UnThreaded | Threaded | Whole Thread (12) | Ignore Thread Prev | Next
Author: intercst Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 79103  
Subject: Re: Which scenario makes more sense Date: 10/2/2001 10:34 PM
Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Recommendations: 1
craigdoc asks,

Pleez help - I need advice on which scenario makes more sense

Total cost of a house is $280,000. I am 35. I intend to put down 70,000 and after keeping a fair amount of cash for emergencies I have 40,000 to invest.

Scenario one
Take a 30-year mortgage and invest the 40K in the stock market. After 30 years I will have paid off the house and will have had the 40K growing in the stock market

Scenario two
Take a 15-year mortgage which I cannot afford unless I use 5000 a year from the 40,000. After 15 years. I will have paid off the house but will then have none of the 40K left – however I will then have the next 15 years to save and invest as I will have no mortgage. The house and mortgage will also have cost me a lot less

Thanks in anticipation

I took Scenario 3. I continued to rent a cheap apartment, put all my money in the stock market, and retired in 1994 at age 38. <grin>

As far as scenario 1 or 2, it depends on if the stock market grows faster than the interest rate on your mortgage. If you look at the one hundred 30-year holding periods between 1871 and 2001, the best grew at an average of 13.40% per annum, the worst was 5.13% per annum, the median was 9.37% per annum.

Post New | Post Reply | Reply Later | Create Poll Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (12) | Ignore Thread Prev | Next


The Retire Early Home Page
Discussion on accelerating retirement day.
Foolanthropy 2015!
Fistula Foundation: A World of Good!
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.