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I am absolutely amazed at the common attitude towards investing. First there seems to be the idea that investing means buying stocks. And then we hear about the horrors of the stock market. I cannot imagine what most people do with their money. I suppose that would be CDs that pay nothing or bonds that right now are a much higher risk than stocks.
Investing does not have to be at all complicated. In fact you can look at your assets, determine how much money you should keep in cash to cover expenses for several months or even a few years. The rest can go into a balanced mutual fund.
You have STILL yet to explain HOW it is anything but a waste of money to hold a mortgage and have BONDS at the same time, which pay a lower rate than the interest on your mortgage.
You need a large six-figure pot of cash for emergencies? Maybe you shouldn't go without health insurance.
Yes, even with full health insurance it is great. Remember now much you have in cash is not just function of that dollar amount but also the percentage it represents of your portfolio. A million dollar portfolio with a 10% cash allocation is your 100K in cash. Cash in your portfolio also serves to lower risk and to keep money available for buying opportunities. Say a market correction with no cash to pump in near the bottom vs cash to pump in near the bottom. Some would say you gotta keep your powder dry. Also taking profit is ok and storing that in cash for use in a more down market is ok. Also many of us have reached a point where our new money is going more to cash and less to riskier assets for multiple reasons. Increasing allocation from 10-15 percent or 20-25 percent is not unusual.
Yes, even with full health insurance it is great. Remember now much you have in cash is not just function of that dollar amount but also the percentage it represents of your portfolio. A million dollar portfolio with a 10% cash allocation is your 100K in cash.
But why would you need $200K in cash for emergencies if you do have health insurance?
You would not get the equivalent of a raise. If your investments do better than the mortgage rate you will have more money with a mortgage. If you cannot invest over a 30 year period to make more than the current 4% rates something is seriously wrong with your investment strategy. I understand the hatred for mortgages, but that hatred clouds people's thinking. This is not a matter of opinion. This is hard cold fact. You will have more money if over the long term your investments return more than the cost of the mortgage. Tax savings would be a bonus on top of that and can be substantial for many of us.
But you also have to consider that the investment income will be taxable, potentially negating the so-called tax "benefit" of the mortgage.
WHY?? You would still have the same money you would have used to pay off the mortgage and in addition you would have the investment returns that money generated. One top of that the mortgage keeps getting smaller as time goes by.
And there is no investment guaranteed to give you that rate of return.
You would not get the equivalent of a raise. If your investments do better than the mortgage rate you will have more money with a mortgage. If you cannot invest over a 30 year period to make more than the current 4% rates something is seriously wrong with your investment strategy.
You are ignoring sequence of returns risk.
Your pro-mortgage stance may work for some, but it is far from clear that it is guaranteed to put you ahead. You seem to fail to understand that there will always be RISK when investing in stocks on leverage and you are just throwing money away when buying bonds at 2% while holding a 4% mortgage. There is simply no way to guarantee coming out ahead, whether you want to admit it or not!!!
Well I only bring it up because the OP is in that situation, yet he is very risk averse. I mean, I don't want to LOSE my money, but investing too timidly and only getting piddling returns is losing money, POTENTIAL money, but it's still money. I know that in index funds I am pretty safe. Despite the volatile market, OVER TIME the market always goes up. So index funds will make money over time. You just have to not get all panicky when things go down, that's just the time to buy more because it's so cheap.
Someone - perhaps you - mentioned paying off a 1.9% loan. That is almost like having free money. Giving up that money would not make me feel better, just foolish.
We seem to have lots of folks extolling the virtues of being debt free even if the interest rate is very low. I wonder how many of you run credit card debts. Statistics tell us lots of people do.
Debt-free since 2000. Credit cards paid off monthly used for the getting the cashback and coupons. Current house and vehicles all bought with cash. Debt-free, nothing compares! Nothing!
Quote:
Originally Posted by TuborgP
Would your rather have 40k income no portfolio and no debt or 150K income 100k mortgage debt and 1.5 million invested?
I would rather have no mortgage. I cannot imagine the insanity of going into retirement with debt. That is one of those "new age" deals. Not many people make 150K in KS and many would be thrilled with a job that paid 40k since many household incomes are lower than that - 2 people working.
Debt-free. I think those financial investors will always want you to invest rather than become debt-free. Seriously, don't you want to own your house and know that you don't have to make a mortgage payment? Seriously, you are 70 years old and still trying to pay off your house?
If you haven't been debt-free and owned your house and vehicles, carried no credit card debt, you just have no idea the rush that comes with that!
Debt-free! Who could ask for anything more? You know, the bird in the hand.............
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