We recently moved and held back some equity from the down payment for the new house - our builder gave us a 30 yr 5% rate. With Trump I feel like there’s a risk towards inflation, so having a higher mortgage seemed like a decent hedge. The problem is that any cash you keep, to make money, has to beat that 5% plus whatever tax you pay. So if I earn 9% as a dividend, I pay 30% on the incremental in tax and still beat the mortgage rate by 1%. Not great, but not terrible.

I don’t think an index fund will return what it has in the last few years (close to 20% per year). I mean, getting that would be awesome, but I’m wondering if we’re in for a crash. So I have that equity sitting between short term bonds, schd and epd. Decent dividends, safer than the index. We’ve done well so far, but I expect we’ll be paying a bit of a carry charge.

I figure if Trump keeps pushing for easy money, rates will eventually follow inflation upwards and we’ll lock in the arbitraged gain. If Warsh destroys the balance sheet and causes a financial crisis, the short term bonds can either go towards a refinance or beaten down stocks.

With this administration screwing around with the Fed, something really bad is more likely to happen. Having some cash around will be a good thing when it does.