surprising
Recycles dryer sheets
- Joined
- Feb 7, 2023
- Messages
- 85
Back in 2019 as I was getting ready to retire, one of the things I wanted to do was get rid of mortgage payment to try to reduce expenses as much as possible before pulling the trigger. We downsized and were able to purchase our new home outright ($510K) with proceeds from previous home sale plus some cash. So we've been mortgage free for 5+ years now.
But.. what if instead I had gotten a $400K mortgage and used that extra $400K to invest in, say, VTI for 5 years? Let's do math.
Without mortgage, the only gains I get is from the house appreciation. Today the house is worth $670K, so that gives $160K in 'profit' going mortgage free thus far.
Investing $400K in VTI 5 years would currently be worth $730K today plus $15.746/sh in dividend = $40K, total is $770K, about $370K in gains.
House has appreciated to $670K, which gives an additional $160K in profit.
Subtract off 5 years of mortgage payments of $120K ($2000 * 12 * 5) = $410K profit investing instead of going mortgage free.
Did I do the math right? If so, it looks like I made a very bad decision!
But.. what if instead I had gotten a $400K mortgage and used that extra $400K to invest in, say, VTI for 5 years? Let's do math.
Without mortgage, the only gains I get is from the house appreciation. Today the house is worth $670K, so that gives $160K in 'profit' going mortgage free thus far.
Investing $400K in VTI 5 years would currently be worth $730K today plus $15.746/sh in dividend = $40K, total is $770K, about $370K in gains.
House has appreciated to $670K, which gives an additional $160K in profit.
Subtract off 5 years of mortgage payments of $120K ($2000 * 12 * 5) = $410K profit investing instead of going mortgage free.
Did I do the math right? If so, it looks like I made a very bad decision!