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It can be very hard selling a house in a 2008 style recession ...even if you found a buyer the banks were reneging at closing because they had no money ...don’t fall in to a false sense of security here .. you may need cash ,lots of liquid cash or instantly salable investments that can go with the push of a button if push comes to shove
I understand...........but 2008 was pretty severe.
In most cases of a long time hold, lets say 1988 purchase you would still be "in the money" if you took a low offer in 2008. Buy for 200K, house is worth 500K so 2008 hits and you only get 400K you still made money but no you didn't nail the top of the market.
In your example, 2008 would have been a tough time to sell off your 401K too......
Just what I said .....you need sustainability
While a portfolio of equities would have taken a hit it could easily be sold .... but if you were holding a portion in bonds no problem selling
So for those not retired having most of your money tied up in just equities and the bulk in a house would not have been a wise plan.. that is mismatching time frames if some larger expenses poke their head up.
I guess the world never ceases to amaze me. The poll shows over half the participants would not take a mortgage during retirement. That decision would have cost me a $100K and over the next few years that will continue to grow so that the decision is worth a half million or more.
I would guess that a high percentage of those who would not take a low cost mortgage also have no idea about investing. Certainly a number of people who posted warned about the risks of investing. One even compared that with handing your money to Madoff. That sort of logic would have kept me poor most of my life and would have cost me millions in money I currently have or have already spent. As I have said in the past, my illiterate emigrant grandfather taught all his kids and grandkids to have their money work for them. He made a living scratching the ground with a hoe but died fairly wealthy and was able to give all the kids either land or a college education.
Personally I find it incredibly sad that so many people have no idea about investing or handling their finances.
There are variables that make this a situational decision. Long term growth of both portfolio and income depending on income sources. Not having a mortgage may help delaying SS and may allow a couple to increase monthly savings/investments. We are in a different world today than at other times. Someone approaching 65 has seen a great Bull market and that may cause them to thing differently if we had just had a long term bear/flat market.
Also if you have 300k do you ease your way into equities over time or jump in risking bad timing?
I guess the world never ceases to amaze me. The poll shows over half the participants would not take a mortgage during retirement. That decision would have cost me a $100K and over the next few years that will continue to grow so that the decision is worth a half million or more.
I would guess that a high percentage of those who would not take a low cost mortgage also have no idea about investing. Certainly a number of people who posted warned about the risks of investing. One even compared that with handing your money to Madoff. That sort of logic would have kept me poor most of my life and would have cost me millions in money I currently have or have already spent. As I have said in the past, my illiterate emigrant grandfather taught all his kids and grandkids to have their money work for them. He made a living scratching the ground with a hoe but died fairly wealthy and was able to give all the kids either land or a college education.
Personally I find it incredibly sad that so many people have no idea about investing or handling their finances.
I don't know at this point if I'll carry a mortgage, but playing devil's advocate, maybe it's not all about investing once one reaches a certain point in their lives. Sometimes, it's more about keeping what you have as safe as possible and being mortgage free, where no matter what happens, the house is yours as long as you can pay the taxes on it.
I can understand both sides of the coin.
I understand...........but 2008 was pretty severe.
In most cases of a long time hold, lets say 1988 purchase you would still be "in the money" if you took a low offer in 2008. Buy for 200K, house is worth 500K so 2008 hits and you only get 400K you still made money but no you didn't nail the top of the market.
In your example, 2008 would have been a tough time to sell off your 401K too......
We retired and transplanted Jan 1, 2008. Your scenario was our reality. Because of the bounce back in the markets and the economy it was only a blip in the grand scheme of things. It could have been otherwise.
Remember in 2008 we boomers were just hitting retirement and millions had their psyche shaped by that event, recovery and sustained bull that followed.
Personally I find it incredibly sad that so many people have no idea about investing or handling their finances.
Some people are simply extremely risk-averse, either by nature or because they have had bad experiences in the past. And no matter how you slice it, investing DOES carry a level of risk. The level varies but it is there, and if it's unacceptable to someone, well, it is their right and privilege to choose to avoid it. It doesn't necessarily mean that they are clueless. One size does not fit all when it comes to financial choices. What worked for you in your circumstances may not have worked, or even been possible, for someone else.
Many years ago I was told "Never invest money that you cannot afford to lose" and I firmly believe that is 100% true. There was a time in my life when I did have money that I could afford to lose, and at that time I did have investments. However, my life circumstances changed drastically in my early sixties and I no longer have, nor will I ever again have, any money that I cannot afford to lose.
I'm content with my choice. No need for anyone to be "sad" about that.
I don't know at this point if I'll carry a mortgage, but playing devil's advocate, maybe it's not all about investing once one reaches a certain point in their lives. Sometimes, it's more about keeping what you have as safe as possible and being mortgage free, where no matter what happens, the house is yours as long as you can pay the taxes on it.
Exactly.
Some people are also emotionally ill-suited to investing. I know I was, still am, and will always be. When I did have investments I was constantly checking to see "how they are doing" and my stress level would soar into the stratosphere every time a stock price dipped. In the rational part of my brain I knew that this was the completely wrong way to approach the situation but the gut/emotional part of me couldn't help itself and overrode that every time. It would have been as impossible for me to get off that particular emotional rollercoaster as it would be for me to transform myself into an entirely different person in another time and place.
(And that was when I could afford to lose the money I had invested and still feel that I'd be okay. There's no way I'd ever place myself in that kind of mega-stress mindset again now.)
Plus in retirement, you never have to worry about being laid off, this is why we still have a mortgage. It has paid off so far.
That is a major point and one of the reasons we were very attractive to the bank. Our risk of losing our pensions and or SS was wayyyyyyyyyyyyyyyyy lower than threat of a job loss would be.
They said it was going to be part of their permanent portfolio of loans and not resold. Nine years later and they still hold it.
This was on our second home. We paid cash for the first. The mortgaged home within mile of beach has skyrocketed in value the last five years.
There are variables that make this a situational decision. Long term growth of both portfolio and income depending on income sources. Not having a mortgage may help delaying SS and may allow a couple to increase monthly savings/investments. We are in a different world today than at other times. Someone approaching 65 has seen a great Bull market and that may cause them to thing differently if we had just had a long term bear/flat market.
Also if you have 300k do you ease your way into equities over time or jump in risking bad timing?
I think the no mortgage crowd would be the crowd to take SS at 62, not delaying. This from my years of reading here. Not only that they will slap themselves in the back that they’re very responsible financially to not care about when to take SS. It’s the mortgage crowd that are irresponsible.
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