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]It's about risk management.  We paid off our mortgage as a diversification strategy.  Our house is less than 25% of our net worth at it's current value - the purchase price was only 12% of our current NW.  Our 4.5%, 15-year mortgage was small enough and long enough into its term to no longer make sense to refinance to a lower rate or to push us into itemized deductions after the Trump tax law changes (SALT cap did us in).  So... we paid it off.  It didn't seem to be worth the gamble of paying 4.5% to a bank to use money that isn't guaranteed to do better in the market.  We consider it a guaranteed 4.5% investment in this instance.[/quote]

+1000

Guaranteed returns

[b]No wealthy person is getting any deduction from the interest---their property taxes are going to use up the SALT cap [/b]

Though I suspect wealthy people who inherited vs earned their way to being wealthy may think a bit differently.  We always had goal and worked towards paying off mortgage and not taking car loans (and never paid interest on CCs) well before we were wealthy.  It's a mindset of "guaranteed return". And then once you have a lot more, we don't feel the need to put 100% in the stock market.  Just 30-40% is plenty.  We would rather have modest gains (which are great with interest rates currently) and protect the principle, because we can live extremely well (way above what we desire for retirement) with what we currently have---there is no need to "grow it" aggressively[/quote]

The SALT cap only applies to taxes, it has nothing to do with the mortgage interest deduction.[/quote]

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