What would you do if you have $400K in cash ? (Plano: apartment, home equity)

[Clonelion]

Originally Posted by pharpe

First inflation doesn't have anything to do with it. It's actually your friend with debt because it makes overall value of your debt less.

Say you have a mortgage of $400,000 at 4%. You will pay 687,478 over 30 years. So if you pay off the loan you save yourself 287,478 over 30 years. That is your opportunity cost.

An investment of 400,000 with the return on an S&P index average for 30 years is 8,419,990.66. Over 8 million profit over pay the house off option.

Also, the 10% appreciation on the home is still working for you. Your home will appreciate the same whether it's paid off or not. It's a non factor. It's a simply the cost of money that you are looking at.

Do you think the S&P Index will keep on paying 7% YoY returns ?I agree with McKinneyOwnr and ufcrules1 that we are due for correction. I know no one can predict stock market, if some one could, they would be making millions already :-)

[pharpe]

Originally Posted by Clonelion

Do you think the S&P Index will keep on paying 7% YoY returns ?I agree with McKinneyOwnr and ufcrules1 that we are due for correction. I know no one can predict stock market, if some one could, they would be making millions already :-)

Once again I'm not saying invest in the S&P. That was a math example. Please read my posts. The point is (for the 3rd time) that you need to look at what paying off your mortgage does for you. That saves you the interest you would pay over the life of the loan. If you can find an investment opportunity that you brings in a better return (at a risk level you are comfortable with) then that is the better use of your money.

At the end of the day, if you can't understand the simple concept and example that I'm describing, you really should be working with a professional before doing anything with $400k and not getting your financial strategies off a Dallas message board.

[Clonelion]

Originally Posted by pharpe

Once again I'm not saying invest in the S&P. That was a math example. Please read my posts. The point is (for the 3rd time) that you need to look at what paying off your mortgage does for you. That saves you the interest you would pay over the life of the loan. If you can find an investment opportunity that you brings in a better return (at a risk level you are comfortable with) then that is the better use of your money.

At the end of the day, if you can't understand the simple concept and example that I'm describing, you really should be working with a professional before doing anything with $400k and not getting your financial strategies off a Dallas message board.

Thanks for sharing your views. Sorry that you have to explain a third time a very simple concept.

I have great respect for many members and senior members of this board. Without expecting any thing in return, they share their honest opinions. In fact, I have less respect for the those "reputed" professional wall street firms managing their client's funds.

[TheTXGuyHere]

I would give it all to the TheTXGuyHere and ask him to spend it on good things and make world a better place. LOL

Here are my suggestions

Use 80K -- Open a Jimmy Johns ( 120k - 300k profit)
Use 40k - 20% down payment on a townhome - rent it for 2k per month. ( 5k per year profit + increasing equity in house)
Use 30k -- Open a Subway

Remaining amount, I would buy a house and use the equity as collateral to get the above business started.

[ufcrules1]

Originally Posted by pharpe

The point is that you need to look at what paying off your mortgage does for you. That saves you the interest you would pay over the life of the loan.

It does more than that. It gives you peace of mind. It gives you a place to live mortgage free for the rest of your life. How do you put a $ value on that? It is an asset you can touch and feel, not something that can go away if we have a depression/stock market meltdown.

Originally Posted by pharpe

If you can find an investment opportunity that you brings in a better return (at a risk level you are comfortable with) then that is the better use of your money.

That is a captain obvious statement. Even though you poorly worded it.

[pharpe]

Originally Posted by ufcrules1

It does more than that. It gives you peace of mind. It gives you a place to live mortgage free for the rest of your life. How do you put a $ value on that? It is an asset you can touch and feel, not something that can go away if we have a depression/stock market meltdown.



That is a captain obvious statement. Even though you poorly worded it.

If its captain obvious why are you arguing against the logic?

If the financial goal is just to live mortgage free, than do it. You can take whatever piece of mind that comes with and be happy.

If the goal it to maximize your return on 400k then it's probably not the best strategy. Personally I would get more piece of mind knowing I was allocating my assess the most effective way possible over simply owning my house outright.

This is my last post on the matter because it's beating a dead horse at this point. Good luck with your investments.

[TaylorW]

Originally Posted by TheTXGuyHere

I would give it all to the TheTXGuyHere and ask him to spend it on good things and make world a better place. LOL

Here are my suggestions

Use 80K -- Open a Jimmy Johns ( 120k - 300k profit)
Use 40k - 20% down payment on a townhome - rent it for 2k per month. ( 5k per year profit + increasing equity in house)
Use 30k -- Open a Subway

Remaining amount, I would buy a house and use the equity as collateral to get the above business started.

no offense, and I'm not sure whether you were joking, but these #s (80 and 30 respectively) are no where near what's needed to open a franchise

they often require at least 500k in assets on top of the funds one would put into the purchase, marketing costs, equipment, etc.

[ufcrules1]

Originally Posted by pharpe

If its captain obvious why are you arguing against the logic?

If the financial goal is just to live mortgage free, than do it. You can take whatever piece of mind that comes with and be happy.

If the goal it to maximize your return on 400k then it's probably not the best strategy. Personally I would get more piece of mind knowing I was allocating my assess the most effective way possible over simply owning my house outright.

This is my last post on the matter because it's beating a dead horse at this point. Good luck with your investments.

You should proof read what you type. That was painful to read.

[loves2read]

Re the Subway franchise---that is likely a little less expensive after the Jared debacle and fact that Subway is sliding in franchise ratings last couple of years

[cyrece]

Pay off my mortgage and if you have $$ left, purchase a smaller investment property.