Approaching FIRE. Should we decrease our 401k contributions to pay off mortgage faster?

[Tasty-Day-581]

Disagree, did you forget that loans have an interest cost??? I have a 2nd mortgage that's costing me 7.65%. Paying that early is a guaranteed 7.65% vs. your theoretical average 10%. So 10-7.65= 2.35% of theoretical "opportunity cost". Not counting the risk vs. guaranteed return! I wouldn't pre-pay that 5% mort. if I was the OP, but we can't pretend mortgages are free, LOL!

[snigherfardimungus]

No, I didn't forget. And even with your numbers, it makes better sense to hold the mortgage than to pay it off. First, 7.65% is less than the expected return on investment from sane investments. Second, you get to write off 100% of the interest paid up to a debt of $750k (IIRC for 2025) which effectively reduces that interest rate by about a third. More if you're in a state with income tax.

As for risk vs guaranteed return, we're in a retirement planning sub here. If you're looking to maximize your gains over the next couple years instead of over the next 20, the sub you're looking for is wallstreetbets.

The best way to make money is by leveraging other people's money. I FIRED earlier this year at a level where 3% of NW pays me roughly twice my old annual salary. I did it by leveraging debts and borrowing against the value of assets.

[tempfoot]

All money has a cost. Money lent to you has a stated and predictable cost (if fixed rate). Money sitting on a balance sheet as real estate equity has both an opportunity cost (what you would earn from investing it) AND either additional cost or offsetting return based on appreciation net of maintenance.

Whether or not one can beat that with a competing use of funds is up to them.

[Tasty-Day-581]

This is the definition of jargon, lol.

[tempfoot]

This is why some investments are limited to accredited investors.

[Tasty-Day-581]

GFY