Reply to If paying off your mortgage is dumb, why do so many rich people do it?

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Reply to "If paying off your mortgage is dumb, why do so many rich people do it?"

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[quote=Anonymous]to answer the original question, I'd say because once you are wealthy enough, you don't have to optimize. you can afford the suboptimal (and arguably higher risk) decision to pay off your home.

I'm doing okay for my age, have enough investments to pay off my mortgage, but I'm much much much more comfortable with $xxxK of liquid assets and an $xxxK mortgage than I would be with $0 and $0. I'd be scared shitless to be debt free and have way too high a portion of my wealth tied up in my house.

quantitatively, risk free rates &gt; my mortgage so any accelerated paydown is bad math that decreases my wealth and decreases my liquidity. and across most long time horizons under most scenarios, stocks/other risk assets going to beat a 2.875% 28 yr mortgage.

If I had $10mm NW instead of $x.xmm NW, then my piddly little $3,300/month of P&I wouldn't matter and I'd just pay it off for shits and giggle, knowing that it's a suboptimal decision that decreases my liquidity and decreases my investment returns.

rich people (and poor people for that matter) do plenty of things that aren't optimal or aren't quantitatively sound.

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