Again, your definition of risk is overly narrow for the context of this site. Those who pay down a (fixed, reasonable rate, 20+ year remaining duration) mortgage faster trade lowered volatility risk against a higher risk of delayed FIRE.
Yup, this is the key distinction to make. Risk and volatility are quite similar when you're working at an investment bank or hedge fund where a higher return means you keep your job and make a nice bonus and a lower job means all your investors pull their funds over to other banks that made different bets. In that context, there is no such thing as having enough money, more money is always better and less money is always worse.
In the context of FIRE the goal is precisely to have enough money to meet our needs, with additional money beyond that point not being nearly as valuable. For a person contemplating early retirement, a low volatility investment mix which usually doesn't provide enough return to keep up with both spending needs and inflation 50% of the time can be much riskier than a high volatility strategy which provides more money than you need for the rest of your life 95% of the time.
I agree with this. I dont agree with posts that try to put positions on me I have never advocated.
Leverage is great if your goal is optimization for accumulation as quickly as possible. Ive never said it isnt.
Less leverage is great if you have less need to optimize returns and wish for a more certain outcome.
This is the only point I have advocated.
Where I object is when posters try to use historic back testing of market returns to suggest it is less risky long term than a fixed rate of return asset class. This type of statement is dangerous because it warps estimates the true risk of equities by overrelying on a very limited data set. Information about investments and the nature of value and markets goes back thousands of years. Modern stock markets havent seen crashes, like Roman grain or Chinese Tea prices, over time, but we have histories to study.
Again, I am not advocating not taking risk, not trying to dampen enthusiasm for the best asset class we have. We just should try to define our variables properly and understand we are planning against unknowns in one case and knowns in another.
An example. Assume your are super lucky and have a 500k salary and a 50k spending lifestyle. Investing in a poor performing asset class is not at all risky to your fire plans. You have so much money coming in, it really doesnt matter if you take a guaranteed 3% or a riskier 6%. If I were asked, I would advise such a person to focus on saving up to a 2% withdraw rate, invest how they are comfortable (in something not junk) work 1 extra year and call it a career. It doesnt matter if they leverage their 200k mortgage. This exampke is meant to illustrate that saying 'holding a mortgage always reduces 'risk' of an unsuccessful FIRE,' is just not always useful or accurate. Sure, it might help in some scenarios to shorten time to hit a wealth target, assuming that is the goal.
What is established and useful is comparing the financial risks of the actual financial asset classes available, like real estate, CDs, bonds, etc. Stocks have a non 0 chance of not returning what you need, so they are 'riskier.', financially speaking, just as are rental properties. Are they worth it, sure....This is not volatility, as has been implied above. It is the risk premium stocks earn. More likely one can lose money, hence investors demand returns. The risk premium is not volatility, so please stop saying I am confused or just talking sequence of returns.
I recommend that everyone fully read a prospectus of a company stock, mutual fund and a bond. I have and it is a useful exercise.
Anyway, I am not trying to criticize anyone, just to create a safe space for folks to feel ok about a common sense decision about whether to hold debt or not hold debt, in the context of stock market risks, with both decisions being ok for FIRE, assuming one understands the implications.
PS. I respect everyone here who is posting. The desire to help others is admirable. No offences meant or taken.