Early Retirement Extreme Forums

If you were to buy a house for 250k and had 50k saved up (meaning you’d need a mortgage), and you could get a 100% mortgage at a 2% interest rate for 30 years with an annual payment of 11k, what would you do with the 50k?

Would you put it:
a) into the house as a down payment (reducing the mortgage)
b) into government bonds (3% net return over 20 years)
c) into a diversified portfolio (4% safe withdrawal rate over 30 years)
d) elsewhere

Buy a tough looking robot to collect the rent from all the tenants occupying the house, especially the ones currently living in the basement.

I would put it SGOV

Currently yields ~4.6%
Not subject to state income tax.

Assuming I also was young and had at least a ten year investing horizon, I'd go for c.
By the way, as a house owner you also should keep some money set aside in savings for repairs on the house and other costs that come with homeownership. So if 50k is all that you have, I would probably keep 15k or so in savings and invest 35k for later.

DutchGirl wrote: ↑

Fri Jun 20, 2025 1:03 pm

By the way, as a house owner you also should keep some money set aside in savings for repairs on the house and other costs that come with homeownership.

This.

Thereby, 2% for 50K is only 1K per year. Even parking it just on a savingsaccount would give you probably the same amount in interest. Why would you make it illiquid and take a lower mortgage, what is the benefit?

A 2% mortgage should be seen as an asset, not a liability. LT government bonds and debt on the house will be inflated away given the US gov't debt and fiscal situation - 10%+ inflation vs 5% Treasury rate. Stocks for appreciation if one can find the right ones - the majority cannot - stock indices currently at high valuations and vulnerable to 'the changing world order'. Precious metals for storing value - protection against debt debasement/inflation. T-bills, shot-term money market fund for shorter-term cash considerations. Suggested allocation assuming 50k being LT savings: 50% precious metal, 25% value stocks, 25% T-biils/short-term money market fund.