Re: Scary article on retirement planning.

[EMAIL PROTECTED] (baron48) wrote in message news:<[EMAIL PROTECTED]>...
> occupant <[EMAIL PROTECTED]> wrote in message news:<[EMAIL PROTECTED]>...
> > SoCalMike wrote:
> > > 
> > > "Stella Hackell" <[EMAIL PROTECTED]> wrote in message
> > > news:[EMAIL PROTECTED]
> > > > "Gap Analysis" <[EMAIL PROTECTED]> wrote in message
>  news:<[EMAIL PROTECTED]>...
> > > >
> > > >
> > > > > Paying rent forever is like being in debt.
> > > >
> > > >
> > > > Paying a mortgage IS being in debt.
> > > 
> > > so is paying rent. but with a mortgage, youll hopefully get your money back.
> > > with rent, youre SOL.
> > 
> > There is no easy answer to rent/mortgage.   There are lots of people who
> > buy a house in a market that drops or where mortgage interest rates
> > are high then drop and they are left holding the bag.   Other serious
> > considerations are buying a house and then the job market is gone and 
> > your house is sitting in a ghost town with an unpaid mortgage or you
> > must move and you can't sell.  All of the above can cause huge personal
> > financial loses.  
> 
> Renting has its own set of risks.  If inflation takes off, what happens
> to your rent?  What happens to your mortgage?  A mortgage is an automatic
> portfolio diversification (which is a good thing over the last few years
> of stock market and interest rate declines).  A paid off mortgage is good
> security against the many economic risks that are out there.  You can live
> very cheaply if need be when you don't have to pay the mortgage/rent.  You
> won't have a paid off mortgage ever is you rent all of the time.
> 
> -Tom

True, but if you pay a normal 30-year mortgage, you end up paying much
more in interest (twice as much, no?) than what the house is actually
worth.  Even if you pay it off quicker, you still pay much more.  I
haven't done the math, but wouldn't it be faster to live in a *very*
cheap room and save up the money for the house, and then, in about 10
years, pay cash?  That way, compound interest works with you instead
of against you.

LM