When did your investments outweigh your mortgage?

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bigtex
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When did your investments outweigh your mortgage?

Post by bigtex » Thu Jul 30, 2020 10:17 pm

I’ve just reached the point where my investment portfolio is larger than the remaining balance on my mortgage. Do you bogleheads do anything different when this happens or continue on as usual?

RocketShipTech
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Re: When did your investments outweigh your mortgage?

Post by RocketShipTech » Thu Jul 30, 2020 10:19 pm

If you listen to some on this forum, they would have you cash out all your investments and pay off your mortgage

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ray.james
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Re: When did your investments outweigh your mortgage?

Post by ray.james » Thu Jul 30, 2020 10:26 pm

Are you asking about "Mortgage as negative bond" ? There are a lot of threads and prior discussions on it.
This might be starting point: viewtopic.php?t=115103

edit: I personally don't adhere to it while I understand it. My reasons are similar to viewtopic.php?p=2107132#p2107132
Last edited by ray.james on Thu Jul 30, 2020 10:27 pm, edited 1 time in total.
When in doubt, http://www.bogleheads.org/forum/viewtopic.php?f=1&t=79939

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rob
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Re: When did your investments outweigh your mortgage?

Post by rob » Thu Jul 30, 2020 10:26 pm

I didn't do anything different but it's a great feeling knowing that if push came to shove, I could pay off the mortgage. Now your at the starting point :D
| Rob | Its a dangerous business going out your front door. - J.R.R.Tolkien

sec_vol
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Re: When did your investments outweigh your mortgage?

Post by sec_vol » Thu Jul 30, 2020 10:31 pm

Congratulations on a milestone. I think I was around 35 when that happened (43 now). Keep it up and you'll be crushing it sooner than you think even though you are now. Pay that thing off and watch the money pile up.

jarjarM
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Re: When did your investments outweigh your mortgage?

Post by jarjarM » Thu Jul 30, 2020 10:32 pm

When we bought the house :D

runner3081
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Re: When did your investments outweigh your mortgage?

Post by runner3081 » Thu Jul 30, 2020 10:50 pm

jarjarM wrote:
Thu Jul 30, 2020 10:32 pm
When we bought the house :D
Same here.

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Re: When did your investments outweigh your mortgage?

Post by flaccidsteele » Thu Jul 30, 2020 10:54 pm

bigtex wrote:
Thu Jul 30, 2020 10:17 pm
I’ve just reached the point where my investment portfolio is larger than the remaining balance on my mortgage. Do you bogleheads do anything different when this happens or continue on as usual?
I never considered looking at my investment this way...

What’s the benefit of comparing the remaining balance of my mortgage on my primary residence to my investments?
The US market always recovers. It’s never different this time. Retired in my 40s. Investing is a simple game of rinse and repeat

LittleMaggieMae
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Re: When did your investments outweigh your mortgage?

Post by LittleMaggieMae » Thu Jul 30, 2020 11:00 pm

I was pretty excited when my net worth hit 0 (when my liabilities (mortgage/car loan/etc equaled my assets (retirement $, EF, equity in house,etc) after being negative for what felt like decades. I didn't do anything different with my money - I had a plan and I was working it. I did start thinking about how each paycheck was making me "richer" (as my investments/assets got bigger and my liabilities shrank) and my net worth started inching up.

MathWizard
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Re: When did your investments outweigh your mortgage?

Post by MathWizard » Thu Jul 30, 2020 11:44 pm

runner3081 wrote:
Thu Jul 30, 2020 10:50 pm
jarjarM wrote:
Thu Jul 30, 2020 10:32 pm
When we bought the house :D
Same here.
Three of us.

I was making sure I got the match, which meant 15% of pay to 403b.
At the same time, I was paying down student loans, and saving up 20% down payment.

10 years later, school loans paid off, and we bought a fixer-upper. By that time, I had more in the 403b than my mortgage.

JS-Elcano
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Re: When did your investments outweigh your mortgage?

Post by JS-Elcano » Fri Jul 31, 2020 12:02 am

bigtex wrote:
Thu Jul 30, 2020 10:17 pm
I’ve just reached the point where my investment portfolio is larger than the remaining balance on my mortgage. Do you bogleheads do anything different when this happens or continue on as usual?
I never looked at it this way. When I went through my records I saw that this happened to me 7 years ago. Nothing changed for me then. Today, 7 years later, my investments are 8-fold higher than my remaining mortgage. I will have it paid off in full in 4 years, that's 15 years after I bought the house and 7 years before I plan to retire early at 59. So, no I didn't do anything different with my investments or my mortgage when my portfolio became larger than my mortgae except that it felt good and encouraged me to keep ploughing away :beer I am looking forard to putting more towards my investments when my mortgage is payed off, which conincides quite nicely with me qualifying for catch-up contributions to my retirement accounts after 50.

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Re: When did your investments outweigh your mortgage?

Post by CurlyDave » Fri Jul 31, 2020 12:26 am

LittleMaggieMae wrote:
Thu Jul 30, 2020 11:00 pm
I was pretty excited when my net worth hit 0 (when my liabilities (mortgage/car loan/etc equaled my assets (retirement $, EF, equity in house,etc) after being negative for what felt like decades. I didn't do anything different with my money - I had a plan and I was working it. I did start thinking about how each paycheck was making me "richer" (as my investments/assets got bigger and my liabilities shrank) and my net worth started inching up.
I never really looked at it that way. Sure the mortgage was negative, but the house value was a positive contributor to net worth. The entire house value, not just the equity in it.

Triple digit golfer
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Re: When did your investments outweigh your mortgage?

Post by Triple digit golfer » Fri Jul 31, 2020 1:09 am

A nice milestone, but we did nothing different and don't plan to.

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Re: When did your investments outweigh your mortgage?

Post by novemberrain » Fri Jul 31, 2020 1:19 am

flaccidsteele wrote:
Thu Jul 30, 2020 10:54 pm
What’s the benefit of comparing the remaining balance of my mortgage on my primary residence to my investments?
I think the OP is considering liquidating investments and payoff mortgage.

rascott
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Re: When did your investments outweigh your mortgage?

Post by rascott » Fri Jul 31, 2020 1:24 am

Did nothing. And will continue to do nothing. Other than refi back into 2.5%, 30 year fixed money. Payment keeps shrinking and shrinking. Don't care one bit about something special about paying off a loan. Could do it tomorrow.... but why?

Hit that at roughly 35.

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BrandonBogle
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Re: When did your investments outweigh your mortgage?

Post by BrandonBogle » Fri Jul 31, 2020 2:08 am

MathWizard wrote:
Thu Jul 30, 2020 11:44 pm
runner3081 wrote:
Thu Jul 30, 2020 10:50 pm
jarjarM wrote:
Thu Jul 30, 2020 10:32 pm
When we bought the house :D
Same here.
Three of us.

I was making sure I got the match, which meant 15% of pay to 403b.
At the same time, I was paying down student loans, and saving up 20% down payment.

10 years later, school loans paid off, and we bought a fixer-upper. By that time, I had more in the 403b than my mortgage.
+ 4. In my late 20s as well.

modest_man
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Re: When did your investments outweigh your mortgage?

Post by modest_man » Fri Jul 31, 2020 2:40 am

Maybe one year after I bought the residence. My goal has always been to have enough taxable investments to pay off the mortgage. I'm almost at 40%.

Yukon
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Re: When did your investments outweigh your mortgage?

Post by Yukon » Fri Jul 31, 2020 4:52 am

rascott wrote:
Fri Jul 31, 2020 1:24 am
Did nothing. And will continue to do nothing. Other than refi back into 2.5%, 30 year fixed money. Payment keeps shrinking and shrinking. Don't care one bit about something special about paying off a loan. Could do it tomorrow.... but why?

Hit that at roughly 35.
I understand the logic, but do you own bonds?
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Re: When did your investments outweigh your mortgage?

Post by oldcomputerguy » Fri Jul 31, 2020 5:13 am

bigtex wrote:
Thu Jul 30, 2020 10:17 pm
I’ve just reached the point where my investment portfolio is larger than the remaining balance on my mortgage. Do you bogleheads do anything different when this happens or continue on as usual?
You don't indicate whether or not you're still employed or are in retirement. In my own case, our (DW's and my) investments indeed reached a point sometime in the past where they exceeded our remaining mortgage balance. I never took note of that, though, because I didn't pay that much attention to the balances at the time, so I can't tell you precisely when that occurred.

I did sit down with a mortgage amortization table and a spreadsheet a few years before planned retirement and came up with a plan to pay extra on our mortgage each month, targetting getting it paid off by a certain date prior to my target retirement date, and we were fortunate enough to be able to execute on the plan and get our house paid for before I retired. I would suggest you check into that possibility before drawing from your investments to pay the mortgage.
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Re: When did your investments outweigh your mortgage?

Post by CyclingDuo » Fri Jul 31, 2020 5:19 am

bigtex wrote:
Thu Jul 30, 2020 10:17 pm
I’ve just reached the point where my investment portfolio is larger than the remaining balance on my mortgage. Do you bogleheads do anything different when this happens or continue on as usual?
Yes, that's a nice step to reach - no matter if your investments are in taxable, Roth IRA, tIRA or 401k/403b/457b accounts. :beer

Eventually, your household cash flow arrives at a point that you are contributing to your investing accounts, covering all of your lifestyle expenses and have enough remaining each month to start paying extra principal payments on your mortgage.

Doing that, eventually those extra payments help get it all paid off early.

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JoeRetire
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Re: When did your investments outweigh your mortgage?

Post by JoeRetire » Fri Jul 31, 2020 5:28 am

bigtex wrote:
Thu Jul 30, 2020 10:17 pm
I’ve just reached the point where my investment portfolio is larger than the remaining balance on my mortgage. Do you bogleheads do anything different when this happens or continue on as usual?
There is nothing different to be done other than perhaps smile or chuckle. It's basically a non-event, since the two have nothing to do with one another.

I don't know when it happened to me, I never noticed. It must have been several houses ago.
It's the end of the world as we know it. | It's the end of the world as we know it. | It's the end of the world as we know it. | And I feel fine.

260chrisb
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Re: When did your investments outweigh your mortgage?

Post by 260chrisb » Fri Jul 31, 2020 5:42 am

Since the first day I saved my first dollar that wasn't meant for anything other than day to day living expenses when I was 33! My investments will always outweigh my mortgage. This of course is a by-product of building savings and investment accounts beginning at 33 and buying my first home at nearly 54!! :D

nolesrule
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Re: When did your investments outweigh your mortgage?

Post by nolesrule » Fri Jul 31, 2020 7:26 am

I had to look it up.

2016, when we were about 2 years into our 2nd house. We are now on our third house, and that one was less on the day we bought it.

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Artful Dodger
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Re: When did your investments outweigh your mortgage?

Post by Artful Dodger » Fri Jul 31, 2020 7:27 am

Probably when I was around 30. I never thought about or connected the two.

Full disclosure. My first mortgage was $22K. I don’t remember the exact APR but in the 10-13% range.

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Re: When did your investments outweigh your mortgage?

Post by KlangFool » Fri Jul 31, 2020 7:29 am

BrandonBogle wrote:
Fri Jul 31, 2020 2:08 am
MathWizard wrote:
Thu Jul 30, 2020 11:44 pm
runner3081 wrote:
Thu Jul 30, 2020 10:50 pm
jarjarM wrote:
Thu Jul 30, 2020 10:32 pm
When we bought the house :D
Same here.
Three of us.

I was making sure I got the match, which meant 15% of pay to 403b.
At the same time, I was paying down student loans, and saving up 20% down payment.

10 years later, school loans paid off, and we bought a fixer-upper. By that time, I had more in the 403b than my mortgage.
+ 4. In my late 20s as well.
+5.

KlangFool

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Re: When did your investments outweigh your mortgage?

Post by MikeG62 » Fri Jul 31, 2020 7:38 am

bigtex wrote:
Thu Jul 30, 2020 10:17 pm
I’ve just reached the point where my investment portfolio is larger than the remaining balance on my mortgage. Do you bogleheads do anything different when this happens or continue on as usual?
Assume you are talking about your taxable investment portfolio and not your tax deferred (401k/IRA) investment portfolio. If the latter, it would mean nothing to me. If the former then at some point I might consider making additional principal payments toward the mortgage, especially in this low rate environment where the guaranteed return on the additional principal payments would be attractive to me. By at some point I mean where your taxable investment portfolio swamps your mortgage balance (i.e., is many times greater). Other than the first few years of our first mortgage, I always paid extra toward our mortgage principal. Some here would rather invest the extra money, and they would not necessarily be wrong. As I said, I liked the idea of the guaranteed return.
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Badger97
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Re: When did your investments outweigh your mortgage?

Post by Badger97 » Fri Jul 31, 2020 7:54 am

bigtex wrote:
Thu Jul 30, 2020 10:17 pm
I’ve just reached the point where my investment portfolio is larger than the remaining balance on my mortgage. Do you bogleheads do anything different when this happens or continue on as usual?
Not something I really ever considered.

I think this probably happened for us about 20 years ago. It didn't take long, but then our first house was pretty cheap.

Now? I think our investment portfolio is like 15X our mortgage balance. I'm looking to cash-out refinance to take on more debt and invest even more.

toocold
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Re: When did your investments outweigh your mortgage?

Post by toocold » Fri Jul 31, 2020 8:30 am

About 12 years ago. We decided to payoff the mortgage with our after brokerage. It felt good. :)

rascott
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Re: When did your investments outweigh your mortgage?

Post by rascott » Fri Jul 31, 2020 8:50 am

Yukon wrote:
Fri Jul 31, 2020 4:52 am
rascott wrote:
Fri Jul 31, 2020 1:24 am
Did nothing. And will continue to do nothing. Other than refi back into 2.5%, 30 year fixed money. Payment keeps shrinking and shrinking. Don't care one bit about something special about paying off a loan. Could do it tomorrow.... but why?

Hit that at roughly 35.
I understand the logic, but do you own bonds?
None. Beyond a very small pool as part of a balanced fund for more immediate needs.

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Re: When did your investments outweigh your mortgage?

Post by LittleMaggieMae » Fri Jul 31, 2020 1:02 pm

CurlyDave wrote:
Fri Jul 31, 2020 12:26 am
LittleMaggieMae wrote:
Thu Jul 30, 2020 11:00 pm
I was pretty excited when my net worth hit 0 (when my liabilities (mortgage/car loan/etc equaled my assets (retirement $, EF, equity in house,etc) after being negative for what felt like decades. I didn't do anything different with my money - I had a plan and I was working it. I did start thinking about how each paycheck was making me "richer" (as my investments/assets got bigger and my liabilities shrank) and my net worth started inching up.
I never really looked at it that way. Sure the mortgage was negative, but the house value was a positive contributor to net worth. The entire house value, not just the equity in it.
Yes. I should probably have a bit clearer and not used "net worth". I use to keep a list of loan balances (house/car/whatever) and the 'money' I had that I had saved and thatd I could conceivably get and pay off the loan balances in order to KEEP the house/car/whatever. I wasn't counting the overall value of the house in the thing I was calling "net worth". I used to get a warm fuzzy from seeing that the overall amount I owed on stuff drop while the amount I had saved went up. Once the amount I owed overall was less than the money I had (investments, EF, taxable) I felt like every paycheck was really making me "more" wealthier somehow. It was a feel good rather than a "rational" thing. I think that transition to owing less than the amount of $$ you have over all is kind of what the OP was commenting on.

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Re: When did your investments outweigh your mortgage?

Post by stoptothink » Fri Jul 31, 2020 1:15 pm

Our investments were more than double our mortgage principal the day we moved into our first home. Other than stay the course, we did nothing. Maxed all tax-deferred options and put the rest towards the house. 4.5yrs later the mortgage is gone and investments have nearly doubled again.

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Re: When did your investments outweigh your mortgage?

Post by manzanor » Fri Jul 31, 2020 1:17 pm

My tax deferred investment is 5x mortgage but taxable account is only 0.75x mortgage, but I try not to think about it and just keep on investing -- full steam ahead.

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Re: When did your investments outweigh your mortgage?

Post by Oregano » Fri Jul 31, 2020 2:32 pm

My investment assets have always exceeded my mortgage balance.

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Re: When did your investments outweigh your mortgage?

Post by thedane » Fri Jul 31, 2020 6:20 pm

runner3081 wrote:
Thu Jul 30, 2020 10:50 pm
jarjarM wrote:
Thu Jul 30, 2020 10:32 pm
When we bought the house :D
Same here.
Same here

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Re: When did your investments outweigh your mortgage?

Post by White Coat Investor » Fri Jul 31, 2020 7:59 pm

bigtex wrote:
Thu Jul 30, 2020 10:17 pm
I’ve just reached the point where my investment portfolio is larger than the remaining balance on my mortgage. Do you bogleheads do anything different when this happens or continue on as usual?
This happened very early for me and I've kept it that way. Of course, now I have no mortgage at all. A reasonable argument can be had for having something like 0.3X in debt, where X is your net worth. But I prefer the debt free life.
1) Invest you must 2) Time is your friend 3) Impulse is your enemy | 4) Basic arithmetic works 5) Stick to simplicity 6) Stay the course

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Re: When did your investments outweigh your mortgage?

Post by livesoft » Fri Jul 31, 2020 8:02 pm

We couldn't afford to buy a house until we were in our late 30's and moved out of NY to TX. When we made the move and bought a house, our mortgage was always less than our investments.
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Re: When did your investments outweigh your mortgage?

Post by FoolStreet » Fri Jul 31, 2020 8:14 pm

bigtex wrote:
Thu Jul 30, 2020 10:17 pm
I’ve just reached the point where my investment portfolio is larger than the remaining balance on my mortgage. Do you bogleheads do anything different when this happens or continue on as usual?
"stay the course"

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Re: When did your investments outweigh your mortgage?

Post by Xrayman69 » Fri Jul 31, 2020 8:34 pm

Early 40’s 5 years into the mortgage (probably 43) in a HCOL city and late professional career start. It was our 3rd home (forever home) and the mortgage was nearly 7 digits and started 5 years. First home was starter home on college city where mortgage was same price as rent and zero down. Second home was in current city (home town) before the forever home.

2 refinance later the mortgage remaining is 33% of taxable accounts and cash reserves. Pay double the mortgage every month and at this rate will be down to zero in about 6 years. Carry a mortgage on second personal home (sort of a vacation home but mostly use for business housing as business is in a different city from main home city).

Interesting exercise in reflecting but did nothing different.

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Re: When did your investments outweigh your mortgage?

Post by surfstar » Fri Jul 31, 2020 8:39 pm

bigtex wrote:
Thu Jul 30, 2020 10:17 pm
I’ve just reached the point where my investment portfolio is larger than the remaining balance on my mortgage. Do you bogleheads do anything different when this happens or continue on as usual?
I think we'll reach that later this year. Never thought of it before reading this thread, though.
Doesn't change a thing for our retirement planning.

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Re: When did your investments outweigh your mortgage?

Post by Glockenspiel » Fri Jul 31, 2020 11:22 pm

This happened for me a few years ago at around age 32. Feels good but I didn’t change anything we did. Now our investments are about 4x our remaining mortgage, by having a 15-year mortgage and investing more than $50k per year.

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gr7070
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Re: When did your investments outweigh your mortgage?

Post by gr7070 » Fri Jul 31, 2020 11:59 pm

No idea for me.
RocketShipTech wrote:
Thu Jul 30, 2020 10:19 pm
If you listen to some on this forum, they would have you cash out all your investments and pay off your mortgage
And some would have you cash out refi to 100%. And invest the leveraged balance.

I couldn't care less what my mortgage balance is in reference to my investment balance; as long as I'm working on both appropriately.

Do as you wish; so long as you save appropriately and amortize your mortgage.

smitcat
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Re: When did your investments outweigh your mortgage?

Post by smitcat » Sat Aug 01, 2020 6:09 am

Probably something like 30 years back but we do not track that data - still have a mortgage.

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Re: When did your investments outweigh your mortgage?

Post by acegolfer » Sat Aug 01, 2020 7:44 am

RocketShipTech wrote:
Thu Jul 30, 2020 10:19 pm
If you listen to some on this forum, they would have you cash out all your investments and pay off your mortgage
I doubt that's the consensus, unless your post was a sarcasm.

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Re: When did your investments outweigh your mortgage?

Post by RocketShipTech » Sat Aug 01, 2020 8:46 am

acegolfer wrote:
Sat Aug 01, 2020 7:44 am
RocketShipTech wrote:
Thu Jul 30, 2020 10:19 pm
If you listen to some on this forum, they would have you cash out all your investments and pay off your mortgage
I doubt that's the consensus, unless your post was a sarcasm.
Not at all sarcastic. Every other mortgage post is a brag about paying extra or paying it off early. As if the mortgage is a necessary evil ideally extinguished at the earliest opportunity.

Cashing out your investments to pay off the mortgage is the logical conclusion.

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Re: When did your investments outweigh your mortgage?

Post by acegolfer » Sat Aug 01, 2020 9:08 am

RocketShipTech wrote:
Sat Aug 01, 2020 8:46 am
acegolfer wrote:
Sat Aug 01, 2020 7:44 am
RocketShipTech wrote:
Thu Jul 30, 2020 10:19 pm
If you listen to some on this forum, they would have you cash out all your investments and pay off your mortgage
I doubt that's the consensus, unless your post was a sarcasm.
Not at all sarcastic. Every other mortgage post is a brag about paying extra or paying it off early. As if the mortgage is a necessary evil ideally extinguished at the earliest opportunity.

Cashing out your investments to pay off the mortgage is the logical conclusion.
Obviously you misread. Nobody is saying that. Instead, the recent discussion concludes if (1) you have more bonds than the mortgage balance and (2) liquidity is no issue, then sell bonds to pay off debt.

jfmiii
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Re: When did your investments outweigh your mortgage?

Post by jfmiii » Sat Aug 01, 2020 10:10 am

thedane wrote:
Fri Jul 31, 2020 6:20 pm
runner3081 wrote:
Thu Jul 30, 2020 10:50 pm
jarjarM wrote:
Thu Jul 30, 2020 10:32 pm
When we bought the house :D
Same here.
Same here
Same. When we were house hunting, the mortgage had to be both less than 1.5x income and less than cash+taxable investments after the downpayment had been made.

ANC
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Re: When did your investments outweigh your mortgage?

Post by ANC » Sat Aug 01, 2020 12:51 pm

Another one for the day we signed our papers, buying our house at age 44 in 1998.

Long-term real estate skeptic here. Had cheap rent in the 80s and 90s and put the extra savings into the stock market. Here in the Bay Area, that still looks like a good decision, even in retrospect

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