Author Topic: Mortgage vs. Invest: There is no 'right' answer !  (Read 8214 times)

mathlete

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Re: Mortgage vs. Invest: There is no 'right' answer !
« Reply #50 on: April 24, 2017, 12:25:12 PM »
i'd say we benefit way more b/c we're using it to fund our retirements.  yes most of getting to FIRE is how much you save but once in FIRE you're living off those gains.  and while obtaining FIRE those small gains can help you cut 1-2 years off your timeline if invested in the market vs sitting in a house.

Downward volatility in the markets can add a few years to your timeline as well. And equity returns are pretty volatile over short horizons.

I'm sure it's been said a billion times, but everyone's mileage my very. I just looked at my personal FIRE model, which assumes 8% appreciation on equities and 3% inflation. I tested the impact of $1000 additional a month going either into equities, or paying down the mortgage (~%2.75 a year in interest saved after accounting for the loss of the tax deduction on that mortgage interest saved). The impact on my FIRE date was a matter of months.

Unfortunately, I don't have the "problem" of $1000 of free cash flow a month that I have to manage. If I did though, I'm not sure I'd rule out paying down the mortgage. I'm already investing close to $40K a year into (mostly American) equities. The forward S&P500 PE is 18. The Shiller PE is above pre-2008 recession levels. I don't know how much more of an appetite for US stocks I have.

hucktard

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Re: Mortgage vs. Invest: There is no 'right' answer !
« Reply #51 on: April 24, 2017, 12:55:47 PM »
I would use the $100K as a down payment on some rental property and make 15%+ returns on the money. I don't really see the point in ever paying off my mortgage if I can continue to earn higher returns on my investments. However, when I truly don't need any more money I will probably pay off mortgages and sell rental property so I don't have to worry about them anymore. The thing is I kind of like investing so I may keep doing it even after I don't need to.