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I suppose these days it is pretty stupid to pay off your house when you could invest. Low APRs have made the days of rushing to pay off your house a thing of the past. Instead of say dumping an extra $2000.00 a month at your house to pay it down quickly (most APR around 3.5%), you'd be better off completely taping out your and your wifes 401ks, a Roth or traditional IRA and then dumping the rest into some semi-aggressive or more conservative bluechips even (lets assume a return of 7%).
Is this what everyone else is doing these days? And please hold all the stupid comments about being rich and stuff...no one cares.
Where are you getting this 7% return? You gambling again...
"Winner take all" - M.Dantonio
doubling that on 401ks...its been a good year obviously.
IRA at 7%+
If you get aggressive its a great time to make money, this will always balance out but an annual return of about 6-7% isn't outrageous to expect.
I think someone needs a financial adviser.
7%? You sound like a financial advisor. I was once told I'd get 11%, I laughed and got up and left.
Pay off the mortgage. Never know when life is going to fuck you in the ass. Then you're pulling money out of that 401k at a penalty to keep up on your mortgage.
I'll agree it's not unthinkable to end up getting 6-7%, but it IS outrageous to expect that and base your future investment earnings on that number.
Agreed, and I hate holding debt, just the idea of maximizing your money makes me happy. This isnt supposed to be a shot at anyone or how they choose to handle their money, I just figured its a good discussion. If anything it will give us spartans more money to be awesome.
Seriously, why is 7% so outrageous?
i'm pretty rich and stuff. what is this amateur hour?
Hell yeah. 3.5% is pre-tax - likely less than 2.7% after-tax. If you can't beat a 2.7% return then you should just not invest at all.
I'm up 18% on my 401k this year - not a math major, but believe that is more than 7%....
My 401ks are making 12-16% this year, so I'm in no hurry on the mortgage.
Next year you could be down 35%.
Do that for the next 10 years.
Or up 35%. Over the long run, you should expect to earn 10%+ in equities. We have nearly 100 years of data that proves that's true.
The interest on my 15-year mortgage at 3.25% isn't even high enough for me to itemize my taxes. Not this year as a single person who had the home half the year, and not next year when we have the home the whole year but are married
I think 7% is definitely a safe bet on the 401k, I understand if you are staying conservative it may be less, but I think it is not outrageous to plan around 6-7% if you are any sort of decent investor...
It is ups and downs and every generation is not the same, but if you look at the statistics over the last 40-50 years (the only thing we can go on), that is a safe estimate.
Buy a bigger house?
Either that or I won't put 20% down next time. I'll run the numbers and see what's best.
I'm of the believe that you always pay off debt before investing. Investing always has been and always will be a risk. Figure that you pay off your mortgage, ultimately leaving you with money to invest anyways so IMO it's wise to do it the conservative way. The chance to get those "throwing it all into the market" impulses out was back when the DJIA was around 8 or 9k. Now it's anyone's guess where it will be going forward, which takes me back to the "investing is a risk" spiel.
I'd pay things off first.
Emerging markets FTW baby...
Location: Mumbai, India
Exactly, even huge downpayments are starting to make less sense. I am not a credit heavy person, dont hold any debts outside my home, but its definitely a conservative move to pay down the home at a high rate.
7% is ultra conservative in my opinion.
Have any good tips on actual investments for those interested to take a look at?
You sound like someone who stashes their money under their mattress. You may have convinced yourself that investing is bad, but don't try to convince the rest of us.
Long-term returns have run in the 8% range for decades. That is not new or secret information.
If I gave you $1,000 today and said that you can pay me back $1,001 a year from now, would you do it?
This post was edited by BH Spartan 16 months ago
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