Your comment, though sarcastic, underlines some points I thought about myself and I would like to discuss it!
We are both well aware that there is no risk-free investment.
Governments bonds that are considered less risky that ETFs usually return 1-2% per year.
The ETF I'm talking about maps a market index covering a big chunk of the US market or several stable international markets.
They are still a risk, your house is also an asset and is also a risk.
I think if you only have your mortgage as an asset then probably buying some ETFs would help diversify your assets.
But if you already have a lot ETFs then maybe would be better to finish up earlier the mortgage...
Sorry if I came across that way, I wasn't being sarcastic at all. Series I bonds are essentially risk-free unless you think the US government plans to default within the next 1 year (which is basically the lock-up period). Series I bonds pay a coupon equal to CPI. The current Series I interest rate is 7.11%. It is variable, however, and capped at $10,000 in contributions per year (online). [1]
It really isn't if the interest rate is below inflation. If it's below inflation, the mortgage is yielding real-dollar value. That's an asset in my eyes.
It's a calendar spread. Last year, you were buying 2021 dollars for a fixed rate (2.675% APR in my case), but you different vintage dollars over time. You owe 2022 dollars in 2022, and 2031 dollars in 2031. A 2051 dollar is almost certainly going to be worth significantly less than a 2021 dollar.
So you're buying 1 2021 vintage USD, but at the extreme, you're paying it back with 2.2 2050 dollars. If we expect inflation to be an average of say, 3% over that period, each 2021 vintage USD should be worth at least 2.42 2021 vintage dollars. So in this example, you're earning real dollars over this period.
> It really isn't if the coupon rate is below inflation
It's a liability in the amount of the balance. I suppose you could consider the present value of the “income” stream of the difference between inflation and interest over the life of the loan as an asset, but unless it's a very unusual loan, any income stream of that kind is likely to be a transitory effect, and interest is likely to be be a real as well as nominal expense considered over the life of the loan.
Indeed, you are of course correct! I'm just hoping folks look at mortgages not as a strictly bad thing, but as a tool in their financial arsenal. They can be good! I think most folks are stuck in nominal dollar mode, and it can really help to look at things in real dollar terms.
We are both well aware that there is no risk-free investment. Governments bonds that are considered less risky that ETFs usually return 1-2% per year.
The ETF I'm talking about maps a market index covering a big chunk of the US market or several stable international markets. They are still a risk, your house is also an asset and is also a risk. I think if you only have your mortgage as an asset then probably buying some ETFs would help diversify your assets. But if you already have a lot ETFs then maybe would be better to finish up earlier the mortgage...