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  • #31
    Originally posted by LIFEISBEAUTIFUL View Post

    I need to research pledeged assists. I guess the idea of something paid for and not writing out a big mortgage check is also really psychologically- eg, irrationally- appealing. Thank you.
    https://www.schwab.com/pledged-asset-line

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    • #32
      Originally posted by Zaphod View Post

      Yes absolutely I would, now find somewhere that will give me a 30 year mortgage like terms to do so, but you dont.

      Depending where these investments are and in what there will be significant yearly gains from dividends, etc....I'd probably put a nominal amount down 20%, and put that on 30 years of autopay, at some point even less than dividends will be paying it off easily.

      You have 200k plus 15M in investments that will or can be throwing off significant income. I'd get the house you want, be it 2.5 or 5M, who cares. I would not waste a bunch of cash by dumping it into the mortgage and pay it off fully, thats just like burning your money and unnecessary. Let that money earn its keep and grow some more as well. No bank will bat an eye with your net worth.

      Why is anyone mentioning withdrawal rate? Someone is working and making a good wage, and plus dividends alone (depending on how allocated) should make this more than enough to not need to draw down at all unless spending is really really high.
      But to do this, you'd have to be 100% equities or other aggressive allocation with the portfolio. Otherwise, it doesn't make sense to keep a $2MM mortgage and then have $2MM invested in bonds. I'd never be comfortable with that allocation at that net worth, especially if OP is currently FI, even with dropping $2.5MM on a house.

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      • #33
        Originally posted by jhwkr542 View Post

        But to do this, you'd have to be 100% equities or other aggressive allocation with the portfolio. Otherwise, it doesn't make sense to keep a $2MM mortgage and then have $2MM invested in bonds. I'd never be comfortable with that allocation at that net worth, especially if OP is currently FI, even with dropping $2.5MM on a house.
        https://www.financialsamurai.com/his...io-weightings/

        Historically, even with 100% bonds or 50/50 equity/bond, you would beat out low interest loan/mortgage. So mathematically/historically, a loan is the 'smarter' decision. But ultimately, it's all about personal risk tolerance.

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        • #34
          Originally posted by LIFEISBEAUTIFUL View Post

          Thanks for this. I guess in my mind there are seperate questions of whether we can afford it (which I know we can) and whether it is prudent, but I understand that depends on a lot of personal variables you don't have in giving advice. Our goals are to enhamce our lives, leave a little for the kids and have security. We don't really need to grow it. It is largely taxably invested now.
          I would only buy a home that met specific needs. For example, good school district. Close to work. Other utility you’d get from the place with its bells and whistles. All of this should be weighed against opportunity costs. If you want to settle down and be stable and fulfill I’d buy the minimum amount of home, making sure my other financial goals are satisfied. Good luck.

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          • #35
            Originally posted by jhwkr542 View Post

            But to do this, you'd have to be 100% equities or other aggressive allocation with the portfolio. Otherwise, it doesn't make sense to keep a $2MM mortgage and then have $2MM invested in bonds. I'd never be comfortable with that allocation at that net worth, especially if OP is currently FI, even with dropping $2.5MM on a house.
            Uh, no you wouldnt, Almost any allocation that had some equity involved will beat a mortgage, which time/inflation defeat. Every time I get these comments (and this is like the 5th one this month) it makes me want to keep saying these things, since its clear people do not understand the choices theyre making, theyre simply categorizing something as "low risk or good" "high risk or bad" and actually not understanding the risks theyre actually taking, ie longevity and real losses purchasing power due to inflation.

            I dont why you wouldnt be even more comfortable at such a NW, its far more than one needs to live an extravagant lifestyle, and what kind of downside are you thinking happens? There is incredibly little reason to be concerned with anything. You could try to index fixed costs/spending to dividends even as a hedge, etc....

            You should have a sense of peace with a higher NW not less.

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            • #36
              Originally posted by Nysoz View Post
              I’m going to vote the other way and would still take out a loan/mortgage if the rates are still really low. With that big of a portfolio, you can get a margin loan or pledged asset line of credit to buy that house at 1-2% loan interest.

              But yes, you can afford the house.
              But why?

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              • #37
                With that windfall and your questions I would seek paid professional advice that can help guide you. They can help with the local market, your goals moving forward, tax planning, etc.

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                • #38
                  Originally posted by Sampter View Post
                  With that windfall and your questions I would seek paid professional advice that can help guide you. They can help with the local market, your goals moving forward, tax planning, etc.
                  Thanks so much. I may be paranoid, but we do have advisors and I wanted to ask you wise folks to counterbalance their advice.

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                  • #39
                    Originally posted by LIFEISBEAUTIFUL View Post

                    Yes,true- but I guess the question is how much can I spend on my primary residence that is in keeping with sound investment principles? Not sure if that makes sense, but that's where I am conflating these two separate points.
                    I think you found your answer. The primary residence is not really an investment. Yes it is in your net worth, but it is primarily a consumption and likely will increase other costs to support it. Spending principles (like the 30% ROT) and investment principles (ROI) are two different thought processes.
                    You can rationalize by the average cost of residence, income and wealth in the area as well. I doubt that will convince you either. It is the issue of living in a VHCOL area.
                    It is not a major mistake for sure. You are stuck with your own decision.
                    When you decide, be curious for an update. And 30 years from now!

                    Comment


                    • #40
                      Originally posted by Tim View Post


                      It is not a major mistake for sure. You are stuck with your own decision.
                      When you decide, be curious for an update. And 30 years from now!
                      I am sure the next thirty years will be spent torturing myself by looking at house listings in less expensive areas

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                      • #41
                        Originally posted by VentAlarm View Post

                        But why?
                        It all depends on a person's goal in life. OP could go all cash and do fine. They can invest aggressively and end up more than fine, leave more to family/charity, or spend even more. Even middle of the road investing should outpace loan interest. Mathematically and historically money invested in any reasonable way over a long time frame does well and beats low interest loans. It's up to an individual if they want to keep playing the game or not.

                        It's said that once you've won the game, why keep playing? Some people just enjoy playing the game and personally I will continue to play the game as long as I enjoy it.

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                        • #42
                          Originally posted by Zaphod View Post

                          I dont why you wouldnt be even more comfortable at such a NW, its far more than one needs to live an extravagant lifestyle, and what kind of downside are you thinking happens? There is incredibly little reason to be concerned with anything. You could try to index fixed costs/spending to dividends even as a hedge, etc....

                          You should have a sense of peace with a higher NW not less.
                          Agree. Wonder what the OP’s plans were had s/he saved only a “measly” $5M at this age...
                          Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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                          • #43
                            Originally posted by Nysoz View Post

                            It's said that once you've won the game, why keep playing? Some people just enjoy playing the game and personally I will continue to play the game as long as I enjoy it.
                            And to some people, it’s not a “game”.
                            Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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