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"Go back and see my description of scenario 2. You hold enough cash to pay off the mortgage, but you hold it rather than the mortgage bank holding it"

If you are holding that much cash, you aren't making 12% on your money, no way......and that was the premise of your argument. Even assuming you could get 12%, and 10.8% is more typical, on your stocks, in your scenario, you have to be holding lots of 'cash' or equivalents...and we are not talking mutual funds.....they aren't cash, and they can drop 80%. They have dropped 50% in 2 years ('73-4)

To start with, you would have to have $150,000 in cash for your $150,000 mortgage, but we assume you had zero, and started either putting extra money into investments, or into paying more on the mortgage.

Your argument fails since you first claim you are going to get 12% on your investment, then tell me you are going to hold enough cash to pay it off.....and cash or equivalent is paying about 6% now.

Even if you get to your $300,000 in investment level, nearly half would have to be in cash after 13 years, since you have one heck of a big mortgage balance yet. And at half cash, you aren't going to making 12%, so you never wouldhave gotten to $300,000 in the first place.

In fact, if you held cash, so you could pay it off, then you would likely be getting a taxable 6 or 7% on your 'cash' holdings, while forgoing a sure 8%. That loses you about 3% a year. Hmmmmmm.....

Huh? You can't be 100% in stocks at 12%, and then claim to have 'cash' to pay it off. Something has to gvie.

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