0050 is fine, but keeping VT as the core is the most hassle-free approach.

Personal note: I actually hold VOO and QQQ, not VT — because I believe VOO’s component stocks are themselves globally diversified mega-corporations, providing indirect global exposure. That’s personal preference and doesn’t mean VT’s logic is wrong; VT’s diversification is indeed more comprehensive.

More important than “which ETF” is whether you’ve built the habit of regular investing. After I did my own financial plan, I established this habit: every month when the paycheck arrives, the first thing that happens is the investment money gets auto-deducted. What’s left is what I can spend. Don’t wait until month-end to see what’s left — because usually it’s zero.

For a more complete breakdown of ETF selection logic and comparisons, check this article.

The Most Important Takeaway from This Case

A PTT commenter said something I strongly agree with:

“Given your income, expenses, and age, you should theoretically have saved more, but your assets outside the house are a bit thin.”

This hits the nail on the head.

At 38, earning NT$1.1M annually, after mortgage and living expenses, you should theoretically save NT$300K+ per year. But his current savings are only NT$500K — meaning most of his past savings went into the down payment and renovation.

This is normal — buying a home is a massive expense. But going forward, the priority is building an investment rhythm.

How you allocate your paycheck matters — the first thing to do when your salary comes in is “force-transfer” the investment money out. What’s left is what you can spend. Don’t wait until month-end to see what remains, because what remains is usually zero.

This approach has an official name: “Pay Yourself First” — treating investment as a fixed “expense” that gets prioritized, rather than something you do only if there’s money left over. It’s a proven behavioral finance technique: let the system make the decision for you, instead of relying on willpower.

Something Unspoken but Crucial: How Does Retirement Look?

At 38, assuming retirement at 60, that’s 22 years.

Investing NT$20K monthly with a 7% annualized return — what does 22 years get you?

The answer: approximately NT$13 million.

This doesn’t even include his existing NT$500K savings and USD savings insurance accumulation.

So if he starts executing seriously now, retirement funds aren’t as far away as you might think.

The key: Start, and keep going.

This Advice Isn’t One-Size-Fits-All

Before the conclusion, let me be upfront about the assumptions — because not everyone’s situation is the same.

The “NT$20K investing + NT$5K mortgage” split works when:

• Mortgage rate is around 2.5%-3% (above 4%, prepayment becomes much more attractive — adjust the ratio)
• Income is relatively stable (salaried employee)
• No plans to sell the home within 5 years (if selling soon, cash flow liquidity matters more than long-term investing)

If your situation doesn’t fit — self-employed, commission-based, major upcoming expenses, or rates above 4% — prioritize preserving cash flow, adjust the ratio, and don’t force-fit this framework.

Financial planning isn’t a set-it-and-forget-it thing either. I recommend a quick annual review with three questions:

1. Has income changed? Increased, decreased, or new risks (job instability, family care needs)?
2. How did you react during a market crash? Did paper losses make you want to stop or sell? If so, your investment ratio might need to come down.
3. Does the invest-vs-repay ratio still fit your current situation? If rates went up or income dropped, recalculate.

The power of compounding comes from time and “not stopping.” Being able to answer these three questions annually and adjust accordingly — that’s real financial planning.

FAQ

Lazy to Be Rich Conclusion

懶大

金融科技新創 CEO | 獨立財務顧問

1. Emergency fund first: Ensure NT$200-240K in emergency reserves before anything else.
2. Mortgage is good debt — no rush to pay off: With low rates, long-term ETF investing offers higher expected returns. Focus on investing.
3. Split the NT$25K like this: NT$20K into regular VT investments (or 0050 + VT combo), NT$5K extra mortgage payment — covering both the psychological and financial bases.
4. Paycheck allocation is key: Investment money should be transferred out first — don’t wait to see what’s left at month-end.
5. ~NT$13 million in 22 years: NT$20K monthly, stick with it, and retirement funding is achievable.

Starting at 38 isn’t late. What matters isn’t where you start — it’s whether you start at all.

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