Quote:
Originally Posted by MillerTime GFG
That's the thing...people are so hellbent on paying down their mortgage at all costs, even if their money can do better elsewhere.
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We talked about this, and you provided very good advice. I think for my situation we want to pay down debt quickly on our house right now. I am not sure it is because we are not financially savvy, but part of a plan based on risk.
To me debt is slavery, in the way it forces decisions to be made that are not in your best interest. For example, knowing that you need to pay your mortgage forces you to take a job you may not want to work, perhaps at a lower wage. Or sell items you don't want to part with. It also causes you to not have the ability to amass capital to buy assets when the time is right, since you are steadily paying after tax income into partial interest payments (even at a low rate right now).
To address the making more money in the market. That is not a guarantee unless you are buying bonds which are low return (or negative) anyways. Outside of that all stocks carry risk. Meaning you can sink money into it with nothing to show for it. At least with a house you own, even if the value is less than what you purchased you have a tangible asset. Something you need that no one can take from you.
Last, I believe protecting yourself against future hikes is prudent. 25 years or more is a long time to think rates will be low. 10 years from now it could be 5%+ which is a massive bump from today. Again, insurance against future volatility.
My point being, conservative investing is one form of investment strategy. It has worked well for me in the past, having the capital readily available to purchase and finance our home for a steal in 2009 when many portfolios were in the negative.
I am not against the philosophy of invest now you will get a greater return. If you can make it work with this volatility good for you. I just think there is no harm (not saying you mean this, I know you don't) in playing it safe, paying down debt, amassing wealth and preparing to buy assets for lesser value when downturns like this hit.
Most non-savvy people should follow this advice, instead of taking on more risky debt. I know it is not the way to get rich quick, but I do know it is one of the best ways to secure a comfortable living.