"it's important to bear in mind that every extra dollar Connor and Hannah don't use to pay down their mortgage but, instead, invest, at risk, in their 401(k) is, effectively, a decision to borrow to gamble in, say, stocks."
What the heck is a couple making $100k together (50k each) doing buying a $600,000 house and only putting $1500 into retirement? And how did they get the $120,000 down payment?
Quote from: Fomerly known as something on November 25, 2019, 06:56:46 PMWhat the heck is a couple making $100k together (50k each) doing buying a $600,000 house and only putting $1500 into retirement? And how did they get the $120,000 down payment?Yup. I stopped reading there. This must be why sub-prime lending happens.
Hence, even if you are holding no Treasury bonds, whatsoever, you need to assume you are investing just in such bonds to do the analysis correctly (on a risk-adjusted, apples-to-apples basis) for yourself or others.
Perhaps because nobody knows how to do a "fair" comparison between investments with different risks, it seems academia insists that all comparisons must be done between investments of equal risk. In the real world, people sometimes choose a 100% stock asset allocation. In that case the "only" (even if not "fair") relevant comparison is between the expected returns of the stocks vs. the mortgage.
I understand not wanting to borrow against your house to invest in 100% stocks, but I wonder if his result would flip were the 401K to even have a conservative allocation like 40% stocks/60% the bonds he advocates?