GoFuckYourself.com - Adult Webmaster Forum - View Single Post

Sly · 12-09-2010, 01:09 PM

Quote:

Originally Posted by will76

thanks... you bring up another good point, there has always been rumblings about trying to get that tax deduction removed. I think I remember reading something about Obama trying to do away with it or limit the people who can take the deduction. Tax deductions like this are not set in stone, and while I don't think they would take it away, it is possible. Which would take away factoring in the tax deduction into the "invest the money " strategy making you have to make an even larger return with the money vs using it pay down your mortgage.

Also, the invest the money strategy really is for should you get a loan in the first place vs financing it. We talking about a couple hundred a month here. It's more applicable when you looking at do I get a loan for 500K at 5% and invest my own 500K into something else and try to make 8-10% or do I just pay cash for the property and save on not having to pay interest each money.

The deficit commission has recommended doing away with, or limiting, the tax benefits of purchasing a house. So yes, that can disappear at any time. The way things are going, I do think it will be at minimum limited at some point in the future. I don't think they will completely strip it because a lot of people do depend on it, it would be a political hellfire, but limiting the benefits could definitely happen.

A couple hundred a month is plenty of money to "invest." Investing isn't just stocks and bonds, and many financial advisors even say that people should not consider messing with stocks and bonds until they have other vehicles completely maxed out... such as 401(k) and IRA. Both 401(k) and IRA offer really great tax benefits (which of course could be pulled sometime down the line.) Although in this situation, I think the thread starter is self-employed so he may not have access to the same exact vehicles as a company employee, but I do know that there are IRA like vehicles for the self-employed.

If you break down the math... sticking that $100 a month into a IRA should earn you more money than paying down your low interest loan. On top of that, the fund will continue growing exponentially over time... you aren't going to see that by paying off your house. And then the tax benefits as well...

With this argument you're going to have one group of people that cheer for paying off the house and another group of people that cheer for investing the excess money. Every math breakdown I have seen and done pushes towards investing, but it really depends on what level of risk the person is willing to take and what their long-term goals are.

Investments stomp houses long term.