Redbird again an excuse. with no thought to financial cost ... we face punch the crap out of people for paying mowers or maids or not bringing their lunch. Investing vs paying down a mortgage is 0 effort for amazing returns. for anyone planning to use a SWR based on stock market returns its 100% face punch worthy to pay down your mortgage sooner and the fact that the paydown my mortgage thread isnt in the wall of shame and comedy is ridiculous IMO. Youre not being a badass at all.
I know this debate has been beat to death, but since I saw another thread in investor alley about what happens when everyone indexes and the market never moves, I thought I would add.
Behavioral economics is a bitch. We all want to be perfectly rational, and we all talk a good game, but when the market even hints at dropping, there are a series of posts about sell now, hold off investing cash, go to bonds, etc. Human behavior is NOT to stay the course.
I paid off my mortgage to become a perfectly rational investor. I knew that with x amount sitting in a portfolio that would be able to pay off the house, the fear of the market dropping by half would wear me down. And even if I did not sell, I would think about it constantly. That's irrational, but also likely--because I'm human. When my portfolio lost 60% in 2009, I didn't sell, but I also didn't load ever extra dollar in, because of fear of the unknown.
So I eliminated all debt, and now automatically invest every extra dollar I make. I do so even though the market feels artificially inflated, even though people post about CAPE and other acronyms on a daily basis, and even though 28 posts pop up each week advocating for staying in cash right now because the market seems overvalued, etc.
I also had the luxury of being able to pay off the house in a couple years, so I took it as a guaranteed 3% versus a volatile 7% over a short-term period. Plus, paying it off quickly allowed me to start building new, available money quickly, so I didn't get stuck having all my extra money invested in the house and needing cash for something else.
That said, I understand the math. If I were starting over with a 30-year mortgage, I would absolutely invest it. I also get that the same 4% rule I intend to rely on logically extends to not paying off the mortgage early.
But for all the talk, I don't see too many people taking out all available loans at less than 7% to invest in the market, even though that's rational too. I don't see many people constantly adding and drawing HELOCs to pull the additional principal out of their mortgage payments or rise in equity. It's hard to be rational, because we're human. So I took the steps that gave me security to be rational going forward, even though I did so at a significant cost. Like I said, behavioral economics is a bitch.