Getting rich is largely about luck – shame the wealthy don’t want to hear it

Nov 2013
11,660
11,702
NY
Yes, you have 150,000 in cash, you buy a house for cash, you just made a real estate investment of 150,000

You yourself said that your house is worth $100,000 more than you purchased it for, so the lifetime return on your real estate investment was 67%

so only thing you did was put one risk free investment that has given you a collective 67% return. Turned it into a 2.75% liability, to put the money into another account.

How much do you pay on a mortgage over a lifetime of the mortgage.. (we are using 150,000 as the figure in our examples)

30 year you are paying 675/month to pay off the loan. you pay 243,000 in TOTAL to the mortgage company. that is a 87,000 you lose in that deal.
It's impossible, apparently, to get that dialogue going with you.. your premise is always off when it comes to the math.

It doesn't matter how much I pay over 15 years, or 30 years.. to pay off the loan.
The interest I pay , in any given year is 2.75 %. it's already priced in into my example !!!
And the investment, that returns the 10% per year.. MINUS THE 2.75% of interest I pay on top of the loan amount... STILL RESULTS in an additional 7.25% profit that YOU DON'T have with your strategy.

And that's fine. You're more conservative, in your life, AND in your investment.OK. But please stop mixing it up all the time, and throwing the facts and math out of the window.
Math is NOT a liberal thing.
 

TNVolunteer73

Former Staff
Nov 2014
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TN
It's impossible, apparently, to get that dialogue going with you.. your premise is always off when it comes to the math.

It doesn't matter how much I pay over 15 years, or 30 years.. to pay off the loan.
The interest I pay , in any given year is 2.75 %. it's already priced in into my example !!!
And the investment, that returns the 10% per year.. MINUS THE 2.75% of interest I pay on top of the loan amount... STILL RESULTS in an additional 7.25% profit that YOU DON'T have with your strategy.

And that's fine. You're more conservative, in your life, AND in your investment.OK. But please stop mixing it up all the time, and throwing the facts and math out of the window.
Math is NOT a liberal thing.
do you invest for a year or is it long term.

Yes we can have a dialog you are explaining the advantages your financial plan, I am explaining the advantages of mine.

People reading this thread can look at the pros and cons of both and be better informed. They may like your plan, may like mine, my like to find a middle road between the 2).

Personally I would rather have the home I live in unleveraged. Now if It were a 2nd home, or a rental property, I see where investing and holding the mortgage has some very positive factors. But that is my view point.. you are doing a great job of explaining yours.

This isn't an arm wrestling match, it is just an exchange of differing viewpoints.
 
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Apr 2014
38,724
25,027
Maryland
do you invest for a year or is it long term.

Yes we can have a dialog you are explaining the advantages your financial plan, I am explaining the advantages of mine.

People reading this thread can look at the pros and cons of both and be better informed. They may like your plan, may like mine, my like to find a middle road between the 2).

Personally I would rather have the home I live in unleveraged. Now if It were a 2nd home, or a rental property, I see where investing and holding the mortgage has some very positive factors. But that is my view point.. you are doing a great job of explaining yours.

This isn't an arm wrestling match, it is just an exchange of differing viewpoints.
I tend to go with your viewpoint because I am not a risk taker and obviously neither are you, but I am married to a risk taker who is risks have paid off very well throughout our lives. What is interesting now he tells his stockbroker to be conservative
 
Jul 2015
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Maryland USA
The concept of financing a home purchase and invest the cash must be viewed in the long term. Mortgage interest is not calculated like simple interest. It uses the "rule of 78" and the payments in the early years are fundamentally interest payments very little payment on principal. Even with low interest rates, the difference regarding a 15 year vs. a 30 year total interest payments are significant. If one can collateral a loan using assets other than the home having simple interest computations, its might just work.

Also I have heard luck defined as when preparation meets opportunity. So if one has not taken efforts to be prepared, then being lucky may be impossible. Additionally, one must have the vision to see an opportunity. Such vision sometimes comes with the preparation effort.
 
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TNVolunteer73

Former Staff
Nov 2014
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TN
I tend to go with your viewpoint because I am not a risk taker and obviously neither are you, but I am married to a risk taker who is risks have paid off very well throughout our lives. What is interesting now he tells his stockbroker to be conservative
Now you know that is a great mix, your spouse keeps you from being TO CONSERVATIVE, you keep him from going after the GET RICH QUICK scheme.

this touches on another VITAL point in our financial plan. My wife is the budget maker, I am the budget committee. She will do a budget, because she is good with accounting (she works in account management for a fundraising company) then we discuss it, and make changes then the budget is one we BOTH agree on. This way it is something I am committed to, as she is committed to it as well.

Hell sometimes I fall intot the get rich quick thing, I buy a lottery ticket from time to time
 
Nov 2013
11,660
11,702
NY
do you invest for a year or is it long term.

Yes we can have a dialog you are explaining the advantages your financial plan, I am explaining the advantages of mine.

People reading this thread can look at the pros and cons of both and be better informed. They may like your plan, may like mine, my like to find a middle road between the 2).

Personally I would rather have the home I live in unleveraged. Now if It were a 2nd home, or a rental property, I see where investing and holding the mortgage has some very positive factors. But that is my view point.. you are doing a great job of explaining yours.

This isn't an arm wrestling match, it is just an exchange of differing viewpoints.
I still require the "numbers" being put out in each of the scenarios to be viable, and to make sense. Aside form that I agree with your premise as to discuss the different strategies.

___________________
My home gained 50 % in value since I bought it 4 years ago (hail the NYC real estate market). I put a down payment of 20%, and pulled a 15 year mortgage.

By now, I could pay off the remaining mortgage balance, and save an appr. 60 k USD in interests that I will still pay over the next 11 years otherwise.

As I finance at 2.87%, I rather keep that money of mine in investments, that should give me back anything between 5-7% minimum instead year over year, for the next 11 years.

If I were to lose my job, I COULD pull my investments, and pay off my mortgage right away, to be debt free. No risk taken, but while i'm financially safe with income, I make an extra profit that I would not make would I pay off my mortgage today.

I could also NOT do that, instead SELL my apartment, and pay off the mortgage with the proceeds from that sale. Which would still leave me with a few 100k cash, while I maintain my previous investments. no risk taken there either.

Either way, if I stay stable financially, or if I lose my job, either of my options and investment strategy is highly risk-safe, and provides me with a way better ROI than paying off the mortgage right now.

Debt is not a bad thing. Debt that is over-exposed to the actual equity and collateral behind it, is highly dangerous.
 

TNVolunteer73

Former Staff
Nov 2014
33,633
8,724
TN
I still require the "numbers" being put out in each of the scenarios to be viable, and to make sense. Aside form that I agree with your premise as to discuss the different strategies.

___________________
My home gained 50 % in value since I bought it 4 years ago (hail the NYC real estate market). I put a down payment of 20%, and pulled a 15 year mortgage.

By now, I could pay off the remaining mortgage balance, and save an appr. 60 k USD in interests that I will still pay over the next 11 years otherwise.

As I finance at 2.87%, I rather keep that money of mine in investments, that should give me back anything between 5-7% minimum instead year over year, for the next 11 years.

If I were to lose my job, I COULD pull my investments, and pay off my mortgage right away, to be debt free. No risk taken, but while i'm financially safe with income, I make an extra profit that I would not make would I pay off my mortgage today.

I could also NOT do that, instead SELL my apartment, and pay off the mortgage with the proceeds from that sale. Which would still leave me with a few 100k cash, while I maintain my previous investments. no risk taken there either.

Either way, if I stay stable financially, or if I lose my job, either of my options and investment strategy is highly risk-safe, and provides me with a way better ROI than paying off the mortgage right now.

Debt is not a bad thing. Debt that is over-exposed to the actual equity and collateral behind it, is highly dangerous.

Debt is slavery.. The rich rule over the poor, the borrower is slave to the lender. (proverb from somone that is considered one of the wisest men to ever live).

until that debt is paid you have an obligation to the bank/Credit union/Savings and Loan

Debt isn't evil.. it is just prohibiting. the greater the debt the more that is true.

You seem to be managing it okay.. I am just saying I chose a different tactic on personal finance
 
Jun 2013
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Here
Debt is slavery.. The rich rule over the poor, the borrower is slave to the lender. (proverb from somone that is considered one of the wisest men to ever live).

until that debt is paid you have an obligation to the bank/Credit union/Savings and Loan

Debt isn't evil.. it is just prohibiting. the greater the debt the more that is true.

You seem to be managing it okay.. I am just saying I chose a different tactic on personal finance
Debt is NOT slavery, if you have the capacity to pay debt back, which many wealthy people do and in some cases, used debt to make themselves wealthy. Once again, your mutual fund does not sit stagnant. if it did, you would be losing money, because of inflation. like putting money in a mattress. It grows because of the productivity of others USING your money and your ROI, be it via growth in value, dividends or both, is due to OTHER people working and being successful. All you need to do is pay a fee to managers of your fund who are supposed to buy and sell either on your order or as a part of their job, to keep you in positive territory, so you stick with their fund.

Debt, in of itself, is NOT a problem. The capacity to pay debt back, is. Businesses MOSTLY depend upon OTHER people, for their startup and in many cases, their expansion and they depend upon their money. Once again, debt, allows one, if conditions allow, to keep their cash, earn money on it, all while using someone else's money (at a fee) to purchase something they then get use and enjoyment out of. If you pay large chunks of cash for something, you also get the use and enjoyment out of what you purchased, but you are losing what you could have made on that money, if it was invested. Every situation is different and the math has to be done for each one, to see which is the best route. To say debt is all bad is to be naive about debt and the way some people use it to become wealthier. As with all things, some people do it in an honest and legitimate way, some people do it in deceitful, unethical or illegal ways.

Some people borrow, then piss (in some cases literally) what they borrowed, away. Some people borrow to buy the tools with which they grow a business and their personal equity with.
 
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Apr 2014
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Maryland
Now you know that is a great mix, your spouse keeps you from being TO CONSERVATIVE, you keep him from going after the GET RICH QUICK scheme.

this touches on another VITAL point in our financial plan. My wife is the budget maker, I am the budget committee. She will do a budget, because she is good with accounting (she works in account management for a fundraising company) then we discuss it, and make changes then the budget is one we BOTH agree on. This way it is something I am committed to, as she is committed to it as well.

Hell sometimes I fall intot the get rich quick thing, I buy a lottery ticket from time to time
My husband chuckled when I told him about his "get rich quick" schemes...we have stocks from 20 years that haven't made us "rich quick".... my husband may have been a risk taker but he is also quite brilliant. And I am sure that is why he has done so well with his life against so many odds. Very dear friends of ours and very cautious people I might add , tried to get my husband to invest with madoff...my husband was very suspicious of it. Needless to say our friends lost a small fortune. And other friends as well..
I guess when my husband was a bond trader on Wall Street he had to take risks and make his company "rich quick"