No. of Recommendations: 1
Hi Rich,

Doing a brief scan of the comments in this thread that was my thought. My belief is that the average person (which geneally isn't the person reading these boards) produces below average (SP500) returns.
Its an excellent point. 'Average' is neither the typical audience here, nor the desired outcome of anyone who shows up here (even if they have previously been merely average, or worse.)

Giving a person $250K to invest instead of having a house paid off IMO is usually a recipe for disaster. Unless the typical person can take that money and get something safe like a CD/annuity which is paying more than a mortgage rate I just think for a significant majority of people they will obtain returns lower than their mortgage in the long run.
With a 20-30 year timeframe, there *ARE* fixed rate, and upside indexed rate instruments from the cash value insurance world that pretty strongly (and completely hands-free/passively) outperform the costs of carrying a mortgage balance. No need for an individual to try to personally play the markets. A typical ratio is 5-8% post tax growth, net of all costs & fees, versus 1.5-3% post tax mortgage costs.

OTOH, those who *ARE* sufficiently educated & skilled in market trading (like RayVT, as an example) can probably beat the costs of their mortgage by 200-400% or even substantially more.

I don't think there is one answer for everyone. It really depends on the persons investing skills.
Actually, not really so much a persons individual skills as much as their knowledge of what's actually available in the hands-off safe growth options... *AND* probably even more importantly; their ability to have their reason and logic override their emotions (if they're a nervous type of person.)

Dave Donhoff
Leverage Planner
Print the post  


Useful Resources
Our Home Center has all you need to make buying and owning a home a great experience. Get or refinance a mortgage and much more!
Buying/Selling a Home FAQ

Mortgage Professor
Offsite resource for mortgage questions.
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.
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.