Quote:
Originally Posted by Hawkeye
I am not sure where your math went off but the difference in balances after 5 years would be $176k - $140k = $36k. I am not sure how you got a balance of only $27k after only 5 years. Your $42k for the 12% interest seems right - with a more conservative 6% it would still be about break even at $36k.
Edit: I did all the same things you mentioned ( the issue you had was doing 6 years on the loan but only 5 on the investments)
$43,144 more equity in 15y loan but investments at only 6% average interest is worth $44,460.
And this is ignoring inflation as Corn explained - which only helps over time with a fixed payment.
|
You are right, 6 years on the loan, 5 years on the investment, there's the mistake
So using your corrected numbers, I either pay the 15 year loan (higher payment amount) or the 30 year loan + invest the remainder (same total payment) and I have to make 6% on the investment to break even. But really some number a little higher than 6% to cover the income taxes I will pay on the investment but not on the house equity.
In my example I don't see how inflation plays into it. Both examples I am paying out the same amount each month and have the same results to show from it at the end of 5 years.
Still a guaranteed 6% is I believe impossible to find.