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][quote=Anonymous][quote=Anonymous]Sometimes you just have "enough" in your investment/savings accounts, so why not get rid of that bill? My paid-off house is 12% of my net worth, so I don't worry about giving up potential returns or interest. The majority of my money is working for me in the market, and it's easier (for me) to ignore the inevitable ups and downs when I own my home free and clear.[/quote]
This is fine. You set your priorities. Everyone doesn't want to maximize profit.
My friend told me that she doesn't want to contribute up to 6% to her 401k and get the company match. She feels like she already has enough locked up in retirement accounts and would rather put that money elsewhere in case she needs it before retirement. Maybe another peace of mind thing.[b] I guess she is fine missing on the match.[/b] I'm learning that everyone doesn't want to maximize profit.[/quote]

But this is one of those things where people go with gut rather than thinking through the numbers--even on their own terms.  The match is essentially a 50% return on your money instantly.  You always have the option to put it in a "safe" investment like a FDIC insured account in the 401k or a MM or whatever if you're worried about investment risk.  You can withdraw from your 401k other than retirement but there's a 10% penalty.   10%<50%.  She could take the match and then withdraw it if she needed/wanted to for anything and the penalty would still be less than the gain.  It's not just about optimizing profit, it's about aligning what you say you want with the actual numerical outcomes of your decision.  People put "peace of mind" as an excuse to not deal with real numbers in a lot of ways--that's fine, of course, because we all contain a lot of psychological contradictions and are lazy--but it's not actually reasonable in any way if you work through the details.
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