Assuming mortgage loan is about 3%.
Phuong Tran: Short and quick answer: Basically, if you think your total return on your dividend paying/growing stocks or simply your entire portfolio will be above 3%, then you can choose to use the money to invest.
Mathieu Litalien: Agreed. 3% is so minimal, that I would invest in div stocks. That being said, if rates begin to rise in a meaningful way, i’d reconsider.
Jay Wright: 3% mortgage could be less of one itemizes on their tax returns!
John French: Good question. I think I’d pay the mortgage.
Dan Mitchell: 3% and holding… divs win… but if morgsge rates rise and housing market flat or down then maybe I would have reconsidered… house is a liability not an asset unless it’s paid off and paying you
Phuong Tran: I assume it’s a fixed rate, but he didn’t say so that’s good thinking.
Matt Robins: Fixed 15
Jimmy Leclair: Don’t forget your tax deductions on your home if you decide to pay it off. Lots of people get a nice deduction which you won’t have anymore AND you’ll be earning $$ on your investments so choose wisely!
Steve Haar: If trump has his way we all lose that deduction and more.
Jimmy Leclair: Steve Haar this is true
Christina Marie: Pay off the house
Scott Miller: I asked myself the same question. I managed to lock in for 5 years at 2.39% this summer. So I’ve decided to invest and will pay down the mortgage in 5 years if rates are above 4.5%
Jimmy Leclair: Smart f’ing move!
Stephen Wallace: Have never had a mortgage, bought my house with cash I made off of stocks
Mark James: I paid off the house. There is nothing like being debt free. If I can’t afford to consider the money that I invest as lost money, then I don’t need to be putting it in the market to begin with. There is no guarantee.
Etienne Tawong: Oh yes! There is something like being debt free.
Rodger Frego: I prefer to be debt free and actually own my house. That’s why I retired I paid cash which was my retirement plan all along. Now that it’s like the Standard deduction will go up to $24,000 and fewer Homeowners will come out ahead itemizing, it even makes more sense to not have a mortgage. When you have a mortgage the bank has a lien on your House thus you don’t own it free an clear.
Jay Wright: You will never…NEVER…truly own your house, even if it’s paid off.Don’t believe me…pay your house off…then don’t pay your property taxes and see how long you keep that paid off house.Government really needs to change this law.
Rodger Frego: Jay Wright that’s not true.
Pochiu Chang Cen: pay off the house first
Benjamin North: I would invest mostly and pay an extra 50-100 towards the principle every month. Maybe a 75% invest and 25% split.
JJ Guzman: Pay off the house.
Sam Leathers: Makes more sense to invest it strictly off math, unless you know a crash is coming soon which obviously we don’t it’s almost always better.
Brian Fey: Most experts, including Buffett would say to invest, and make the payment. But it was a life goal of mine to be 100% debt free, and now I am. And it feels amazing. I don’t owe a cent to anyone for anything. Now I buy all cars, boats, etc with cash. And being debt free, it leaves plenty to put in the stock market.
Coelho Zé: You still have to pay property taxes, utilities and maintenance.. how is that 100 percent debt free. Instead you could have had the investments not only pay the mortgage, but Property taxes, utilities and house maintenance.
Umesh Mirani: He said he doesn’t “owe” any money to anyone and is debt free. Debt is something when you take a loan. He didn’t take a loan for property taxes, utilities and maintenance.
Dan Schaefer: I actually did ask myself this question, and chose the stocks. I’d do this 100 times out of 100, but there’s really no wrong answer to your question.
Robert Bartlett: There are far more variables that come into play than that. Kids (College) , Job security, pensions, liquidity elsewhere? How much longer will you stay in this house? I am faced with the same situation. What do I do? Play both sides, little extra toward the mortgage and also invest.
Toni Nikkanen: I was going to say that, thanks for saving me the effort 😉
Robert Bartlett: No worries…every situation is different.
Coelho Zé: Invest it.. build assets as your number 1 priority than let the assets pay off the mortgageI can’t understand why people spend so much time worrying about paying off their mortgage.. instead they should build assets
Phuong Tran: Simple question sir, What if he screws up on his investments? :)))))
Coelho Zé: you got to be the worst investor in the world to screw up. I am talking about investing not speculating
Phuong Tran: This is when it really depends on your risk tolerance or risk profile. Do you characterize yourself as conservative or aggressive or somewhat in between when it comes to taking risk with your money? Because if you pay off the mortgage now, you will save 3% of interest. That is a sure thing. If you take that money and invest, you may or may not earn a return of 3%. Your return could be very good or very bad, and there is no guarantee. ?
Coelho Zé: That is Bad advice
Steve Wall: Pre last recession crash, everyone said you would be dumb to not plow everything into stocks. Market crashed, people lost houses, got margin calls and forced to sale stocks for pennies on the dollar.
Tyler George: I’m 28 and have been contemplating this exact thought. Everything I read says invest early, and capture as many compounds as possible but it seems to me that volume of cash flow is more important (or at least has a greater current effect on my finances). My interest rate is 4.2 and I know my portfolio will beat that but it’s 4.2 on 110k compounded monthly compared to x% on my relatively smaller portfolio…. I donno
Bob Southard: If you do not have the cash to pay off your mortgage, then it is a moot point. The question also speaks to your sense of security. Paying off the mortgage may not be the best thing to do financially, but it does provide security. Less risk… good night’s sleep.
Tyler George: Bob Southard thanks for the reply, the way I currently feel it will never be a bad thing to pay a mortgage off early and actually own the house.
Steve Wall: I would cash out all I can on house, buy a ton of stocks, market crashes and lose house.
Matt Robins: Great, you won. No one else here gave a crap answer besides you. Feeling proud?
Steve Wall: I feel very proud, you feel the 747 jumbo jet flying overhead? 😀
Coelho Zé: Mortgage is not the problem folks, it’s the ever increasing property taxes, utilities and house repairs. So invest it so you take care of all those expenses
Toni Nikkanen: I overheard today the proposed tax reform might change property taxes for better or worse, that kind of thing can make a difference too ….
Rodger Frego: Toni Nikkanen there is no proposal to change the mortgage deduction outright, but doubling the standard deduction means most home owners will come out better using the Standard deduction. They can’t use the Standard deduction and Itemize. The bottom like is line is mortgage deduction will no longer be as valuable as it was in years past.
Carla M Farragher: Invest. Mortgage is a tax right off
Ernest Michael Nelson: Pay off the house it will allow you to use the money from what you pay to invest. And it will increase your debt to income ratio
Coelho Zé: I bet your broke
Ernest Michael Nelson: Why if I say yes will you give me money? Lol
Andy Pickett: Invest. You can make 6% in dividends. Make your money work for you. That’s the difference between rich people and poor people. Your personal home is not a asset. It doesn’t make you money, investments do.
AJ Singh: It also depends on your income if you pay off your mortgage do you have write offs need write off. I would pay off personally and invest.
Bucky Gilbert: From a mathematical standpoint it’s better to invest if your rate is low. But personal finance is personal. We had the same decision 2 years ago and decided to pay off the house. Peace of mind offsets whatever dollars we lost from inactivity. If you’re secure in your job and don’t mind then I would invest.
Logan Allec: Invest! Duh! Over time you will certainly earn more than 3! Plus you can deduct mortgage interest paid!Facebook.com/moneydoneright
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Brian Gerrity: The bank Owens your house so invest in yourself and let the bank take all the risk if some thing happens to your house, like a storm.
Matt Robins: That’s why you have insurance.
Terrence Long: Paying off also means locking up a huge sum of your investable capital. I would compare the ROI first. Idea is to stretch my money’s potential as much as possible.
Justin Watson: Depends on how knowledgeable of investing you are.
Joshy Joshington: i prefer my dividends cover as many expenses as possible hopefully all
Larry McGehee: I’d payoff the home first .
Albert Bancroft: Both –
Chris Hollen: The math probably says invest. Security says pay off the mortgage.
Jeanie Welton Knapp: For me personally, I feel I do better on my dividends than what I pay in interest on my mortgage. But I do pay extra on my mtg each month, so I’m really doing both.
Larry McGehee: There’s a certain feeling of accomplishment and lack of worry when you’re debt free including you’re home, at least it is for me. I know that no matter what I’ve got a place to live, yeah I’ve got taxes, insurance and maintenance but it’s still not much… it’s a good feeling owning your home !
Rich Slifka: Cash flow is worth something in and of itself. A guaranteed 3% isn’t bad either, anyway.
Lee Onardo: I’d invest to get company match for 401K, contribute the max to Roth IRA, then use the rest to pay off all debt.
Matt Robins: No 401k available
Lee Onardo: Then Roth all the way.
Matt Robins: Roth is only $5500 a year, right?
Lee Onardo: Matt Robins yes
Steve Porter: If u can pay off your mortgage TODAY and not waste the time that compounding could be happening then pay it off today. Then start investing tomorrow. Either way start investing asap, the math just makes sense if u have 20+ years to invest.
Ryan Brabson: You can write off motgage interest, until that stops (and see there is talk about stopping it), then invest.
Joseph Hodgson: You owe a debt. Pay it off.
Greg Behm: I’ll alternate it for you. I have student loans and I prioritize the money I put into that versus my stocks but I also allocate about a 60-40 ratio when putting money towards either. 60% towards loans and 40% towards stocks. Most of it sits as capital (i believe I used that right) until I can purchase a fair amount of stocks considering E-trade charges a trade fee
Aaron Gilliam: You can use robbinhood
Aaron Gilliam: Investing in stocks allows easier liquidation incase of job loss alowing you to make monthly minimums while you search for a new job
Matt Robins: Home equity line is available
Jason Lawrence: If you are paying $300 a month in interest, and only going to get 250 back a month in dividends, i would suggest paying it off. Imo, where will you gain the most assets. If you can figure out how much to drop that down so your divedends outweigh your interest, then invest. This is my opinion, and i understand compounded interest on divedends, but if you pay off your home quicker you are also shelling out less montly income that could go towards investing.
Jason Lawrence: Something else you can do is pay your mortgage bi monthly. You will save mad money by doing this if the bank will let you as your payment will be calculated twice per month instead of once bringing your interest down and your mortgage payment up. Banks dont like this though, lol.
Matt Robins: Bank won’t allow it. Not sure why, but it’s not an option.
Jason Lawrence: Because it cuts so much into their money.
Marty Chargin: Historically, an S&P 500 index fund will produce greater appreciation than the real estate market. I like having a mortgage to write off interest at tax time. Pay down the home, and let it appreciate over time, and invest in the stock market too…
Tom Gianni: Wait till trump tax plan goes through first then decide If paying off house first it worth it or not …. just saying
Tecunseh Amos: The house as it will free up cash every month because you are not having to shell out money for the mortgage
Steve Hunter: I’d buy a nice REIT, like UNIT is a Great Buy right now!ORC is Ok until rates go up. Get That 15+%!!
Matt Robins: Great point.
Steve Hunter: There are Others that are not REITs. BPT pays well too.Many others I can’t think of ATM…….
Matt Robins: Steve Hunter I’m a fan CIM … with interest rate hikes possibly coming there are concerns
Steve Hunter: Is CIM a REIT?? I dumped ORC a couple of weeks ago, which wasn’t the best move. But I’m anticipating rates will go up. Not buying into anything that will benefit necessarily.
Steve Hunter: *DSM pays almost 7% and is Tax Free.
Steve Hunter: BKCC pays over 8%. Personally, I would swing from one quarterly payer to another. But not go crazy. Diversify by owning a few good ones in Different Sectors. 😉
Robert Freeman: payoff my house. then take the savings in mgt payments and buy dividend stocks.
Coelho Zé: Priorities should be, 1 build assets, 2 passive growing cash flow to pay off taxes, utilities and food 3 follow by mortgage and college tuition.
Matt Robins: Yeah, college is a big concern. Have not started saving for it yet.
Coelho Zé: My daughters college tuition was 260k for 4 years at a private college. We got it down to 200k and I still have 120k in her investment accounts which I use the dividends and capital gains to pay off her monthly tuition payments.. my plan is to pay off her tuition loans using her investment dividends and capital gains..than let her have whatever the value of the account is to give her a head start in life.
John Paul Martin: Investment first, provided you can maintain minimum payments until the investments can take over the payments.
Mae Ledet: Pay that mortgage OFF, then love debt free, investing in dividends stocks . 🙂
Justin-Lee Renfro: Personally I paid my debts off first then allocated my weekly debt payments into the stock market. It’s nice to have the comfort of knowing you have no payments but it’s even better to treat my market contributions as a bill. When I have extra I always put in more. But at the end of the day I always contribute last years bill payments. Imagine making your mortgage payment + your current budgeted stock fund to your portfolio every month. Now imagine doing that for the next “X” years that was left on your mortgage. Its a personal decision that you should talk about with your significant other.
Justin-Lee Renfro: To add to that. A paid off home is an assest. #1 no monthly payment. #2 Always a place to live #3 you could rent it out or sell it or use it as an airbnb property at a later date if you decide to. But this is just an opinion. I’m far from an expert. I simply mean to share my wife and I conversations and train of thought when we bought out the bank last year.
Andy Pickett: You obviously dont know what an asset is. An asset is something that make you money. Your house is a liability, the exact opposite of a asset.
Justin-Lee Renfro: If you aren’t making a monthly payment any longer your income has increased. If you rent or sell your home you’ve made money. Your obviously close minded.
Andy Pickett: Justin-Lee Renfro you need to read a financial book.
Justin-Lee Renfro: Andy Pickett keep paying your mortgage and agree to disagree.
Scott Miller: Last year I managed to use the equity in my house to use as a down payment on an investment property. The rent I take in every month now covers the costs of the rental house AND my house (interest, property tax, insurance and maintenance) 1 year later and I’m about to do the same. Being debt free is nice, but I can beat the 2.5% mortgage rate in my sleep.
James Cawley: A mortgage is the cheapest loan you will ever get and you also deduct it off your taxes. You put the money to work and invest
Austin Allgood: Both
Edwin Devera: Pay off the house , then put the money, that you saved by paying the house off ,to a dividend paying stock.
Courtney Nicole: Pay off the house. get rid of debt first and then invest
Michael Morse: Pay off the house first….then i could put an additional 3% to work instead of giving it away to a bank. Buying stocks is about timing. No point buying stocks first if their value drops plus paying out 3%.
Scott Miller: http://www.investopedia.com/…/should-i-pay-down…/
Should I Pay Down a Mortgage or Invest the Money? | Investopedia
Scott Miller: Now this write up implies rates stay at historic lows for the next 20-30 years, which is doubtful. But 6% return is below average as well. There is no right answer, depends on risk tolerance. If your young it gives you time to recover after a correction, so greater risk can work out better in the long term.
Matt Robins: Thanks good article.
Peter Millin: Do interest payments on your house offset the deductions? Do the math.
Bob Stag: Heck, Why not split the “extra” cash 50/50? If you had an extra $1,000 per month, make a principal payment on the home loan of $500, and invest the other $500. Loan still gets paid off quicker, you saving some for future needs.
Fernando Mauricio: Invest
Kevin Bailey: House
Coelho Zé: If your goal is not to become a millionaire, than pay off the house first. Millionaires focus on creating assets first, I know many millionaires and they are all about creating passive income as a top priority. I never met anyone who became broke building assets that generate income, but I have met many who spend 15-20 years to pay off their mortgage 5-10 years early who are now broke because shit happens like taking equity out to pay for kids college, health reasons or loss of job.To me it’s a no brainer, but what do I know my mortgage is over 400k but have enough assets that have made me financially independent years ago. If I’d had focus on paying off my mortgage first, it probably would be less than 100k today and I’d be working another 25 years.
Michael Boone: I sent a friend request to you. Your FB Page is a very interesting and informative read. Great posts.
Andy Pickett: 100% agree with you. So many people are content with mediocrity. The difference between rich and poor people are assets. There is such a thing as good debt. Most millionaires have debt. It’s called real estate. You think trump owns trump tower free and clear? Nope. But he is a billionaire. He knows it’s a waste of money too pay off good debt.
Michael Morse: Debt free & staying that way is the key.
Henry Maglente: Thanks for sharing your knowledge. I’ve always enjoyed your input.
Coelho Zé: Most wealthy people I know have huge amounts of debt, it’s called leverage and used wisely can generate great wealth.
David Sami Martinez Joseph: Assets like what
Coelho Zé: Stocks, prefers, real estate, businesses, closed end funds, low cost index funds..
David Sami Martinez Joseph: Idk how to do all that
Jeremy Lvancevic: It depends on your objective with the property. I have no idea why people who had the means but didn’t buy real estate on 30 year mortgages with sub 3% interest rates, invested in ANYTHING else. Yea the stock market did great in the last decade, but the people who gobbled up apartments, condos, etc and now have people paying off those mortgages after the property values more than doubled, are the real winners.
JC Catalano: The answer is to cap all debts first and create a 6 mos. nest before anything. Most mortgages can’t fit into this reality, let’s face it. But, Ramsey and Suze have suggested no CC debt, buying a used new car (15k or less miles on it at purchase), adding to matching 401k accounts and a ROTH IRA and paying an extra mortgage payment per year by dividing that figure by 12 and adding to each monthly payment. Doing this takes like 8 years off a 30 year mortgage, I believe. The key here is CCs and having 6 mos. cash reserves. Job losses are simply too common these days to carry debt safely year in and out, I feel.
Ray James: Given the rich valuation in equity markets, pay off the house first. A bird in the hand is better than all of the BS Wall Street Marketing. You can learn with your finances in order and then take out a heloc once your confidence builds and the market tanks.
Sam Leathers: Another way to look at which might give you warm and fuzzies is investing in companies that have a greater yield than your APR and using the dividends to pay down the home loan. Essentially you are just creating a credit spread that leaves you cash flow positive, specially after taxes. Without a doubt you are taking on market risk at a minimum in this scenario but the share price won’t affect the credit spread as long as dividends are maintained.
Steve Wall: What about when this market crash people have been predicting for years happens?
Bob Stag: Well, you don’t sell the stock, and use the dividends you should still be getting to continue to pay down the principal. Or, stop paying extra principal and use the dividends to add to your positions.
Sam Leathers: Exactly Bob Stag, As long as the dividends don’t get cut you aren’t losing anything and are still gaining the “spread” on the difference between yield and interest.
Steve Wall: I am pretty sure during most market crashes there are not many dividends out there.
Bob Stag: Look at all the companies that havent cut dividends in 25-50 years. There are some, many I hold.
Steve Wall: I would be interested to know a few of them. I was in banks and Reits, needless to say they got slaughtered both ways.
Bob Stag: Financials were a big chunk of companies that cut their divends back during that crisis.
Bob Stag: Steve Wallhttp://www.dividendgrowthinvestor.com/…/dividend…
Dividend Aristocrats List for 2017
Bob Stag: http://www.dividendgrowthinvestor.com/…/dividend-kings…
Dividend Kings List for 2017
Steve Wall: Thanks, nice list. Are rates for mortages that low that plowing all your cash into these stocks is still going to pay more then the interest you would be paying on your mortgage after taxes on your dividends?
Sam Leathers: 15% dividend tax rate, income tax reduction on mortgage payments.
Steve Wall: The dividend kings are only paying .95% to 3.40% plus 15% tax. Mortgage interest deduction is only if you have enough to itemize.
Bob Stag: Steve Wall , depends on rate. Try and see if your mortgage company will let you pay bi-monthly. Divide your “extra” cash every 2 weeks in half. Put half into dividend stocks, half into extra payment, principal only, Right now, my portfolio yield is…See more
Steve Wall: I pay $5 extra now on my 15yr lol. I am more into buying income producing stocks, selling options on them and paying off higher APR debt. With rates so low, on mortgage and 15 yr fixed, I am not in a hurry right now. I was more saying for people asking this kind of question, they may not be in tune with the markets as much and not prepared for the wild ride it can become.
Bob Stag: Steve Wall , unless you are single, with no healthcare costs, no unreimbursed work costs (uniforms, shoes whatever you use at work you pay for), no real estate taxes……….. then maybe straight principal is better. Check with a tax accountant for your specific situation.
Ray James: the accountant isn’t going to give any innovative advice, just pointing that out. Doesn’t want to risk losing the client.Paying off the mortgage is actually doing something material. The other stuff is just messing around.
Bob Stag: Steve Wall , if they are not prepared for the markets wild rides, then they should not be in stocks. What happens when people sell when markets fall? Usually they bought higher and ended up selling lower.
Steve Wall: Not with the way the market has been latelty. Once it crashes many will be crying just like last crash lol.
Bob Stag: Ray James , so investing is “immaterial”?
Steve Wall: Investing is great until the next crash and most people will panic and get margin calls, sell off low, start losing houses that go underwater, etc.
Bob Stag: My first rule, don’t buy on margins. Cash only lane.
Steve Wall: That is a good rule. I remember pre-last crash, people were buying up investor homes on leverage and stocks on margin. That did not turn out well.
Ray James: Bob Stag the way that most people do it, yes. They just blindly dump funds in and hope for the best. What I’ve suggested is doing something measurable (a bird in the hand) rather than listening to the marketing and unrealistic expectations that go along with it. Education is key. Get educated, then get stocks.
Ray James: If the market were closer to a bottom than the top it would probably make a difference, but there is just a lot of “I’m new, what do I do?” posts at this point for me to be comfortable. 🙂
Ray James: Almost nothing is truly cheap right now. (Please do not tout the “interest rates are low therefore…” argument. Interest rates ARE low and have forced many MANY people out further on the risk continuum than they normally would be. “Stocks are the only game in town” has been the mantra for years now. Valuations are decidedly not cheap.) This is going to make the next bear much worse.
Steve Wall: I am having one hell of a time finding stocks to purchase at these prices.
Ray James: I bought 1000 GE two weeks ago at $25…sold some calls and am essentially $1000 underwater now. Stuck. It could go hihger (nice double bottom on the chart today) but…they could also cut the dividend and it could be in the teens by Thanksgiving.
Ray James: Crystal balls would be nice. Or brass ones. 🙂
Steve Wall: I have been looking at GE a bit. I have not gone over the financials though, why are you thinking maybe a dividend cut?
Ray James: because their cash burn is high. Also the CFO left yesterday and there’s an activist investor on the board as of yesterday.
Bob Stag: Ray James , well, then they are not “investing”. they are rolling the dice, and hoping.
Ray James: I think that they are trying not to cut it.
Ray James: Bob Stag that’s the “merrikkan way”…Anyone entering the markets today is essentially a bag holder.
Bob Stag: Ray James . I have GE, got rid of a chunk before the implosion, but grabbed a bunch under $10. I like the direction they “might” be going in, but won’t add till closer to $23, or, below.
Steve Wall: And then the experts here are telling the bag holders, don’t pay off your mortgage, buy some super high priced stocks, instead lol.
Ray James: Bob Stag I think it is the only Blue Chip that is close to being cheap. the company either gets turned around or sold off for parts. Flannery isn’t playing around. though, I will say that one of the analysts I used to hang out with said “never buy a company that just changed where the headquarters is”…turns out to be pretty good rule…
Rene Cooper: Its really very simple… if you can get a return on your investment that is higher than the rate on your mortgage, it usually makes sense to invest… if you pay off your mortgage instead, you are essentially investing that money at the mortgage rate until you finish paying it off…If you invest it at a return that is higher than your interest rate, you can pay off the mortgage anytime you want in the future, using the higher gains from your investment, and either pay it off quicker *because you have the money + gains*, or pay it off when you decide, and still have the extra money available from the gains available to make more money…Caveat: the return on investment calculation should take into account income taxes, stock appreciation, capital gains, dividends and deductibility of mortgage expenses to be more accurate…
Ray James: If you decide to do the math on this, (you should do the math becasue this is a math question) I would make very pessimistic assumptions about future returns. sure, assume a 10% return on stocks, but then also assume only the dividend. You should do a third based on negative equity market returns also. Peristently difficult markets DO exist and are structural in nature (Look at Japan–you should note that we are Japan now). Reliable historical measures suggest the equity markets will be roughly where they are today in a decade or so. Think about that.
Bob Stag: And until rates rise, I am still getting 4%+ on my money.when that changes, more of my money might go elswhere.
Ray James: Bob Stag if that is in dividends then you need to talk about average bear market draw downs…everyone says a bear market is 20% down…but they rarely stop there. Look at the nasdaq in 2000 or the spx from Oct 2007-March 2009…Those are the kinds of drops that will bring us back to historical “fair value” or “average bear market bottom” valuations
Bob Stag: But, if I don’t sell, and collect and re invest the dividends, I still better off, even if the markets go back to even, since I should be getting more in dividend income.
Ray James: Too many people invest in the rear view mirror. People should ask “what makes us go higher from here?” “What is cheap today?” “What does my life look like with a 50% draw down and 7 years to recover back to even?”
Ray James: They are often too concerned with the “gotta be in it to win it” mentality to actually win.
Ray James: I think the difficulty is between “needing the stock market to work” and allowing it to work for you. The focus on a few basis points in expense ratio or being in for the last dollar, all the way to the top is a distraction. Joseph Kennedy, the first …See more
Ray James: “You can’t time the market” says every broker who needs the fees generated by your account as he works for a firm THAT SUCCESSFULLY TIMES THE MARKET with their own money.. Think about it.
Bob Stag: If you don’t sell, you have no draw down. If you are retired, you should have some bonds and such. Me rarely sell, might sell some, but rarely all. Dividend eliminated, yeah I will, a cut, not necessarily. I just feel, 6 -9 months worth of financial…See more
Ray James: I use a longer time frame, and would continue to do so especially early in retirement. I understand your “no draw down” comment however, the recovery can take years. Some people can plan that well but my experience tells me that most people simply do n…See more
Mike Grega: Div stocks!
Botao Jiang: High dividend stocks are not safe from higher interest rates, consistent dividends are.
Milo Lowenstein: Paying off your mortgage is the greatest financial BS ever purported on the American people!!!! ? Banks love fools!
Matt Robins: Banks rather you not pay off your mortgage.
Sam Leathers: That’s true, but it’s the tax payer losing at the end of the day not the bank or the home owner.
Austin Allgood: paying off your home is not losing.
Matt Robins: Austin Allgood especially if once paid off you roll your old payment into investments
Milo Lowenstein: I should have clarified….currently….paying off a mortgage “early” is not a financially savvy move….in many many cases.
Matt Robins: Milo Lowenstein you made it clear before. I appreciate it.
Steve Wall: Until market crashes and you wished you had just paid off home instead.
Div Son: Mathematically, it’s probably better to invest in some good dividend stocks. But, I managed to pay off my homes (many years ago), and I can’t tell you how good it is to be completely debt free. The question to ask also is if you will be investing the saved interest? Eg if you paid off your home in 1 year from a 15 year mortgage, you have 14 years of “interest”. What if you invest this?
Michael Morse: I look at it this way. Most people spend 1.5x the value of their mortgage by paying off the mortgage slowly. All that money could of been used for investment. It’s a convenience price you pay to make payments rather than buying the house in one lump payment.
Michael Morse: When your unemployed in the next recession….ask your bank if you can put your mortgage on hold until you can find work again….see if they’ll care if you can or can’t pay them what you owe. Now ask yourself….is it better to payoff your home first or invest in a crashed market & try and make payments using your stocks you paid $60/share that are trading for $10 now?
Bob Stag: One would hope they have at least 6 – 9 months worth of emergency funds. If not, then they shouldn’t be investing or trying to pay off a mortgage early.
Steve Wall: Sadly most people I know, do not know the term emergency fund.
Bob Stag: Then, like I said, they shouldn’t be paying off mortgage early or investing.
Steve Wall: True, they don’t bother with those either.
Matt Robins: Bob Stag have emergency fund. But good point to others who don’t
Bob Stag: Matt Robins , then I say split it 50/50
Sam Leathers: I think we need a more dramatic scenario to scare people into making poor financial decisions, how about, you should only ever buy gold because the USD and all other currencies are going to collapse and stocks will never recover in the rest of the time that humans inhabit this planet. Better yet, just invest in guns and ammunition for the societal collapse that’s around the corner ??
Steve Wall: Try the end of the world groups for that lol.
Robert Freeman: Samuel Alan Leathers II take off your tinfoil hat.
Michael Morse: Samuel Alan Leathers IIThat’s why i own physical fiats from various foreign countries. As a just in case the USD falls like the Ruble did a few years back.
Eddie Lopez: HOME 1st. Always Home 1st.
Botao Jiang: what do you mean by paying off the house? if you ‘refinance” and get a better deal of course go with paying off the house, no?
Matt Robins: Not sure I understand idea. ???
Steve Hunter: I look at it like THIS: It Depends on How Much is going to the Principal each Month. If you are like Most people, then over 90% of your Monthly Payments goes to Interest, unless you are halfway through your Mortgage-Term.Even with a Low ~3% Rate, you would Benefit by paying OFF your Mortgage FIRST. Once you Do, you ACTUALLY Own your Home!!Another thing to consider: If you Do Invest in Dividend-Stocks, your Home is essentially an Asset to the BANK. And depending on how you look at it, the Bank is getting Paid by YOUR Payments. If you pay OFF your Mortgage, then your Home is no longer in the Banks Name, they can’t claim it as an Asset under any circumstance, and YOU OWN it Free & Clear!!I would rather do that, and SAVE your Income for your Next Investment!! 😉
Scott Miller: I must say I’m a little surprised on how many say pay off your home first. Does this mean everyone saying pay off the house has no mortgages and don’t pay rent? Or won’t invest until they have no mortgage or rent?
Chris Hollen: People remember 2007-8. If you lose your job in the next recession are you gonna sell stock at half the price you purchased it at to keep from being foreclosed on?
Scott Miller: When making an investment you should always make sure you are able to hold long term 5-10 years if needed. Having 100% of your mortgage paid off seems overtly cautious to me. You will miss out on a lot of opportunity.
Steve Wall: Same advice people gave in 2007, then bam market crashed houses underwater, jobs lost, houses lost.
Scott Miller: most people that ran into trouble then had small down payments, bad debt and no savings. I bet those that had 30-50% down on their house, no bad debt and 6-12 months of savings did very well. Those were the people buying whole everyone was forced to sell at all time lows.
Steve Wall: Very good point! While many lost, those that had saved were able to swoop in and buy things for pennies on the dollar. Looking back at stock prices then I really wished I had tripled down back then lol.
Albert Bancroft: Small bit of irony this question and Richard Thaler getting the Nobel Prize. All our responses would make an interesting footnote
Ray James: Well, like everything you need to be smart enough to wade through the BS. You also need to understand that you can make any argument you want and make your assumptions very optimistic. I would say that you have more realists on this thread.