Not unless the TV or boat was appreciating the way houses often do....I've never understood paying your mortgage as "investing in your house." If you buy a $1,000 television with your credit card, would you consider paying off your credit card as "investing in your tv"? If you borrow money to buy a boat, is paying off that loan considered "investing in your boat"?
Not unless the TV or boat was appreciating the way houses often do....
I wanted to bring up the old discussion of paying off the mortgage vs. investing the money. In light of very recent times, what do you think about investing more money in your house vs. more money in investments?
Have you been watching the news lately?
Ok, let's change the hypothetical. Let's say I buy a gold Rolex watch with my credit card and I expect the watch to hold its value, or maybe increase in value over time. If I pay down my credit card debt, am I "investing in my watch"?
Let's say I get a bank loan to buy a rare piece of art, which is expected to increase in value over time. If I pay down the bank loan, am I "investing in art"?
Have you been watching the news lately?
Ok, let's change the hypothetical. Let's say I buy a gold Rolex watch with my credit card and I expect the watch to hold its value, or maybe increase in value over time. If I pay down my credit card debt, am I "investing in my watch"?
Let's say I get a bank loan to buy a rare piece of art, which is expected to increase in value over time. If I pay down the bank loan, am I "investing in art"?
If you borrow to buy a house and rent it out rather than live in it, you consider that "investing in real estate", even before the mortgage is paid off, don't you?
Andrew paid off the house with it, and the market tanked (so he was relieved).
Yes, but I think you are mixing two different concepts together. The initial act of purchasing the house is investing in real estate. But, the act of later paying down the mortgage is not....that is paying off debt, plain and simple. The house will appreciate or depreciate exactly the same regardless of whether you pay down the mortgage, and the mortgage balance will decrease at exactly the same rate as you pay it off regardless of whether the house appreciates. In my opinion, people make a mistake when they mix the two together, and that mistake leads to flawed decisions.Ok, let's change the hypothetical. Let's say I buy a gold Rolex watch with my credit card and I expect the watch to hold its value, or maybe increase in value over time. If I pay down my credit card debt, am I "investing in my watch"?
Let's say I get a bank loan to buy a rare piece of art, which is expected to increase in value over time. If I pay down the bank loan, am I "investing in art"?
Assuming you have a valid reason to believe that the watch or the objet d'art is likely to appreciate, I would say yes. Under similar circumstances, I wouldn't be investing, because I don't have any idea whether such a purchase is likely to gain or lose value.
If you borrow to buy a house and rent it out rather than live in it, you consider that "investing in real estate", even before the mortgage is paid off, don't you?
The bottom line is when you pay down a mortgage, you are paying off a debt, not "investing in a house." The investment occured (if at all) when the house was purchased.
Yes, but I think you are mixing two different concepts together. The initial act of purchasing the house is investing in real estate. But, the act of later paying down the mortgage is not....that is paying off debt, plain and simple. The house will appreciate or depreciate exactly the same regardless of whether you pay down the mortgage, and the mortgage balance will decrease at exactly the same rate as you pay it off regardless of whether the house appreciates. In my opinion, people make a mistake when they mix the two together, and that mistake leads to flawed decisions.
The bottom line is when you pay down a mortgage, you are paying off a debt, not "investing in a house." The investment occured (if at all) when the house was purchased.
another Andrew (Andretta?) here.If you agree that nobody can really predict what the market will do, then there are four possibilities for using a pot of money sufficient to pay off the house.
Andrew paid off the house with it, and the market tanked (so he was relieved).
I guess I was a Benjamin (Private Benjamin? ). I bought my house in August, 2002, and paid it off in four years. But I had a smaller nestegg and planned to retire in 2009, so for me it was a no-brainer. Didn't want to be a Danielle and end up delaying ER.If you agree that nobody can really predict what the market will do, then there are four possibilities for using a pot of money sufficient to pay off the house.
Andrew paid off the house with it, and the market tanked (so he was relieved).
Benjamin paid off the house with it, and the market soared (and he missed it).
Charlie didn't pay off the house, invested the money, and the market soared. Boy, was he glad he didn't miss it.
Daniel didn't pay off the house, invested the money, and the market tanked. Ugh.
Which of these, if any, will delay your ER? If you have a large nestegg or a long time horizon, none of them. If you have a smaller nestegg along with a short time horizon, D (Daniel's case) could be a deal breaker and keep you from retiring for a long time, at least until the market recovers.
Anything, other than D, is a good result. The other three all do important things to bolster retirement security. Whether they increase your nest egg or make you mortgage-free to reduce the required living expenses AND allow you to plow more cash flow into your retirement for the next few years, it's all good.If you agree that nobody can really predict what the market will do, then there are four possibilities for using a pot of money sufficient to pay off the house.
Andrew paid off the house with it, and the market tanked (so he was relieved).
Benjamin paid off the house with it, and the market soared (and he missed it).
Charlie didn't pay off the house, invested the money, and the market soared. Boy, was he glad he didn't miss it.
Daniel didn't pay off the house, invested the money, and the market tanked. Ugh.
Which of these, if any, will delay your ER?
Not unless the TV or boat was appreciating the way houses often do....
The house will appreciate (or not!) exactly the same with or without a mortgage.
With stocks currently down considerably from their highs, I may chose today to invest some of the money in what I think are solid companies that are paying a good dividends.