Various points:B4Xt3r wrote: ↑Sat Oct 26, 2019 7:19 amMind if I ask a question beforehand, because I'm confused why such details matter. Why isn't the question just with my next dollar, where should I place it to maximize my net-worth at the end of the mortgage or perhaps at the beginning of retirement)?CyclingDuo wrote: ↑Fri Oct 25, 2019 6:45 amOkay, we'll assume that.
Looks like you are about age 29-30 based on searching some of your early posts.
If you did cut back on your contributions to the 401k to the point of only receiving the employer match and redirected that cut money to the mortgage principal - what percentage of your gross income would that leave going towards all savings (401k, HSA, Roth IRA, taxable accounts)? What is the percentage of your gross income that is now going to your overall savings before contemplating a cut to your 401k contributions?
With your current mortgage and net income (take home pay) budget, what percentage of the take home pay is currently going towards PITI? What amount - or percentage - currently is available in your take home pay that could be redirected towards additional mortgage payments before considering a cut in your 401k contributions? In other words, do you have any wiggle room to cut some of your discretionary wants?
What about the prospects of you (and your spouse) increasing your incomes through overtime, extra shifts/hours, second job(s), etc...? Are there any potential inheritances coming in the future from either set of parents (or grandparents)? What are the prospects of a bonus for any of your employers?
What are your own thoughts on the power of time and compounding regarding your equity/bond assets?
Here's an excellent read...
That brings us to a perverse conclusion—one I’m almost reluctant to mention: Because savings are so crucial, and because they’re the key driver of your ultimate nest egg, how you invest is somewhat less important.
(I'm not trying to be difficult, sorry if its coming off that way.)
1. If I could afford to refinance to closer to 3% for a 15 year, and not decrease 401k contributions, I would.
2. With a fixed rate mortgage, the rates can never increase. There is value in that. It is like insurance against inflation or rising interest rates. It is hard to quantify the value, but it does exist and is greater than zero
3. Because of #2, comparing mortgage rates to various cash or fixed income rates is an apples.and oranges comparison. If mortgage rates go up, you are locked in. If they go down, you can refinance or prepay if you wish.
4. If you are looking at decades of investment horizon, the chances are a portfolio of stocks and bonds will beat 4% are good. It is true that there is interim risk, but that shouldn't matter if you are investing for retirement.
5. There is long term value in a Roth. It is tax free forever. As you pay off your mortgage, after that point, "invested" funds default to taxable. Paying off a mortgage is only like a 4% Roth as long as you have the mortgage.
6. There is also value in liquidity. While a 401k may not be liquid, at some point down the road it can be rolled into a Roth IRA, and a Roth can be partially tapped, penalty free, under certain conditions.