No. of Recommendations: 2
*) There's nothing wrong with having a big mortgage in retirement -- as long as it's a "smart" mortgage. If you pay 4% while earning 8.5% (average) on your investments, then you're making a net 4.5%

Biggest point of contention. An equity investment return is not guaranteed, nor is it linear. Yes, if you could get a higher rate it makes sense, but equities are up one year, down the other, drastically in some cases.

Of course. If you are on a shoe-string you're at risk to get burned. So don't retire early on a shoe-string. Simple as that.

A mortgage is a long-term non-callable loan, so as long as you can make the payments you are fine. It's when you can't make the payment that it all comes crashing down.

The spreadsheet that I posted in a different loooooong thread shows some interesting statistics for a simple B&H of the S&P500. Since 1950, the worst 20-year period had an average return of 6.2%. Worst 15 year period had 3.9%.
A 30 year mortgage is, um, 30 years. Worst case 30 year S&P return was 8.9%.
So, as long as you can make the payments, worst case is you net 8.9% - 4.5% = 4.4%. Avgerage case you net 10.7% - 4.5% = 6.2%.

Not a steady 6.2%, though. It's very lumpy and quite possible to have a string of years with a net negative return. People who understand (and can stomach) that lumpy goes along with high return end up rich. People who insist on low-volatility, non-lumpy end up not rich.
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