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Originally Posted by manaboutown
Great analysis!
A further consideration for me would be the income tax factor. Interest paid on bond is not tax deductible whereas mortgage interest usually has been tax deductible for most folks. Now that has changed in my case as I no longer itemize deductions. Dividends and realized gains, if any, in mutual funds are taxable whereas appreciation is not until it is realized.
One more thought. We have experienced a nine year long bull market, the longest ever. Will we see an 8% average gain per year over the next 10 to 20 years?
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Agreed except I would content that you could make a strong argument that the bond interest and the fire tax are legitimate deductions since generally, this "expense" are included elsewhere. I believe the code says that non-ad valorem items are "normally" not deductible. So the two questions are, will I loose if audited? and will anyone even look at the dollars involved and care?
As for will we continue to see a historical 8%, I believe in the long run we will see continued growth, but for me, the year 1 analysis and the continued access to the principal is enough.