Recap for those who
won't bother don't want to read the entire thread: The mortgage money we borrowed at 5.5% and invested in 2004 was up over 17% by 2005. Even as recently as Oct 2008 it was still up 5.3% APY.
Here's the loan's life-long average APY after each year:
Reinvested dividends are up to over 8% of the total, reflecting the fund's average yield. This year has been very volatile and it continues to achieve CD-like rates. Better hurry over the next 23 years to catch up...
In real life, last year we refinanced (yet again) down to 3.625% fixed for 30 years. Once again, I'm pretty sure that we won't see lower rates than that during the rest of my life. I might as well also say that I think this is our last refi, and this time I really really mean it, but my track record on that has been pretty poor.
Heh. I just realized that I have another blog post staring me in the face...
Disclosures & disclaimers: For those who are new to this thread, it's only an update. It's just seven years into a 30-year experiment and it's too soon to call the results. This is a niche investment situation that's probably only appropriate for those who are going to stay in their home for 30 years (or the rest of their lives), living off a COLA pension while investing the mortgage money in a long-term equity index. Volatility would exceed the sleep-at-night comfort level of most rational humans, perhaps even Vulcans. A portfolio's 30-year survival is influenced by the first few years of returns, and in this case they were wonderful. I'd hate to consider this experiment starting at the 2007 peak, but someone else can feel free to run the data. However some FIRECalc data runs indicate that a larger portfolio (even with its higher expenses of the mortgage payment) is more survivable than a smaller one, so an ER mortgage may actually be a good idea in some scenarios.
By the way, the credibility of your comments is directly related to the evidence that you've bothered to read the entire thread.
Co-author (with my daughter) of “Raising Your Money-Savvy Family For Next Generation Financial Independence.”
Author of the book written on E-R.org: "The Military Guide to Financial Independence and Retirement."
I don't spend much time here— please send a PM.