Re: Scary article on retirement planning.

"Larisa" <[EMAIL PROTECTED]> wrote in message
news:[EMAIL PROTECTED]
> [EMAIL PROTECTED] (baron48) wrote in message
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> > occupant <[EMAIL PROTECTED]> wrote in message
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> > > 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

Whatever you do pay in interest, after 30 years the value of the house
should be enough to cover it - my house was about £6,000 when new in 1972.
It's now worth £120,000.

Even if it was £10,000 30 years ago with an interest rate of 7.5%, the total
amount payable over the term would be £25,000.