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Old 05-25-2015, 05:31 PM
 
6,256 posts, read 4,734,369 times
Reputation: 12853

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Quote:
Originally Posted by mathjak107 View Post
......

then see if markets fell 40% and took 5 years to come back .....
Again, always the worst case.

Even your example is not that bad. You have roughly 60% in the stock market so the overall hit is a lot less. And you would rebalance and make back a lot on the recovery. Five years is a long recovery. It did not take anywhere near that long last time.
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Old 05-25-2015, 05:37 PM
 
71,626 posts, read 71,751,865 times
Reputation: 49225
well if you want to run a scenario you need to standardize on parameters and if the parameter you want to look at is how would my portfolio hold up having a mortgage if we repeat 2008 again in my first 5 years then that is what you need to look at or what if i was that y2k retiree .

the issue is retirements have no do overs . if you make a bad choice early on that goes bad you may have irreversible damage that destroys an entire retirement time frame so you better look at what potentially is a worst case.

in fact if you pop on over to a very popular retirement forum many of us frequent quite a few stress test their budgets against 2008 levels just to see their down side risk . anything better is great but if a repeat shows high failure then that is what counts.
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Old 05-25-2015, 05:38 PM
 
Location: SF Bay & Diamond Head
1,779 posts, read 1,419,602 times
Reputation: 1971
Quote:
Originally Posted by mathjak107 View Post
so you have 1 million . in case 1 you have a paid for house , no mortgage and 400k left invested.

in scenario 2 you have 1 million invested , a 600k house and owe the bank 600k for the house. . you do not have 1,600,000 . your net worth is still 1 million.

so how much a year will that 600k cost you in generated income from that 1 million ?
Exactly!!! Ding! Ding! Ding! But I don't know anyone that invests their net worth. I am adding the $600,000 the bank gave me to invest. I have $600,000 MORE to invest than if I did not have a mortgage.

See, I told you you needed to do the math! Geez.
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Old 05-25-2015, 05:43 PM
 
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huh ? you are taking a mortgage and not buying a house ? because if you are you have 1 million to invest and a house you don't own that the bank bought.
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Old 05-25-2015, 05:44 PM
 
Location: SF Bay & Diamond Head
1,779 posts, read 1,419,602 times
Reputation: 1971
Quote:
Originally Posted by mathjak107 View Post
huh ? you are taking a mortgage and not buying a house ? because if you do you have 1 million to invest and a house you don't own that the bank bought.
Taking a mortgage on a house. Either you are ignorant or being a jerk.
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Old 05-25-2015, 05:46 PM
 
Location: SF Bay & Diamond Head
1,779 posts, read 1,419,602 times
Reputation: 1971
Quote:
Originally Posted by mathjak107 View Post
huh ? you are taking a mortgage and not buying a house ? because if you are you have 1 million to invest and a house you don't own that the bank bought.
The Bank is going to live in my house? I don't think so. Is that how you ended up a renter? Do they still live in your old house. Do they make you still pay on the mortgage?
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Old 05-25-2015, 05:46 PM
 
71,626 posts, read 71,751,865 times
Reputation: 49225
then you have 1 million in your investments and a house the bank owns and you are buying it from the the bank. basically until you pay it off you are renting it from the bank , your interest and principal is the rent . . . you still have only 1 million to your name .

you have zero equity in the house and your million.
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Old 05-25-2015, 05:49 PM
 
Location: SF Bay & Diamond Head
1,779 posts, read 1,419,602 times
Reputation: 1971
Quote:
Originally Posted by mathjak107 View Post
then you have 1 million in your investments and a house the bank owns and you are buying it from the the bank . you still have only 1 million to your name .

you have zero equity in the house and your million.
My house is worth $1,200,000. I have 50% equity. Have you ever owned real property?
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Old 05-25-2015, 05:52 PM
 
71,626 posts, read 71,751,865 times
Reputation: 49225
what the heck are you talking about . you made up the scenario.

here is your scenario

quote ! honobob If we both have a million in assets and I get a $600,000 mortgage then I have $1,600,000 to invest and draw against and YOU only have $1,000,000 to draw against.


'here is my answer:

then you have 1 million in your investments and a house the bank owns and you are buying it from the the bank. basically until you pay it off you are renting it from the bank , your interest and principal is the rent . . . you still have only 1 million to your name .
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Old 05-25-2015, 05:52 PM
 
Location: SF Bay & Diamond Head
1,779 posts, read 1,419,602 times
Reputation: 1971
Did the Bank "buy" your house or did you lose it to foreclosure?
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