Easist way to look at this is the extra money you're paying is effectively earning you that 3.375%. The general consensus is if you can earn more than that elsewhere then do that. You're already in the best mortgage position you can be in with that term and interest rate.

I am not positive, but I think that if you subtract inflation, you are paying even less for the money that you borrowed..Also the deductions..

For me, i have a 4% loan i could pay off, but my Investments pay way more.

Some people need a paid off house. But if the rate is that low, i personally won't pay it off..

If California does away with the mortgage deduction, i will have to re-crunch the numbers.

i think you have the sweetest of loans, and I would not put more on the principal..But that is such a personal decision.. Not my call... But IMHO

I'm leaning that way, then start dumping it into my roth. That way its accessible in a dire emergency but earmarked for retirement.

Although I'm only 2 payments in, with interest being front loaded are there benefits to paying down the mortgage in the beginning for a set time frame?

Good questions and it's one of those "it depends" answers again.

Personally if I had a fixed rate - LOW - mortgage there's no way I'd pay it off or make extra payments.

The interest is tax deductible so your real cost of money is even lower than the "rate" you're paying.

Saving for IRA/401K is "tax deferred" growth and income. Even better if you get company matching participation!

ROTH is TAX FREE GROWTH AND INCOME

Your payment is fixed... so with inflation - your costs are going DOWN...

Time with dividend reinvestment and TOTAL RETURN is on your side to double or triple or quadruple your investments... and without the time on your side you'll never get that kind of return.

The "key" to homeownership WAS (note that key word - WAS) supposed to have growth of the home value... and when you calculate that return on the actual money invested (down payment and payments) you're getting the growth of the home price without having much of an investment.... etc. If it's paid for - and the value only goes up the average 4% a year -- then that's all you're making on your money and you can't spend it.

Weld, Erik, Solar...the three wise men. Keep up the questions guys, The answers are getting good. I check this first anymore before the other sections

Tracy...Now that was funny...Those damn cartridges!!

Hey, thanks for including me, in the Wise men...I am trying my best to be one...

Mike V..:cheers:

This took me awhile to upload - etc - AND TO SEE THE CHARTS YOU'LL HAVE TO CLICK THE PDF LINK - But what I wanted to show was the relationship -- or the NON relationship between the P/E Ratio (price to earnings) and the RETURN on any particular stock. Back a few posts - someone asked whether or not I paid attention to the P/E's and I said - No... because they're really not relevant and it's too much information for me to keep track of - and I again referred to the "I" look at good charts / history / dividend / best of breed - over all these other technical "numbers.

What this chart is showing is the 3 MO - 1 YR - 5 YR Cumulative Return - and if you keep moving to the right - it shows the PRICE/EARNING RATIO.

What you'll see is really NO relationship of the 5 YR return vs the high or low P/E ratio. If I'd have chosen to NOT select a stock due to a "high" P/E ratio - I'd have LOST OUT on some very nice RETURNS.... So I just can't pay attention to too much data. Most of the time (like a political candidate?) they just don't tell the whole story.





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[QUOTE=GregWeld;388919]This took me awhile to upload - etc - AND TO SEE THE CHARTS YOU'LL HAVE TO CLICK THE PDF LINK - But what I wanted to show was the relationship -- or the NON relationship between the P/E Ratio (price to earnings) and the RETURN on any particular stock. Back a few posts - someone asked whether or not I paid attention to the P/E's and I said - No... because they're really not relevant and it's too much information for me to keep track of - and I again referred to the "I" look at good charts / history / dividend / best of breed - over all these other technical "numbers.

What this chart is showing is the 3 MO - 1 YR - 5 YR Cumulative Return - and if you keep moving to the right - it shows the PRICE/EARNING RATIO.

What you'll see is really NO relationship of the 5 YR return vs the high or low P/E ratio. If I'd have chosen to NOT select a stock due to a "high" P/E ratio - I'd have LOST OUT on some very nice RETURNS.... So I just can't pay attention to too much data. Most of the time (like a political candidate?) they just don't tell the whole story.


Thanks. although I have the money management part together, and I have a lot of investments, I appreciate you taking the time to upload the information.
I still consider myself a Novice, and any info is appreciated.

I plan on both keeping my game plan going the way it is, and also adding to it. So now I have more food for thought.

One of the best threads:lateral: :cheers:

One caution with using P/E as an evaluation tool is that it's only a fair(ish) comparison metric within a common industry. I don't use it much (if at all) either because the ratio is often completely out to lunch in the oil and gas exploration sector as different companies try to assess value for different, sometimes intangible assets and the ratios can get completely blown out of proportion.

Exactly James!

That's why I keep pounding the table - just buy good stuff - stuff you know and understand - the dividend really helps... and just keep life simple. No need to get all confused and caught up in what the talking heads are hyping this week on TV... 'cause "next week" for a time horizon isn't really important...

My old partner had a saying he used all the time... Figures lie - and liars figure.

All these numbers are "interesting" perhaps - but they don't tell you what you REALLY need to know to buy a stock, i.e., IS THIS SOMETHING YOU WANT TO OWN AND WHY.