Earlier quoted context omitted.
I was able to pay off my mortgage about a year ago (I am in my late 30s), and work has taken on a new aspect for me. I feel a bit more comfortable challenging the status quo and trying to take on more "interesting work". With that in mind, I am still attentive to the fact I need to maintain a sustainable career for another 25/30 years.
Many people in my circle are proud of paying off mortgages, so I kind of assumed by default that it is a worthwhile thing. But looking at the numbers I'm not so sure: it seems much better in current market to cash out as much as possible and let that money sit in an index fund. I guess the main issues are some risks with downturns and/or liquidity.
The question that ultimately convinced me to just pay off my mortgage was "If someone gave you a house, free and clear, would you mortgage it to buy investments?". My gut reaction was "no, I would really like to have a free and clear house."
I have considered buying a second home to rent, but I have some moral qualms about exacerbating the housing crisis where I live. Furthermore, the stress of tenants isn't something I really want to deal with.
Everyone here has great points about maximizing returns, and I know I will have less money in the long run because of my decision. With that in mind, I am investing about half of my old mortgage payment, and the rest goes to the family vacation fund.