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Old 06-29-2021, 12:43 PM   #41
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You seem to not get that more I free up cash ( aka mortgage free ) and buy into the market on a continual basis , more shares but also I run the risks of an up and down market. Last time I check my portfolio has increased big time over the last few years. It is my choice to pay off my mortgage early, my choice to risk more buying into the market and it has paid off well for me. I will end this by saying we all make choices in life and the market has been very very good to me and my family!
You aren't freeing up the amount of your mortgage. Paying off your mortgage is pretty much the opposite of freeing up cash. Can you show us the math how you would come out ahead during high return stock market years and a low interest mortgage?

If you have a 3% mortgage and 10% investment returns, how can you not come out ahead having the mortgage? Using the simple example without taxes, for every $100K, you are paying $3K in interest and earning $10K, with a $7K net profit by having the mortgage.
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Old 06-29-2021, 12:44 PM   #42
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You seem to not get that more I free up cash ( aka mortgage free ) and buy into the market on a continual basis , more shares but also I run the risks of an up and down market. Last time I check my portfolio has increased big time over the last few years. It is my choice to pay off my mortgage early, my choice to risk more buying into the market and it has paid off well for me. I will end this by saying we all make choices in life and the market has been very very good to me and my family!
Where did the money come from to pay off your mortgage?
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Old 06-29-2021, 12:53 PM   #43
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Where did the money come from to pay off your mortgage?
Working thru high school, college, every vacation period, lucrative side gigs, living at home for a few years rent free while earning, putting 25% down on the house, living below my means, investing monthly regardless of market conditions , sold well performing stocks to pay off early etc. Was in the group where our monies worked harder than we did but I actually enjoyed working.
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Old 06-29-2021, 12:55 PM   #44
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For example, right before you paid your first mortgage payment, you discovered you had $100 extra. Do you pay an extra $100 of principle and avoid paying 3% interest on that $100 for the next 30 years. or do you invest it and earn 10% for the next 30 years? Avoid 3% or earn 10%?
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Old 06-29-2021, 01:02 PM   #45
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Working thru high school, college, every vacation period, lucrative side gigs, living at home for a few years rent free while earning, putting 25% down on the house, living below my means, investing monthly regardless of market conditions , sold well performing stocks to pay off early etc. Was in the group where our monies worked harder than we did but I actually enjoyed working.
So the point is that you could have taken that extra money beyond the regular monthly payment and invested it earlier and would have taken even more advantage of the great market returns.

Nobody is arguing against the decision to pay the mortgage off early if you prefer not to take so many risks or just like being debt free, but to say that you did it so you could invest more in the market now doesn't really make sense because you were limiting how much you were putting in the market earlier.

In any case, it's very admirable to have worked so hard to get yourself in good financial shape no matter what choice you could have made in your mortgage, so congratulations on that.
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Old 06-29-2021, 02:29 PM   #46
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I think it is kind of a false choice to compare mortgage paydown with equity investing as they have very different risk characteristics. Most people don't consider using their bond allocation to buy stocks for just that reason.

I think what the poster is saying is he allocates money to both mortgage paydown (A bond-like investment) and to equities.

That seems perfectly rational to me.
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Old 06-29-2021, 02:47 PM   #47
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Emotional response: pay it all off, what great peace of mind!
Analytical response: get that rate as low as you can find and invest all of said money since it's going to gain at a higher rate than the loan's rate.

Your choice.

I ER'd with 5 mortgages, but hey, I seem to like to do things different.
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Old 06-29-2021, 03:04 PM   #48
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Emotional response: pay it all off, what great peace of mind!
Analytical response: get that rate as low as you can find and invest all of said money since it's going to gain at a higher rate than the loan's rate.

Your choice.

I ER'd with 5 mortgages, but hey, I seem to like to do things different.
I would never ER carrying 5 mortgages. Investment returns are variable and mortgage payments are fixed. I bet on the market and still do. Over the long run, a diversified portfolio should provide greater ROI than real estate and yes, paying off a mortgage(s) is a great thing.
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Old 06-29-2021, 03:07 PM   #49
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OK, so once someone is mortgage free (and presumably totally debt-free), they feel more comfortable putting more money into the market. That makes sense to me.
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Old 06-29-2021, 03:11 PM   #50
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I would never ER carrying 5 mortgages. Investment returns are variable and mortgage payments are fixed. I bet on the market and still do. Over the long run, a diversified portfolio should provide greater ROI than real estate and yes, paying off a mortgage(s) is a great thing.
A diversified portfolio of an equivalent amount to the mortgage balance will earn more than the interest cost of the mortgage, correct? Then we agree on taking the analytical approach. Cheers

I gross about $20k/mo but don't have the $+1 million to pay off all of those mortgages. Why should I keep w*rking to pay them off? What's the point?
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Old 06-29-2021, 03:19 PM   #51
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A diversified portfolio of an equivalent amount to the mortgage balance will earn more than the interest cost of the mortgage, correct? Then we agree on taking the analytical approach. Cheers
Jumping to the other side of this, what's the best analytical approach? Maximize your money in the most common case, or giving yourself the best chance to survive a serious extended downturn? You don't know that your diversified portfolio will earn more. If your investments not only don't beat your mortgage rate but also go negative, having paid off the mortgage looks like a better move, doesn't it?
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Old 06-29-2021, 03:21 PM   #52
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Every time this topic comes up (and it comes up a lot) I ask the question:

If your home is already paid off, today, with the current market, would you take out a mortgage to invest in the market?

This is a matter of risk tolerance. The odds are that taking the mortgage, in the long run, would be the right decision. But how many would actually do it? AND, would they sit tight if/when the market corrected, or would they sell low?

The irony is, when buying a new home, I think more people see the benefits of the mortgage.

And then there is the question what percent of net worth is the home value?

There is no RIGHT answer here, though some will insist there is.
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Old 06-29-2021, 03:58 PM   #53
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Jumping to the other side of this, what's the best analytical approach? Maximize your money in the most common case, or giving yourself the best chance to survive a serious extended downturn? You don't know that your diversified portfolio will earn more. If your investments not only don't beat your mortgage rate but also go negative, having paid off the mortgage looks like a better move, doesn't it?
What's happened after every extended downturn?

One can look at historical data and determine how often stocks would have beat a particular mortgage rate over a particular number of years, and how often one would come out behind. I think that we all do this with our investments and projecting retirement income with tools like Firecalc already.

The idea/discussion of "how to handle a serious extended downturn" is also fraught with assumptions. One can argue that no mortgage is better, but one can also argue that having a mortgage and having an equivalent amount of cash and/or liquid investments will be better.
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Old 06-29-2021, 04:40 PM   #54
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ha. I just made this decision. I'm theoretically 90 days from retirement, and I refinanced my mortgage $420K, 30 years at 2.5%. My thinking was over the next 30 years, that $420K will do much better than 2.5%, so I chose for my $ to be working for me instead of in my house, which will be left to my heirs.

On the other hand, I totally get the emotional decision to not have a mortgage. So, as others have said, depends on whether you want to take an analytic or emotional approach. Whatever way you want to go is the right way.
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Old 06-29-2021, 04:40 PM   #55
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... I will end this by saying we all make choices in life and the market has been very very good to me and my family!
I have absolutely no problem with your choice. I do have a problem with your logic.


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... There is no RIGHT answer here, though some will insist there is.
I guess I'd have to scan the posts, but I don't think anyone is saying that holding a mortgage is the RIGHT answer. But there do seem to be some wrong analysis.


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Jumping to the other side of this, what's the best analytical approach? Maximize your money in the most common case, or giving yourself the best chance to survive a serious extended downturn? You don't know that your diversified portfolio will earn more. If your investments not only don't beat your mortgage rate but also go negative, having paid off the mortgage looks like a better move, doesn't it?
Yes, holding the mortgage and investing is adding some risk. It seems very low given these current mortgage rates, and the historical long term market performance (the worst of the 20 and 30 year periods beat these rates). But the risk is still there, and if someone is uncomfortable with that risk with a prudent mortgage amount, then paying off the mortgage is the decision they come to.

But that should be it, not some apparently convoluted explanation that it let's them put more in the market, because they don't have a mortgage payment?

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Old 06-29-2021, 04:52 PM   #56
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I have absolutely no problem with your choice. I do have a problem with your logic.




I guess I'd have to scan the posts, but I don't think anyone is saying that holding a mortgage is the RIGHT answer. But there do seem to be some wrong analysis.




Yes, holding the mortgage and investing is adding some risk. It seems very low given these current mortgage rates, and the historical long term market performance (the worst of the 20 and 30 year periods beat these rates). But the risk is still there, and if someone is uncomfortable with that risk with a prudent mortgage amount, then paying off the mortgage is the decision they come to.

But that should be it, not some apparently convoluted explanation that it let's them put more in the market, because they don't have a mortgage payment?

-ERD50
Convoluted might be your opinion. There are more problems in this world to be concerned about. I've been a player in the market for many years. Freeing up more cash ( mortgage free ) allows me to accumulate more shares and of course more risk and that's my choice. Others who ER with 5 mortgages is another choice. We all make choices. It is members having differences of opinions and risk investing .
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Old 06-29-2021, 05:16 PM   #57
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Convoluted might be your opinion. There are more problems in this world to be concerned about. I've been a player in the market for many years. Freeing up more cash ( mortgage free ) allows me to accumulate more shares and of course more risk and that's my choice. Others who ER with 5 mortgages is another choice. We all make choices. It is members having differences of opinions and risk investing.

Whether it is best to have a mortgage going forward is a matter of personal opinion with pros and cons, because we don't know what investment returns will be in the future. But in the recent past, it is a fact based on math that in most cases those with mortgages who invested the money in the stock market came out ahead financially, because we do know what mortgage rates and stock market returns have been, and the stock market returns have been much higher than prevailing mortgage rates.
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Old 06-29-2021, 05:22 PM   #58
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I guess I'd have to scan the posts, but I don't think anyone is saying that holding a mortgage is the RIGHT answer. But there do seem to be some wrong analysis.

-ERD50
My comment was more directed at past threads where folks on both sides decided they had the one and only right answer.

But your comment on analysis is correct. It may ultimately be an emotional decision, but, the numbers are the numbers.
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Old 06-29-2021, 06:42 PM   #59
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Convoluted might be your opinion. There are more problems in this world to be concerned about. I've been a player in the market for many years. Freeing up more cash ( mortgage free ) allows me to accumulate more shares and of course more risk and that's my choice. Others who ER with 5 mortgages is another choice. We all make choices. It is members having differences of opinions and risk investing .
OK, you are just repeating yourself and you are not responding to the questions.

This is not a conversation, it's just you telling us how proud you are of yourself.

Over and out.

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Old 06-29-2021, 09:27 PM   #60
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In my case I'm not putting the money freed up by taking the mortgage into the equity market. I'm more than willing to bet that I'll beat the 2.875% mortgage rate I have now with just CD rates over the 30 years of the mortgage. I know CD rates are low now, but they won't stay that way forever. And 2.875% is practically free money. I wouldn't put it into the equity market even though the odds are good that over time I'd win by even more, because an extended market downturn could lower my principal enough that I might never recover, as I'd also be pulling money out to pay the mortgage each year. But by investing in CDs, unless we go well below 1%, which is where we are now, the worst I can do is lose by a little. I'm definitely willing to make that bet.
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