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the risk in being in cash is much greater than anywhere else Technology is deflationary, growth in tech looks to be the least risky. Technology has prevented i

by useful 6y ago

the risk in being in cash is much greater than anywhere else Technology is deflationary, growth in tech looks to be the least risky. Technology has prevented inflation and will for a while. I think the only lever the US has for inflation is largely in housing as it makes up something like 50% of the CPI. Fixed assets are very inflated but I would like to think the commercial market will take a hit before the residential market. Some factories, plants, and office space is worthless in a world with zoom, solar, and electric cars. Buy a house, money is cheap. At least you'll have a roof over your head and it will be easier to pay off the loan if there is any kind of inflation that the government has said they want.

diob 6y ago
Your last sentence is why I refuse to pay more than the minimum on my house payment. It's very likely we're going to experience inflation, might as well pay it back with cheaper dollars.
- toomuchtodo 6y ago
  What if you're unable to earn dollars due to structural employment changes [1]? That's my concern about not paying off a mortgage. If everything is inflated, paying off debt is a guaranteed return, versus possibly getting into an asset class at it's plateau (see Japan lost decades). [1] https://www.bloomberg.com/news/features/2021-02-17/gig-economy-coming-for-millions-of-u-s-jobs-after-california-s-uber-lyft-vote https://www.bloomberg.com/news/features/2021-02-17/gig-econo... ("The Gig Economy Is Coming for Millions of American Jobs")
  - diob 6y ago
    My thoughts are that I'd be in a lot bigger trouble if that happened. If I can't earn dollars, civilization is likely at the point where owning my house wouldn't even matter.
  - nugget 6y ago
    Hypothetical house in New Hampshire, north of Boston: $600k purchase price 10% ($60k) down $540k interest-only mortgage @ 2.25% = $1,012/month payment $12k in property taxes and $3k in insurance (annual) = $1,250/month payment Even if you pay off the loan balance, that other $1,250/month lasts forever. As loan rates fall and property tax rates increase, you're seeing parts of the US (TX, NH, NJ, IL) where the majority of the monthly payment is for taxes, insurance, maintenance, and other expenses that continue perpetually. Which can lead one to re-examine what it really means to "own" a house in the first place.
    - OldHand2018 6y ago
      I’m not really following you. The mortgage is just you paying back the money you borrowed to buy the place. Are you expecting that owning property should incur no ongoing cost? By the way, your example mortgage has X number of $1012 monthly payments, and then a final $540,000 payment. That’s why it “costs less” than your taxes/insurance/maintenance.
      - amscanne 6y ago
        The parent is saying that the monthly taxes and other costs are greater than the interest on the mortgage. So the idea that you've "paid off" your house provides a false sense of security: it will continue to have significant carrying costs.

by useful 6y ago

diob 6y ago

Your last sentence is why I refuse to pay more than the minimum on my house payment. It's very likely we're going to experience inflation, might as well pay it back with cheaper dollars.

toomuchtodo 6y ago
What if you're unable to earn dollars due to structural employment changes [1]? That's my concern about not paying off a mortgage. If everything is inflated, paying off debt is a guaranteed return, versus possibly getting into an asset class at it's plateau (see Japan lost decades). [1] https://www.bloomberg.com/news/features/2021-02-17/gig-economy-coming-for-millions-of-u-s-jobs-after-california-s-uber-lyft-vote https://www.bloomberg.com/news/features/2021-02-17/gig-econo... ("The Gig Economy Is Coming for Millions of American Jobs")
- diob 6y ago
  My thoughts are that I'd be in a lot bigger trouble if that happened. If I can't earn dollars, civilization is likely at the point where owning my house wouldn't even matter.
- nugget 6y ago
  Hypothetical house in New Hampshire, north of Boston: $600k purchase price 10% ($60k) down $540k interest-only mortgage @ 2.25% = $1,012/month payment $12k in property taxes and $3k in insurance (annual) = $1,250/month payment Even if you pay off the loan balance, that other $1,250/month lasts forever. As loan rates fall and property tax rates increase, you're seeing parts of the US (TX, NH, NJ, IL) where the majority of the monthly payment is for taxes, insurance, maintenance, and other expenses that continue perpetually. Which can lead one to re-examine what it really means to "own" a house in the first place.
  - OldHand2018 6y ago
    I’m not really following you. The mortgage is just you paying back the money you borrowed to buy the place. Are you expecting that owning property should incur no ongoing cost? By the way, your example mortgage has X number of $1012 monthly payments, and then a final $540,000 payment. That’s why it “costs less” than your taxes/insurance/maintenance.
    - amscanne 6y ago
      The parent is saying that the monthly taxes and other costs are greater than the interest on the mortgage. So the idea that you've "paid off" your house provides a false sense of security: it will continue to have significant carrying costs.