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Old 05-24-2015, 03:06 PM
 
Location: Myrtle Creek, Oregon
12,223 posts, read 12,487,684 times
Reputation: 19369

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Quote:
Originally Posted by jrkliny View Post
You keep talking about wages dropping, taking a dive, earning less, etc, etc. All of which is supposed to make a mortgage even harder to pay.

Unfortunately none of that is true. Wages have gone up very considerably for all workers even those in manufacturing or unskilled positions. For someone with a mortgage, the costs have become a much smaller portion of their pay.

None of this has much of anything to do with the original discussion.
You still haven't sorted out that the inflation hedge is buying a home, not holding a mortgage. The mortgage obligates you to pay far more than the purchase price, which negates most or all of the advantage of home appreciation.
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Old 05-24-2015, 03:13 PM
 
12,705 posts, read 9,961,918 times
Reputation: 9515
Quote:
Originally Posted by honobob View Post
Why don't YOU tell me what YOU think a REAL interest rate is so I don't have to deal with never ending convoluted back tracking.
Answer in riddles you always do why?
This discussion is pointless. I'm out.
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Old 05-24-2015, 03:14 PM
 
Location: SF Bay & Diamond Head
1,779 posts, read 1,417,822 times
Reputation: 1971
Quote:
Originally Posted by Larry Caldwell View Post
You still haven't sorted out that the inflation hedge is buying a home, not holding a mortgage. The mortgage obligates you to pay far more than the purchase price, which negates most or all of the advantage of home appreciation.
Only if you buy in a bad area. My first property was bought for $35,000 and the mortgage rate was 9%! I paid less than $35,000 in interest and yet the property is now worth $500,000+ and has produced almost the same in rent!. The mortgage was less than most peoples car payment in the last years thanks to inflation.
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Old 05-24-2015, 03:15 PM
 
71,490 posts, read 71,652,652 times
Reputation: 49074
Quote:
Originally Posted by Larry Caldwell View Post
You still haven't sorted out that the inflation hedge is buying a home, not holding a mortgage. The mortgage obligates you to pay far more than the purchase price, which negates most or all of the advantage of home appreciation.



if you can profit off the spread it is worth it.

but at this stage it may not be worth it.

jack bogle and others feel that at these valuations average returns are likely to be about 6% as an average for quite a while going forward . dividends typically represent 1/3 of market gains and dividends and interest rates track each other . with dividends at 2% equity returns should average out for at least the next 5 years to as long as a decade at around 6% . now that the retracement party is over forging forward historically takes a lot more time and effort for the markets. retracements are usually fast and easy in comparison.

could we do better ? sure we could but i would consider that an upside surprise as opposed to planning around 8% at this stage.


Add in taxes on gains and possibly not clearing the standard deduction to take the interest on the mortgage in retirement and that reduces it even more.

Throw in the fact a retiree will not be 100% in stock. A 50/50 mix may have stocks at 6% and bonds at 2.50% -4% over the next 5-7 years ..

That may not beat the mortgage. Especially if you have to sell equities at a loss to pay that mortgage.

we are considering buying a co-op but if we do we will pay cash. there isn't enough spread in taking a mortgage at this point to risk the fact we may make only 2% or 3% difference between the mortgage and our 50/50 mix . especially since the bull is long in the tooth and investments would have to be sold off possibly at a loss to pay for a mortgage i didn't need.

i borrowed a ton of money to invest in real estate ventures but it wasn't to make even a 5% difference , it was to make some pretty big dollars .

at this stage of our lives we made our money as investors and those aggressive days are not needed .

Last edited by mathjak107; 05-24-2015 at 03:39 PM..
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Old 05-24-2015, 03:18 PM
 
Location: SF Bay & Diamond Head
1,779 posts, read 1,417,822 times
Reputation: 1971
Quote:
Originally Posted by ncole1 View Post
This discussion is pointless. I'm out.
ncole1, you've been out many posts ago and you just failed to realize it. I just wanted to see how far you would dig yourself in before you actually realized you had no supportable point.
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Old 05-24-2015, 03:24 PM
 
6,223 posts, read 4,718,283 times
Reputation: 12746
Quote:
Originally Posted by Larry Caldwell View Post
You still haven't sorted out that the inflation hedge is buying a home, not holding a mortgage. The mortgage obligates you to pay far more than the purchase price, which negates most or all of the advantage of home appreciation.
Not when I have a return that is way beyond the cost of the mortgage. At the end of my 30 year mortgage I am likely to have 2 or 3 times the amount of the mortgage in my portfolio and that of course is after paying the principle and interest.
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Old 05-24-2015, 03:24 PM
 
12,705 posts, read 9,961,918 times
Reputation: 9515
Quote:
Originally Posted by Larry Caldwell View Post
You still haven't sorted out that the inflation hedge is buying a home, not holding a mortgage. The mortgage obligates you to pay far more than the purchase price, which negates most or all of the advantage of home appreciation.
Some people don't understand how to compare real interest rates to real returns due to a lack of background in basic financial theory. It would be very time-consuming to try to explain all this, but I assure you that I have seen this misunderstanding come up over and over again. I don't know who started it, but it seems to have gone "viral".
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Old 05-24-2015, 03:25 PM
 
71,490 posts, read 71,652,652 times
Reputation: 49074
Quote:
Originally Posted by jrkliny View Post
Not when I have a return that is way beyond the cost of the mortgage. At the end of my 30 year mortgage I am likely to have 2 or 3 times the amount of the mortgage in my portfolio and that of course is after paying the principle and interest.
from your mouth to the market gods ears. that is for all our sake's.
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Old 05-24-2015, 03:27 PM
 
12,705 posts, read 9,961,918 times
Reputation: 9515
Quote:
Originally Posted by mathjak107 View Post
from your mouth to the market gods ears. that is for all our sake's.
I think jrkliny could make even more money by borrowing against the crystal ball.
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Old 05-24-2015, 03:41 PM
 
Location: SF Bay & Diamond Head
1,779 posts, read 1,417,822 times
Reputation: 1971
Quote:
Originally Posted by ncole1 View Post
I think jrkliny could make even more money by borrowing against the crystal ball.
I thought you were out because the discussion was pointless! Oh, just back to make snipes. Funny how you can always make time for bad behavior.
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