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I meant average return over 30 years, not necessarily 8% consistent every year. https://www.bogleheads.org/blog/three-fund-portfolio-returns/ https://www.bogleh

I meant average return over 30 years, not necessarily 8% consistent every year. https://www.bogleheads.org/blog/three-fund-portfolio-returns/ https://www.bogleheads.org/blog/three-fund-portfolio-returns... https://advisors.vanguard.com/VGApp/iip/advisor/csa/analysisTools/portfolioAnalytics/historicalRiskReturn https://advisors.vanguard.com/VGApp/iip/advisor/csa/analysis...

toomuchtodo 8y ago
Jack Bogle, Blackrock, and other knowledgeable market participants are predicting lower future returns into the future (~4%) for a variety of reasons (structural, global and domestic growth that won’t be repeated), muting any arbitrage benefit between your mortgage rate and investment market returns. History will show (IMHO) homeowners should’ve just applied more towards their mortgage principal, and thrown solar on their roof if they could from a risk adjusted returns perspective (both “investments” I list are guaranteed, whereas the equities and non-US treasuries bond market is not).
- jerkstate 8y ago
  Thanks, I just modified my spreadsheet predicting 4% annual return for the next 15 years (although the article I could find with Bogle's prediction is a decade of 4% returns) and then 7% thereafter. The 30Y loan still comes out ahead, but very slightly (less than $3000 advantage on about $2M expected value of the portfolio). Such is the time value of money. Agree with you about solar panels (and other efficiency upgrades) - my initial remodeling plans are improving sealing, insulation, and upgrading to a more efficient furnace. Already got the smart thermostat!
  - toomuchtodo 8y ago
    Keep in mind the 30% federal tax credit on solar starts phasing out after this year, and you may have other incentives available (state, local, utility) that reduce payback time of your solar install to 4-7 years; every kw after that is free! Hope my comments have been helpful.

toomuchtodo 8y ago

Jack Bogle, Blackrock, and other knowledgeable market participants are predicting lower future returns into the future (~4%) for a variety of reasons (structural, global and domestic growth that won’t be repeated), muting any arbitrage benefit between your mortgage rate and investment market returns. History will show (IMHO) homeowners should’ve just applied more towards their mortgage principal, and thrown solar on their roof if they could from a risk adjusted returns perspective (both “investments” I list are guaranteed, whereas the equities and non-US treasuries bond market is not).

jerkstate 8y ago
Thanks, I just modified my spreadsheet predicting 4% annual return for the next 15 years (although the article I could find with Bogle's prediction is a decade of 4% returns) and then 7% thereafter. The 30Y loan still comes out ahead, but very slightly (less than $3000 advantage on about $2M expected value of the portfolio). Such is the time value of money. Agree with you about solar panels (and other efficiency upgrades) - my initial remodeling plans are improving sealing, insulation, and upgrading to a more efficient furnace. Already got the smart thermostat!
- toomuchtodo 8y ago
  Keep in mind the 30% federal tax credit on solar starts phasing out after this year, and you may have other incentives available (state, local, utility) that reduce payback time of your solar install to 4-7 years; every kw after that is free! Hope my comments have been helpful.