Quote:
Originally Posted by LivingAlmostLarge
He says though that if you read the link, most of us DPOH are putting too much stock into returns higher than 6%. It's ridiculous. But I'm not sure, what do most people return?
My own returns are usually pretty high but it's because we actively diversify. But I thought even just normal index investing might yield 8%. I typically use 8% number in my assumptions.
Now where is jim when I need him? To help me crunch more numbers.
This is his response to paying off the mortgage.
You are correct in that you should first make sure you maximize your 401(k) contributions, at least to the point of your employer match, before prepaying your mortgage. But anything over that is not a sure bet. If you don’t believe me, just ask a lot of people who, after many years of making the minimum mortgage payments, what their 401(k) plan is worth today.
To me and those who think like me, a home is not an investment. It is a place to live. Whatever money I make on it when I finally decide to sell, is a fringe benefit. That’s all.
I look at it this way: If I choose to pay off my mortgage early and the world economy goes in the tank, I still have a rent-free place to live that I can always call home.
I think maat, I should ask you, because this sort of sounds like something you might say to be debt free. But why pay off the home just to live in debt free?
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I chimed in already, reading some of these posts for the first time.
Putting only 4%-8% into retirement plans is a joke. That really accomplishes very little.
Knowing the tax implications of the mortgage is important- advising anyone in 35% or 33% bracket to give up their largest tax deduction is foolish (the goal should be highest after tax return on money used to pay down mortgage, the goal should NOT be to get debt free fastest or pay the least amount of interest possible).
The author came to a conclusion without stating what the goal is (best return. least interest paid, lower taxes, best after tax return, lowest risk, highest reward, earliest retirement date, highest net worth now, highest net worth in 10 years).
Each of those goals has a different investment profile and pay down mortgage profile.