The Rational Reminder Podcast RETHINKING MORTGAGE DEBT (EP.5)
Aug 14, 2018
The hosts dive into the intricacies of mortgage debt, exploring the benefits of leveraging it for investments. They tackle the importance of optimizing your credit score and how it impacts financial choices. A debate on whether we're in a tech bubble brings to light the fundamentals driving the market. Listeners are introduced to how large Canadian pension funds manage their assets, illustrating the effectiveness of simple index strategies over more complex options. Expect surprising insights on the skewness of venture capital returns and their implications.
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Monitor And Manage Your Credit
- Check your credit regularly using tools like Credit Karma to spot errors and identity theft early.
- Keep utilization low and automate full monthly payments to avoid score drops from missed payments.
Compare Mortgage Decisions On The Balance Sheet
- When deciding to pay a mortgage or invest, compare expected portfolio returns to mortgage cost and view both as one balance sheet decision.
- Ignore emotional bias and evaluate mathematically whether leaving money invested beats paying down mortgage principal.
Mortgage Turns Portfolios Into Levered Equity
- A mortgage plus portfolio is effectively leverage that reduces your net fixed-income exposure and increases equity risk.
- What appears as a 50/50 statement allocation can actually be near 95% equity once mortgage leverage is considered.