Quote:
Originally Posted by PoorLurker
What are your thoughts on this mentality?
People who say, use super low interest rates, 3-4%, to leverage money to invest in long term investments.
Use $18,000 a year to fund 401k (or other retirement fund) vs. Use $18,000 a year to pay down principal on one's mortgage.
$1 in 1986 is $2.16 today.
There are people paying "$1" who started their mortgages nearly 30 years ago.
Or is this not proper thinking as the 80s had much different interest rates therefore comparing apples to oranges.
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That's a great question. And I can see where one would be willing to go either way. And although the dollar value is higher than it was in the 80s, so is every damn thing else... But even more so (consumer goods, services, etc). I would argue that stocks and even 401k (which are tied to said stocks) are much more volatile than a property.
So here's a question for you... Which would you rather own/have:
$250,000 in a 401k or IRA?
or
A paid for $250,000 home?
Now keep in mind, this scenario is for the common folk who may be earning say $75k annually. Not the 1% or someone knocking down a substantial regular income in mid to upper six figures and above.