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Originally Posted by pyroguy
KenKat, I will politely disagree that a big 401k and mortgage beats paid for house and small 401k. If you became strapped and needed money you could always sell your house and rent or move down in house. Is it easy or quick to do? No. However, if you pulled money out of a 401k you would be taxed at your tax rate PLUS a 10% early withdrawal penalty. Besides, with a paid for house you can put your house payment (minus taxes and insurance) into your 401k, Roth IRA, or other investment to build up a large investment account.
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We never bought more house than we thought we could afford. We bought our first house in 1992 and put 25% down. We sold that house for a decent profit and bought our second house in 1998 with about 40% down. We stretched a little on that one but ended up ok and are still in that house today. We always had an emergency fund and some taxable investments we could tap that would carry us through if needed (which we have so far not).
I started putting money into a 401k in 1988 and have never pulled any out. I rolled everything over to an IRA if I left a job.
Quote:
Originally Posted by pyroguy
Investing in general is a risk. You risk whether your investment will go up or go down. However, if you have a paid for house you have a good idea of your upcoming expenses and the things you don’t anticipate you have an emergency fund for.
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Putting all your money into a house is also a risk. Houses don’t always go up in value; housing in my area took a hit in the Great Recession of 08-09 and has been pretty slow to bounce back until recently. My house has been a great place to live but has only increased by a relatively modest amount overall.
I will leave you with this - don’t put too much in your house at the expense of not saving in a 401k, IRA or even taxable account:
https://www.portfoliovisualizer.com/...ocation1_1=100
$10,000 a year put into a balanced investment fund like Vanguard Wellington, starting in 1994, becomes $1.1 million today - a 9.4% per year return.
If you are able to both invest and maybe pay down the mortgage a little, great. But take advantage of investment opportunities like a 401k or IRA’s first before paying extra on the mortgage.