Quote:
Originally Posted by Sagi_AFF
We are right after a housing bubble burst and going through a bad economy. I think the risk that his house will be worth less than it is today in 7 years is also remote. I will concede however that if someone is risk adverse then they probably shouldn't try to invest all of their extra money. The reason is if they get scared they would end up selling at the worst possible time. Maybe the best thing for him is to do some early loan pay down and some long-term investments.
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I don't think it will be worth less either but he hasn't answered my question yet on how much he put down. If he put down 20% he has more of a cushion if values do go down more. Also, I don't know how good of deal he got either, he could have paid more than he should have so he could be starting off at a bad point.
Allocating some money towards a long term retirement plan is a great idea even if he can spend a small amount per month. That is for another discussion. I'll close here with repeating my main thoughts, "investing the extra money" is bad for most people. Most people will lose that extra money one way or another. If they can afford it, it is simply safer for them to put it into reducing the amount of interest they are paying on their mortgage only if their mortgage is their highest interest rate expense. They need to start with credit cards, car loans etc.. anything that they are paying high interest rates on. Once you get all the high rates shit knocked out then you can put some more towards long term retirement. And if you don't know much about stocks, investments etc... and especially if you are risk adverse or using money that you can't afford to lose, putting it into reducing your mortgage payments would be better for most people.
Also, hell I don't even know if he is paying PMI, if so he needs to get his mortgage paid down enough so he stops wasting money each month on that. I was always a preacher of using the banks money to make more money and investing the difference, but i know it doesnt work for most people, especially when you talking about someone's primary residence vs commercial or investment type situations.
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