I am agreeing with AN/flu now since they are not really talking about leveraging at all costs and never pay off the house ever.
I actually don’t mind having a mortgage or all in for “risky” assets when I get old, contrary to the conventional wisdom. I don’t believe just because you are in 70s, you should avoid stock market.
The key to me is cash flow. If you have enough cash flow to handle your retirements, you (and your heir) are better off if you are invested in an asset class that over-perform in the long run. For the same reason, I am against over-leveraging, because all you have is quite some assets in your balance sheet with no cash flow to show for it. You probably won’t need the cash flow now but your investment strategy should have a plan for positive cash flow 15-20 years from now, which means that you will start to pay off the houses (investment property first, then perhaps the primary) at certain point of your life. I am against addicting to leverage just because it produces better return because sooner or later you may lose your ability to earn your paycheck…and it could come earlier than you expect it.
That still leaves us one question, AN/flu. What do you guys think is a proper cash holding right now in this kind of environment? I would think there would be some of emergency fund plus enough down payment for the next rental property? I don’t know what’s the magic formula here? Since you are not finding a rental property with the limited inventory in MM and you don’t want to pre-pay the house, you just watch the cash reserve starts to grow? Or just gamble it with the stock market even at the current high valuation?
