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Uh, no they do not. Bonds do not adjust for inflation, except TIPS. Stocks have some correlation of their return with inflation for long holding periods, but for shorter times this is not so.
Short term bonds adjust for inflation, but they will be less than your mortgage payment, so yes, it's better to not invest in that case. However, I was primarily referring to stocks and real estate, which will over time beat inflation. No, not talking about day trading.
Investing in what? If your investments contain anything returning below your mortgage rate, why not dump it? This is probably the case unless you are in 100% equities.
Prudent investing will easily get you a higher return than the mortgage rates...heck used car dealerships make more than mortgage rates. That's a good investment.
Are you a market timer?
No, I usually invest in the market for my retirement accounts and are long term buys. However I supplement my income with real estate investments and small businesses managed by others.
Yes, and the downside is in disfavor of the mortgage. It could even move -10 to -6.5% (this would be deflation). Those "tail" scenarios, both on the high end and on the low end, are quite unlikely though.
This all assumes you spend the money.
Slipped your last line in quick. But let's look at inflation over the last 50 years. This favors the 3.5% mortgage.
No, I usually invest in the market for my retirement accounts and are long term buys. However I supplement my income with real estate investments and small businesses managed by others.
Ok, so essentially you are saying you would rather enter business deals than pay down a mortgage. This is a risky proposition, if it goes sour you could end up much worse off than if you had simply paid down your mortgage. That said, if it works in your favor, you could indeed profit handsomely.
What you are really dealing with, of course, is that leverage magnifies both gains and losses, which is to say, if you win you win big, but if you lose, you lose big.
Why would you want to keep the amount owed the same?
You tried to say that the reason a mortgage was not beneficial was because a house was sold in less time. A homeowner COULD buy 10 houses over 30 years and arrange the mortgages so that the result was a paid off house in 30 years just as if they had stayed in the original house with the original mortgage.
Now I would possibly keep the amount the same as the paid off mortgage for the new mortgage but would definitely extend the term to 30 years each time.
Inflation is a rise in the price level of goods and services. If you are not purchasing goods and services, their prices are irrelevant.
Put another way, if you are not purchasing anything, your purchasing power is irrelevant.
I AM purchasing something. I purchased a mortgage and the price of future mortgages and other goods and services definitely has an effect on my purchasing power.
What support do you have that inflation has been 3.5% over the last 50 years?
The CPI data.
Over that time frame (12/1965 to 12/2015), the annual rate was higher, at 4.11%. If you choose 1930-2015, the rate is 3.17%. I am not sure how you came up with 50 years as your period in question but the 3.5% is simply a rough historical average. I mentioned 1930 as the beginning of the period in question because the US went off the gold standard during the Great Depression.
I AM purchasing something. I purchased a mortgage and the price of future mortgages and other goods and services definitely has an effect on my purchasing power.
On your purchasing power of what? Your next house?
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