Paid Off Homes (funds, pay, million, taxes)

[gwynedd1]

Originally Posted by boxus

The agreeing with "paying off a mortgage is a risk free return" is a blanket statement. There are numerous scenarios about paying off mortgages. Very, very wealthy people take out mortgages even though they have the funds not to.

And to address about the risk free return, I guess you never heard of strategic defaults? That is one of many scenarios. I have no idea where people get that paying off a mortgage is a risk free investment, there is actually a lot of risk, ask those who had their housing values drop significantly in 2008 for example.

What does that have to do with it? The house may secure the loan but you still hold the mortgage as a liability. Thus paying it down is risk free. A short term bond fund is low risk too but it was paying even worse. Again I would not treat it like an equity position. It is for risk free low return parts of your net worth.

BTW high net worth people do not even need low risk investments. I would just mortgage it as well . If your 5 billion portfolio is cut in half its not going to really change your life style. They do not need to account for risk or cash flows.

[kyam11]

Originally Posted by boxus

The agreeing with "paying off a mortgage is a risk free return" is a blanket statement. There are numerous scenarios about paying off mortgages. Very, very wealthy people take out mortgages even though they have the funds not to.

And to address about the risk free return, I guess you never heard of strategic defaults? That is one of many scenarios. I have no idea where people get that paying off a mortgage is a risk free investment, there is actually a lot of risk, ask those who had their housing values drop significantly in 2008 for example.

No it actually is not. Again simple first year finance teaches you risk is a metric and is quantified. It has a number associated with it. Since there is no deviation to the return (or savings) of the rate meaning if you pay a 4% mortgage off the std deviation will be 0 since it cannot deviate from that rate. Since it has a std deviation of 0 it is now and will always be considered risk free.

Again stop acting like you understand something when you do not. Risk is a quantifiable measure in finance.

The underlying asset does have risk. Why? Because the quantifiable amount of risk is not 0. The value can go up and it can go down thus providing a deviation of value. A 3month T bill is considered risk free because there is no deviation to the rate of return. It has a std deviation of 0 (or at least is accepted of having 0 since the US govt won't default).

None of this is my opinion.

[reneeh63]

Originally Posted by kyam11

=




I don't need you knowing where I went to school and rather than say top school which could be misleading that I might be saying one of the top 2 or 3 mine is ranked about 13-16 in various rankings.

Wow. You pretty much admitting your degree is not that of even Univ of Phoenix is quite eye opening. Thanks for the admit. You are correct it is a pretty simple thing, especially with 7 reputable publications saying the same thing.

Hmmmmm...all this talk makes me wonder if you really did get any degree at all. Or maybe some appointments with a mental health professional are in order with your extreme paranoia?

[kyam11]

Originally Posted by reneeh63

Hmmmmm...all this talk makes me wonder if you really did get any degree at all. Or maybe some appointments with a mental health professional are in order with your extreme paranoia?

Simply pointing out what is. You mistook me for someone who cares what you think or don't think I have done. You don't believe me.....oh well.

As I said I posted and then backed it up with no less than 7 publications saying the same thing. Seems to me you should be less worried about me and more worried about basic concepts.

[reneeh63]

Originally Posted by mathjak107

Stock buy backs have value as they increase my net worth which increases my actual income since I am retired and draw is based on that value.

Anything that increases either gross income or net worth by appreciation can be considered one and the same . Bills are a liability they do not go on the income side ever. My net worth in liquid assets determines my safe withdrawal rate in retirement not just the income stream itself. So buy backs are a plus as well as anything that translates to increased gross income for me.

As to why am I so emphatic about what is cost cutting vs income generating .

I have been active on retirement forums for more than a decade. I have seen way to many seniors concentrate on cutting cost while neglecting growing the income side . To them they appear one and the same but eventually this confusion comes back to burn them as that difference eventually becomes very apparent and leaving these people with the mis-impression that reducing expenses is the same as growing income is not a good idea.

There is great importance on doing both and mixing up the two sides is not good.

As an example the homes we bought in the 1970’s were 30-35k . That was a lot of money back then . But today that paid off mortgage means little anymore when it comes to affordability when taxes are 12-15k and there is nothing left to cut .

That mortgage that that no longer exists in today’s dollars barely represents the utility bill today .

So the fact they did this cost cutting and neglected the investing side has left them in a bad spot and many are now being forced to leave .

So cost cutting should be left as cost cutting and the function of actually investing in assets that can grow income beyond the other expenses is very very important .

Thank you - very well said. Unfortunately, unless you live in a few very specific areas you can't count on your home's value to do very much more than keep up with inflation. Sure, it's a roof over your head but you'll always be paying some amount of tax and upkeep on it - good investments grow...and they don't even have to be all that good or all that risky to do so.

[Rakin]

Originally Posted by reneeh63

Hmmmmm...all this talk makes me wonder if you really did get any degree at all. Or maybe some appointments with a mental health professional are in order with your extreme paranoia?

Hate to say it but The guys being an azz. One of those that has to tell you he's the smartest guy in the room.

And everyone else just smiles.

[eliza61nyc]

Originally Posted by Rakin

Hate to say it but The guys being an azz. One of those that has to tell you he's the smartest guy in the room.

And everyone else just smiles.

lol especially when he clearly is not. southern women have the absolute best line "Well now, aren't you just precious".

[GeorgiaTransplant]

All bolds added. I just can't square your statement that:

Originally Posted by mathjak107

I do like him and I agree with his statement that paying the mortgage eliminates the cost of the mortgage but I disagree with his statement

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With all of the below (and more) you write about him. This is literally the first time I've seen you do anything but gush about him:

Originally Posted by mathjak107

famed researcher michael kitces

I Call BS On Needing $1 Million To Retire (And Other Bad Retirement 'Rules')

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Originally Posted by mathjak107

It is scarey the amount of influence that dr pfau and michael kitces's research has on the industry causing changes in thinking by the professional financial community on things that have been believed to be true for decades.

Why Are Most Americans in Such Bad Shape Financially?

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Hmm. Maybe you should learn from him?

Originally Posted by mathjak107

kitces is actually brilliant when it comes to this stuff and numbers crunching . there is just no end to what i learn from him . he too is big on disproving a lot of the myths that folks believe .

Was your retirement delayed by a stock market crash or poor investment choices?

[reneeh63]

Originally Posted by kyam11

Simply pointing out what is. You mistook me for someone who cares what you think or don't think I have done. You don't believe me.....oh well.

As I said I posted and then backed it up with no less than 7 publications saying the same thing. Seems to me you should be less worried about me and more worried about basic concepts.

Nope - just saying what I think a few others may be thinking or wondering...is there something magical about "7"? Is that your lucky number? 7 7 7 7 7 7 7 7 7 7 7 7 7 7

[mathjak107]

Originally Posted by GeorgiaTransplant

All bolds added. I just can't square your statement that:



@

__________________________________________




With all of the below (and more) you write about him. This is literally the first time I've seen you do anything but gush about him:





I Call BS On Needing $1 Million To Retire (And Other Bad Retirement 'Rules')

___________________________________________





Why Are Most Americans in Such Bad Shape Financially?

____________________________________________

Hmm. Maybe you should learn from him?




Was your retirement delayed by a stock market crash or poor investment choices?

He is still the best researcher around . I don’t have to agree with his analogy’s but his concept is correct

I see no where he said you need a million dollars