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^ About how old were you when the mortgage was paid off?
Early 50's. This was the second house we had bought after we were married, bought and financed it with a 15 yr mortgage when we were in our mid to late 30's.
Retired and home paid off is the best scenario for me. The equity is not something I think about. I have income and other assets to draw from. In some cases, I think people who advocate for renting, are under the assumption that an owner with no mortgage somehow needs the equity for day to day expenses.
Me too. After retiring and traveling for a couple of years, I decided to buy a house again. I financed as much as possible at a low rate and continue to invest. In two years I have been able to make about $30K on my mortgage amount after paying principal and interest.
The strategy of maintaining a mortgage, or borrowing more on your mortgage, does make some financial sense. With the low interest rates you pay on the mortgage, you can frequently make a greater return on the money when invested than you pay on the mortgage. And that is a strategy recommended by many money money manages and works well for some people. My father was an advocate for this strategy and had no desire to pay off his home mortgage.
The downside is that you need to invest your money in vehicles that will provide a higher rate of return in order to make enough to cover your living expenses and your mortgage. If you only need to cover living expenses and not a mortgage payment, you can place your retirement funds in lower yield but safer and more consistent investments.
The problem is that the higher the rate of return you need, the more risk you take with your money and the more volitile the returns can be. It all works great while stocks are having a good year. But it dosn't work so well when stock have a poor year.
My fathers portfolio was invested in a variety of stock positions (professionaaly managed) in order to chase the higher returns needed to cover the higher expenses he had with the mortgage. In the years with poor market returns, I watched his overall portfolio shrink substantially with the combined double hit of taking his monthly living expense withdrawls and poor market returns. It resulted in a great deal of stress and anxiety. Now that the market has been bouncing back, things are easier again.
My lesson learned watching this over many years is that I personally feel more comfortable paying off the mortgage to reduce my needed monthly income and placing my retirement income into more consistent and less risky investment vehicles is far more comfortable than needing to chase higher returns by accepting more risk in order to cover higher living expenses and going through the stress that comes with a shrinking portfolio in years of a bear market.
We see a lot of those wheeler dealers who borrow money on their house to speculate in stocks down at the food bank when the market crashes.
Listen to yourself. This is just garbage with no content just loaded words and insults.
I have a mortgage because the rates are very low and I am confident that I can invest the money I borrowed and make a return that will pay the principal, interest and turn a profit. I bought no stocks but invested in a diversified portfolio mainly of mutual funds.
In the 2 years I have had the mortgage I have paid $30K in principal and interest and pocketed another $30K in profits. In addition the mortgage interest deduction helps keep my taxes down.
I don't live in fear of another major market crash. First I think we already saw our once in a lifetime event. Second, my portfolio has more than doubled since the 2008 crash. Third, my investments are conservative and diversified.
Listen to yourself. This is just garbage with no content just loaded words and insults.
I have a mortgage because the rates are very low and I am confident that I can invest the money I borrowed and make a return that will pay the principal, interest and turn a profit. I bought no stocks but invested in a diversified portfolio mainly of mutual funds.
In the 2 years I have had the mortgage I have paid $30K in principal and interest and pocketed another $30K in profits. In addition the mortgage interest deduction helps keep my taxes down.
I don't live in fear of another major market crash. First I think we already saw our once in a lifetime event. Second, my portfolio has more than doubled since the 2008 crash. Third, my investments are conservative and diversified.
I have a mortgage because the rates are very low and I am confident that I can invest the money I borrowed and make a return that will pay the principal, interest and turn a profit. I bought no stocks but invested in a diversified portfolio mainly of mutual funds.
Your theory is not bad, and I actually have done the same thing with zero % rate credit cards. Borrow at 0% (well actually, 2% or 3% one time charge, then nothing for a year).
But I'm not doing it with my house.
I don't live in fear of another major market crash. First I think we already saw our once in a lifetime event.
Considering that the entire reason that the market is doing well, is because of FED policies and they could pull the plug at any time, I disagree with you here. The market is long overdue for a correction.
I have a mortgage because the rates are very low and I am confident that I can invest the money I borrowed and make a return that will pay the principal, interest and turn a profit. I bought no stocks but invested in a diversified portfolio mainly of mutual funds.
Your theory is not bad, and I actually have done the same thing with zero % rate credit cards. Borrow at 0% (well actually, 2% or 3% one time charge, then nothing for a year).
But I'm not doing it with my house.
I don't live in fear of another major market crash. First I think we already saw our once in a lifetime event.
Considering that the entire reason that the market is doing well, is because of FED policies and they could pull the plug at any time, I disagree with you here. The market is long overdue for a correction.
A correction, but not that big of a correction.
I think the bigger issue is what risk you are willing to accept of the portfolios underperforming your mortgage rate due to things like sequence-of-returns risk.
jrkliny claims that the risk is zero, but the last time the Firecalc was working, it actually showed 2 runs that were the other way - in which case the mortgage plus investments are a net loss.
Hence why I say it is all about what risk you're willing to accept.
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