Point number #1 you are correct. I will admit that I am out of the mainstream that way.
Point #2 sorry dear. CNN’s financial calculator comes up with
Your current savings will grow to: $1,665,780.77
Inflation adjusted (3.0%): $667,989.88
Assuming you save 1200/year. 28% federal rate, 9.3% state rate. I also don’t believe that 3%. Most experts are pegging true inflation at 3.4-4.0 percent for the future. this doesn’t even consider that with our countries savings / debt ratio what our currency could slide to.
At a conservative 5% you will have 20% more than your nest egg in today’s buying power.
More importantly you will have a 30 year mortgage and taxes on a house which is at the hight of the market. Don’t believe that it went down 20%. How many people actually bought at that insane price? You are going to pour double or more into this house then renting. You are going to have to landscape, window treatments (even for millionaires this is expensive!!! It should be part of the marriage vows!).
Point 3: If housing goes up with inflation, your house is only worth the same amount of money. You spent 30 years of interest (triple the cost of the house) to get back an investment which is worth the same as when you bought it 30 years before… Thats why buying at the top of the market is so dangerous. You could spend the next 10 years getting back to the preinflation rate you were at. All while paying for the asset at today’s inflated price with today’s interest rates.
How do you figure that 1.777M is equal to 1M now? That is not a hefty profit. If inflation is = to 4% (just a guess), a 1,000,000 today is worth $3,243,397.51 in 30 years. Your house BETTER be worth a heck of a lot more in 30 years than 3.25M… If it is worth 1.7M you have lost 1/2 of your investment. You spent 1.6M in payments during this time (and taxes)… You also lost the income from the 400K you put down (I only figured you at a 600K loan).
Anyway I am trying to figure this stuff out too. But your robotic logic seems to be alluding me!
Assume that your house will grow at 7% or more. That precludes you expecting it to drop in value – that is folly. Don’t buy a Million dollar asset if you think that your value would be 666K in 5 years.
