[quote=bluehairdave]
I think it is risky to just assume interest rates will rise and savings and bonds will pay much more in the future.
We are already in the middle of what might turn out to be called The Lost Decade for the US. Same principles apply except our precipitous crash wasnt caused by raising interest rates but the bubble itself bursting. I personally am not counting on any large rise in interest rates within the next 5 years OR much growth either for many years.
There are very few things that actually create money in the US anymore. Almost all of the largest money makers and new firms are all service and advertising related. All of the internet companies and financial companies just move money from one place to another and most of that money that is in the system is debt. Just the way it is. No hot economy coming anytime soon. The Govt cant do much more and there isnt much out there to create new money, jobs or earnings besides service. Hasnt been for many years. The last bubbles were all created by Govt. intervention including housing.[/quote]
You seem to equate higher rates with robust economic growth, but those two things don’t necessarily need to go together. (The Greeks are the latest to demonstrate that).
In a sense, anyway, it’s beside the point. Even in the (exceedingly unlikely, imho) event that rates do stay low for five years, you would still have 25 years left on a 30 year mortgage. My point was that you ned to consider potential returns over the entire life of the mortgage – not just what’s happening right now, and not a near-term forecast either.
