Yup. And this is why we left the gold standard and went to fiat money. Congress spends like a drunken sailor today and pays back in worth-less Federal Reserve Notes at some point in the future.
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Payoff the Mortgage or Invest?
- Thread starter Vincent Vega
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Yup. And this is why we left the gold standard and went to fiat money. Congress spends like a drunken sailor today and pays back in worth-less Federal Reserve Notes at some point in the future.
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If you put your money in a can and bury it, it will be worth 2% less when you unbury it in a year.
If you put your money in the market and make 6%. It will be worth about 4% more after taxes and then about 2% more after inflation in a year if you cash out. (Of course you might make more or less depending on market performance).
If you use that same money and pay off your 4.25% mortgage. You will have made about 6.25% GUARANTEED before inflation and netted about 4.25% more after inflation.
Ok folks give me an honest answer. For those of you that feel strongly about paying off the mortgage is it because you don't trust the stock market?
You can make a fortune in the stock market........if you control it. Congress critters often go to DC without a lot of money, but they rarely leave without being a multi-millionaire.
My conclusion of the stock market is it is legalized gambling unless you are an insider.
Correct. If you think inflation is going to be greater than what the market expects, you want to pay as little as possible on your mortgage and invest more in the market. Equity is generally a decent hedge against inflation. It's not perfect as not all companies are able to raise prices and do it quickly with inflation, but it's a lot better than a fixed rate return of a prepaid mortgage.
Not sure why you should expect a lot of inflation though. Our population is barely growing and labor participation remains low. As long as Europe is doing worse than us and China is stumbling, I wouldn't expect a ton of inflation.
I am a numbers guy... I make more than 6.1% on my money.... My mortgage is at 2.7%.... Retired last year....
I am throwing $$$$ on the mortgage to get it paid off very quickly.....
It is a peace of mind thing..... And if anything happens to me, I do not want my wife worrying about a mortgage.
I got 7 figures in the stock market.. Made over 20% a year the last 4 years... I "work" it....I trust it, but there are no guarantees.
Pay off the mortgage... This is what I am doing right now.... The peace of mind cannot be measured in ROI
Would your view on paying off the mortgage vs investing be different if you were 15 or 20 years from retirement instead of in retirement?
If I was years away from retirement, I believe I would make the same decision.... There are many economical and political uncertainties out there....
Having my home paid for is one certainty I do want in my life...
