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Most people don't have the discipline to correctly pull it off over time...
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Steve said:Most people don't have the discipline to correctly pull it off over time...
Steve said:Sorry, that's not at all what I mean. I see a big difference in people's thoughts on investing for short term or long, and buying a product -- like insurance. (Far too many people in this country do not have the discipline to do any of these correctly. I'm not speaking of them right now!)
I just think that when people alter something like their mortgage term, too many of them are going to stop "investing the difference" at some point, or at some time during that fifteen years and mess up the practicality of the idea.
Some of these scenario's are great on paper, but follow through for most is lost at some point.
I would rather say, go for the fifteen year mortgage, manage your budget better, AND through proper budget management, come up with that same (in your scenario) amount of money and invest it. Everyone is better off then!
Steve said:No, but if they can't afford the 15, (in your situation saying it's high-risk,)then they also can't afford the duration of 30 plus the difference, which means they're in the wrong house!
I would rather say, go for the fifteen year mortgage, manage your budget better, AND through proper budget management, come up with that same (in your scenario) amount of money and invest it. Everyone is better off then!
When you take out a policy loan, they charge a stated percentage, but at the same time, they credit a stated percentage to your policy fund, even on the money that you borrowed. Therefore, if they charge 5% on the loan, but they are crediting you at 5% also, then the loan is a wash, and your cash value does not suffer.
Some policies offer a wash loan right away, but in many cases, it is only available after a certain period, say 10
The idea is to build a Cash Value equaling or greater than the amount borrowed during the same time period. This is obviously easier done if you use tax free investments of one degree or another. Most loans are simple interest bearing, most investment is on compounding interest bearing making the savings investment more powerful than the loan accumulation.