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Retirement Discussions / Retire Early CampFIRE
|Subject: Re: Relationship Of Non-Income Producing Assets||Date: 2/7/2000 3:33 AM|
|Author: jpkiljan||Number: 3250 of 838208|
Tomcat wrote and jpkiljan replied:
". . .
Our current home is nice. Our Equity is about $40k of a value total of $160K. We are thinking about buying another home that
is a lot larger. This would be a house that would be our final home. We plan on retiring in 10 years. This house is $260k and
we would put down 20%. Looking at what it would cost us in future investment earnings is about $220K over the 10 year
period. Looks like our projected investment portfolio would be $750k at the end of the 10 year period.
My question really centers around is it wise to make that plunge now or wait til 10 year point? I think about the higher housing
cost and that bigger point further out in the future."
This is a great question and the answer depends upon so many things that you didn't mention like the size of your family (present and future), kids to put through college, typical housing costs in your market, your ages, and why you'd want to retire and live in one house for 30 more years and what makes you think the market growth for big houses is going to be as good or better than the stock market for the next ten years, etc.
Anyway, my gut feeling is that the best strategy is oft-stated 'buy the least house that meets your needs and that you can afford' and that this will also be the case for you--but only you can decide that. But, don't me dissuade you from thinking about thinking this through.
The reason I replied is that, when I am faced with a decision like this, I always fire up my spreadsheet program and do a 'what-if' scenario for my potential investment decision. They always start out the same way: A column with years (months if you want, but years are close enough) on the left side and a series of columns next to that showing what happens to my assets if I don't make the investment (keeping the old hous