| jwasbury |
10-16-2009 10:59 AM |
Quote:
Originally Posted by turbo6bar
(Post 4956270)
+1. Instead of paying down your mortgage, you should be extracting equity via LOC. Use those funds for flip houses, speculative oil drilling, investment-grade automobiles (like CPO BMW M5s), and any other venture with skewed risk-reward profile. It worked for thousands during the housing bubble years, so it will work for you.
Seriously. Think about it. Paying down the mortgage is as close to risk-free return without owning treasury bonds (ignoring dollar currency debate). Consider the risk for any investment. Does it match your risk tolerance? Is the marginal gain in return worth the risk? Don't forget that the financial meltdown was a result of bad debt and poor realization of risk. jurgen
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Thanks for strengthening my point...If you've got cash sidelined earning a fraction of a %, using it to pay down a mortgage at, say 5%, puts you ahead by a guaranteed 4%+ with no downside risk.
T-bills aren't yielding much last time I checked. A little while back I noticed AIG corporate debt was yielding over 12%, apparently it was even higher 6+ months ago. While the gov't hasn't explicity indicated that they will back AIG paper (like they have for fannie and freddie), one can speculate that uncle sam has somewhat committed to propping AIG up. I seriously considered buying some of those AIG bonds, but within days I saw that others had beaten me to it and the yields were no longer so attractive.
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