#46
|
||||
|
||||
Bought into a less desirable neighborhood but it was larger sq. ft than needed, easily affordable, spent next 5 years attacking the principle and paid it off. Spent the next 18 years investing through my work savings plan. Sure taxes and maintenance costs are always there but those are minimal and can be planned over months. i know people that did what the OP is talking about. Starting to invest at 61 is a bit too late in the game. retirement will come knocking when he hits 70.
__________________
Cuando era joven |
#47
|
|||
|
|||
Quote:
whether it would make sense to deduct those interest in a whole separate issue, given that for a married household, the annual interest payment per se needs to be greater than ~$14k (assuming $10k in paid in SALT) in order for it to make sense |
#48
|
|||
|
|||
Quote:
You and I are in different circumstances. There's no lifetime of income coming automatically every month. ...but yet... Last generation's thinking is still being preached as gospel. Shoving $ into something that you can't get it out of in need: your home means you're not investing into something that's earning you interest. It takes less $ to invest over a long period of time to get to the same point as paying off the house then investing. ...or... you can invest slightly more and really come out ahead M |
#49
|
|||
|
|||
i dont like owing people money, do you?
|
#50
|
|||
|
|||
No, but how else are you going to leverage that sweet equity in your house in order to live the dream of compounding interest that comes from stock market certainity?
|
#51
|
||||
|
||||
Quote:
The only thing certain about the stock market is that it will go up and it will go down. The problem is, almost nobody knows which and when.
__________________
Colnagi Seven Moots Sampson HotTubes LtSpeed SpeshFat |
#52
|
|||
|
|||
Quote:
One thing is for certain, if i pay off my house very soon, which i will, then i wont be paying a house payment at all. and my house payment money can go right to savings. and i will have equity available to borrow against should i ever want to acquire more property. or money available for a monthly payment, since i no longer have one of thems. stock markets are at least 30% fake stuff but land and water are always real. of course im sure i could screw over more people, invest into something crappy that makes money and pollutes the earth, make some rich guys richer, and leverage or something. but enough people do that already |
#53
|
|||
|
|||
Financial need to be looked at in their entirety with an understanding of local housing markets, early payment penalties and tax implications.
One thing we did was get term life insurance in the same amount as our original mortgage in case something happened to one of us, at least that way the other person has the option to pay off the house. Depending on their net worth and investment structures, your friend may want to look at and if its legal/possible in the US is to set up a mortgage to themselves from themselves through one of their "registered" investment accounts. In Canada this is possible, not sure of the rules in the US. |
#54
|
|||
|
|||
I think that's the primary motivation for people who pay off their mortgage early. There's absolutely nothing wrong with that approach but, in many cases, it isn't the best thing to do from a financial point of view.
|
#55
|
|||
|
|||
Quote:
next, even assuming one could get a positive return in the equity market, the exposure is likely quite small. The amount invested per month is the difference in the mortgage payments, and I'm not sure how much it may be. However, for a loan size of $400k, the difference in monthly principal + interest payment is about $1k, when comparing principal + interest payment difference on a 15 yr loan at 3.25% vs 30 yr at 3.65%. So $12k extra per year (but if one were sane, not all that $12k should be exposed to the equity market), at return of 7%, after 10 years, $144k worth of investment principal is put in, and the investment return is ~$20k. Of course, a sane person would only put in at most 50% of the monthly investment into equity, while leaving the rest in bonds, so the investment return is likely lower. And here's the rub, as most people who look into their finances know, it takes a long time (usually 20-30 years) for the annual investment returns to exceed annual investment contributions. Of course, investment returns in the long term will be substantial, but we are talking someone in his 60's. Which really returns to the heart of the issue, which is that if investment returns generated solely form difference in monthly mortgage payments is significant to one's net worth, the solution shouldn't be to go for a longer termed loan. The solution ought to be significant downsizing, so that one has add'l income (e.g. via SPIA) in retirement. This is especially true, if the annual real estate taxes are significant (which is likely the case in a state such as CT). If, on the other hand, this investment return doesn't mean jack s*** to one's net wealth (say this person already has $2M in retirement saving accounts + brokerage + home equity), this person has "won" the retirement planning game and should stay the eff out. |
#56
|
||||
|
||||
Quote:
I’ve been reading some of the replies and it amazes me that so many folks seemingly think (or at least biased in their thinking) that the past performance of the equity markets is a reliable indicator of the future, and that after the next cycle the equity markets will take off again. When you look at the changes in the macro economy and demographic shifts (aging is global risk), long term growth looks weak globally for several years. The US deficit and debt will be a constraint, as will China’s slowdown and transition from a manufacturing economy to services & consumption. Add geopolitical risks (China/US, Japan/Korea, Iran, India/Pakistan, Russia) and climate change to the mix too.
__________________
My Bikes |
#57
|
|||
|
|||
The chance of a net negative return in the next 20 years is vanishingly small. The absolute worst performing 20-year period of the stock market spanned the Great Depression, yet it still produced 2.5% per year. In more recent times (i.e. the last 50 years) the worst performing 20-year period produced a 6.4% return per year.
|
#58
|
|||
|
|||
Quote:
Real estate has done better in recent years. From 1975 to 2013, the average annual increase for the stock market and real estate were 7.6% and 4.3%, respectively. |
#59
|
|||
|
|||
Quote:
Quote:
that was a rather disingenuous quoting out of context, and you certainly didn't address the issue of sequence of returns (which is a concern to people in early 60s if they want to use that money in their 70s) |
#60
|
||||
|
||||
Quote:
interesting perspectives here...lots of valid points, but need to be viewed via the subjects risk tolerance, age, and other financial needs. Some people don't like debt...other are comfortable with the concept of leverage. Others are too comfortable.... best advice I saw was was to talk to a fiduciary, and not someone trying to sell something...review all assets and liabilities, project a budget for expected lifespan (100?) and develop a plan to generate income for lifespan and meet other objectives. BTW - I am not a fiduciary
__________________
2003 CSi / Legend Ti / Seven 622 SLX |
|
|