cliff wrote:Please explain to me why selling I Bonds returning 5% plus would make sense to pay a mortgage at 3%? I should add that I always sell equities and bonds to retain the allocation that I desire.
To address your question specifically, I have not suggested getting rid of I-Bonds in any way, shape or form. Now, I-Bonds return an Inflation component. What happens to "returning 5%" if we have LOW to ZERO inflation - perhaps deflation - over the next 10 years? You seem enamoured with looking at ONE piece of the portfolio in isolation and that is a mistake.
First, I seriously doubt that your entire Fixed Income allocation is in I-Bonds that make you feel warm and cozy. You must have significant other Equity/Fixed Income investments in your allocation - use that to get rid of risk, and get rid of debt.
Second, a liability with X% interest means that this interest would be an X% risk-free and guaranteed return to you if you get rid of the liability.
With regards to the BIG picture, my initial comment stands: I can't understand having extra expenses (interest) when withdrawing 4% from a portfolio (retirement) as you said in the original post. That said, perhaps there are other issues in your portfolio/holdings that we don't know - not that I personally need to know.
For subject of this thread you wrote:Retirement 4 percent withdrawal - mortgage principal