I have recently Feb 2021 paid off my home mortgage. I also have no other debt. My home insurance is $1800 per year with two deductibles based on the Dwelling $284,000.

  • Fire = $5400
  • Hail and Wind = $8500

Would it be wise for me to lower my premiums for even higher deductible and use the premiums saving for investing.

If I put 5% of the dwelling amount that my deductible will be around 13K per incident but I will save $400 a year which can be invested in mutual funds.

Please let me know how I should proceed?

  • 1
    This is one of those situations where one has to make a decision b/t risk and reward. If one were to attain 10% a year from investing, it would take 25 years for that $400 per year to become worth $25k. Not life changing. I'm risk averse so saving $400 a year isn't worth the added risk. Dec 7, 2021 at 18:53

1 Answer 1


In general, yes it is wise to increase deductibles and lower premiums if you can still afford to pay for the deductible. And it is wise to invest your wealth so long as you have a large enough emergency fund and don't have significant debt to deal with.

It would be wiser to make sure you have a fully-funded emergency account that is more than the difference in deductible and to deal with any high-interest debt before investing. Don't treat your investments as an "emergency fund" or invest with high-interest debt.

The risks of putting all of your spare cash in investing is:

  • if you happen to have an emergency in a down market, you're "selling low", drastically reducing your overall return.
  • You may be tempted to pay for emergencies by other means (borrowing) if you are too emotionally attached to your investments and don;t have enough liquid funds to pay for the emergency.

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