Comments on: Contribute to Retirement or Pay Down Your Mortgage? Part II http://www.thickenmywallet.com/blog/wp/2007/06/06/contribute-to-retirement-or-pay-down-your-mortgage-part-ii/ Everything to do with thickening your wallet Wed, 01 Feb 2012 15:44:00 +0000 hourly 1 http://wordpress.org/?v=3.3 By: FourPillars http://www.thickenmywallet.com/blog/wp/2007/06/06/contribute-to-retirement-or-pay-down-your-mortgage-part-ii/comment-page-1/#comment-114 FourPillars Thu, 07 Jun 2007 01:49:30 +0000 http://www.thickenmywallet.com/blog/wp/?p=56#comment-114 That's not a bad way to look at it. I guess another situation would be someone who is a very conservative investor. Since their return would not likely be more than their mortgage rate, the mortgage option would win out pretty easily. That’s not a bad way to look at it.

I guess another situation would be someone who is a very conservative investor. Since their return would not likely be more than their mortgage rate, the mortgage option would win out pretty easily.

]]> By: admin http://www.thickenmywallet.com/blog/wp/2007/06/06/contribute-to-retirement-or-pay-down-your-mortgage-part-ii/comment-page-1/#comment-112 admin Wed, 06 Jun 2007 16:44:08 +0000 http://www.thickenmywallet.com/blog/wp/?p=56#comment-112 Thanks for the comments. I am a big believer in trends- if the trend has been that a particular individual has, year over year, returned less in their retirement than their mortgage rates than it is mostly likely that they will continue to do the same. They are clearly doing something wrong especially in light of how low mortgage rates have been the last several years. This individual is better off paying down the mortgage in that case. I am assuming a large sample size- a person has not done well for years on end. If so, it seems unlikely that they will turn it around suddenly unless they are very lucky. In such an event, the safer choice is to pay down the mortgage as a means of avoiding further damage to themselves. I hope these posts get people thinking out of the "either or" box on this issue. Thanks for the comments. I am a big believer in trends- if the trend has been that a particular individual has, year over year, returned less in their retirement than their mortgage rates than it is mostly likely that they will continue to do the same. They are clearly doing something wrong especially in light of how low mortgage rates have been the last several years. This individual is better off paying down the mortgage in that case. I am assuming a large sample size- a person has not done well for years on end. If so, it seems unlikely that they will turn it around suddenly unless they are very lucky. In such an event, the safer choice is to pay down the mortgage as a means of avoiding further damage to themselves.

I hope these posts get people thinking out of the “either or” box on this issue.

]]> By: FourPillars http://www.thickenmywallet.com/blog/wp/2007/06/06/contribute-to-retirement-or-pay-down-your-mortgage-part-ii/comment-page-1/#comment-111 FourPillars Wed, 06 Jun 2007 16:31:08 +0000 http://www.thickenmywallet.com/blog/wp/?p=56#comment-111 The problem with trying to compare the mortgage rate to your investment return is that you can't predict either for any relevant length of time. In my case I'm about to start a five year term on my mortgage so I know that the mortgage rate will be 5.19% for that period. However I have no idea what the rate will be for the 8 years or so after that 5 year term - I'm hoping it will be paid off in about 13 years. My investment return? Forget it - I use a long term estimate of 7% return for my portfolio which I believe is a valid assumption over a time period of at least 15-20 years. I can still use this 7% figure as an estimate for the next 13 years but the odds of it being very accurate are unfortunately not that good. Interesting posts! The problem with trying to compare the mortgage rate to your investment return is that you can’t predict either for any relevant length of time.

In my case I’m about to start a five year term on my mortgage so I know that the mortgage rate will be 5.19% for that period. However I have no idea what the rate will be for the 8 years or so after that 5 year term – I’m hoping it will be paid off in about 13 years.

My investment return? Forget it – I use a long term estimate of 7% return for my portfolio which I believe is a valid assumption over a time period of at least 15-20 years. I can still use this 7% figure as an estimate for the next 13 years but the odds of it being very accurate are unfortunately not that good.

Interesting posts!

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