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YOU brought up the issue of dying in 10 years in post #114 to try to bolster your argument, and then desperately backpedalled in post #119 to prevent me from scrutinizing. Won't fly.
No honey. In 114 I gave an example of how paying 30 years into the future was an overpayment if you died in year 10. In 119 I answered two seeming idiotic questions that YOU asked.
To clarify, it is NOT good to pay off a mortgage in advance no matter when you die BUT it is particularly bad if you die in year 1-10.
As to your second question about probate. Seriously?
No honey. In 114 I gave an example of how paying 30 years into the future was an overpayment if you died in year 10. In 119 I answered two seeming idiotic questions that YOU asked.
To clarify, it is NOT good to pay off a mortgage in advance no matter when you die BUT it is particularly bad if you die in year 1-10.
And you have yet to argue why keeping a mortgage, assuming no early death for the sake of discussion, is unconditionally good even if the alternative is to keep the money in lower-yielding assets than the mortgage rate.
And you have yet to argue why keeping a mortgage, assuming no early death for the sake of discussion, is unconditionally good even if the alternative is to keep the money in lower-yielding assets than the mortgage rate.
Um, time value of money is just one argument.
Liquidity would be another.
Risk.
Geez.
Are you reading any posts other than your own?
Um, time value of money is just one argument.
Liquidity would be another.
Risk.
Geez.
Are you reading any posts other than your own?
The risk argument can work either way. The relevance of liquidity depends on how much other money you have. I see no reason someone with $1 million in fixed income and another $1 million in stock shouldn't ditch the low-yielding bonds to pay off a $100k mortgage. (Assume bonds can be sold from the portfolio with a high cost basis so that tax considerations are negligible).
The risk argument can work either way. The relevance of liquidity depends on how much other money you have. I see no reason someone with $1 million in fixed income and another $1 million in stock shouldn't ditch the low-yielding bonds to pay off a $100k mortgage. (Assume bonds can be sold from the portfolio with a high cost basis so that tax considerations are negligible).
That's just an argument to ditch low-yielding bonds. Liquidity is liquidity. It has nothing to do with the advantages of a mortgage. You are mixing up your investments.
The risk argument can work either way. The relevance of liquidity depends on how much other money you have. I see no reason someone with $1 million in fixed income and another $1 million in stock shouldn't ditch the low-yielding bonds to pay off a $100k mortgage. (Assume bonds can be sold from the portfolio with a high cost basis so that tax considerations are negligible).
One reason why you might not want to payoff the mortgage is because you would have fewer funds to rebalance your portfolio if stocks underperform. You then would miss out a bit when equities rebound, particularly during those times where you have a big drop in the index one year, followed by a big gain the next.
One reason why you might not want to payoff the mortgage is because you would have fewer funds to rebalance your portfolio if stocks underperform. You then would miss out a bit when equities rebound, particularly during those times where you have a big drop in the index one year, followed by a big gain the next.
Yes, you must have some fixed income securities to do this. However you can get the full benefit of rebalancing with a lot less liquidity than you might think, as I argue here:
That's just an argument to ditch low-yielding bonds. Liquidity is liquidity. It has nothing to do with the advantages of a mortgage. You are mixing up your investments.
What do you mean liquidity has nothing to do with the advantages of a mortgage? You were just arguing that it is one reason not to pay it off early, in post #133. By ditching the low-yield bonds in taxable, you reduce both liquidity and allocation to that asset by that dollar amount.
Ok, well then, if you sell bonds to pay off mortgage, they have everything to do with each other.
ETA: It's all about alternatives. If you have to have some fixed income to begin with (a premise which can be disputed, to be fair), then mortgage prepayment may make more sense than bonds. That's all I'm arguing here. If you're trying to say that one should simply have as much equities as possible, then at least you're consistent, though very aggressive in your allocation model.
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What do you mean liquidity has nothing to do with the advantages of a mortgage? You were just arguing that it is one reason not to pay it off early, in post #133. By ditching the low-yield bonds in taxable, you reduce both liquidity and allocation to that asset by that dollar amount.
