http://allfinancialmatters.com/2005/11/14/mortgage-your-retirement/ A personal finance blog dedicated to discussing such topics as budgeting, asset allocation, 401K, IRA, cash flow, insurance, financial planning, portfolio management, and other areas in personal finance. Sat, 11 Feb 2012 20:32:19 +0000 hourly 1 http://wordpress.org/?v= http://allfinancialmatters.com/2005/11/14/mortgage-your-retirement/comment-page-1/#comment-480 Jesse Wed, 16 Nov 2005 00:06:29 +0000 http://www.allthingsfinancialblog.com/?p=142#comment-480 JLP, what are your thoughts on Warren Buffet's strategy of not diversifying, but making sure you really understand what you're investing in. I think his mentor (Graham?) is the one that said you can identify a company where you are virutally guaranteed a profit. That thought intrigues me - and I wanted to get your opinion. JLP, what are your thoughts on Warren Buffet’s strategy of not diversifying, but making sure you really understand what you’re investing in. I think his mentor (Graham?) is the one that said you can identify a company where you are virutally guaranteed a profit. That thought intrigues me – and I wanted to get your opinion.

]]> http://allfinancialmatters.com/2005/11/14/mortgage-your-retirement/comment-page-1/#comment-479 Madame X Tue, 15 Nov 2005 23:58:01 +0000 http://www.allthingsfinancialblog.com/?p=142#comment-479 This does seem like a weird concept. They mention that people do it all the time with real estate. Maybe I'm understanding it wrong, but there are no margin calls in real estate. If your house drops in value, the bank doesn't call in the loan and make you sell your house, do they? As long as you keep making your mortgage payments you get to keep living there. But then again, buying stocks on margin isn't the only way to borrow to invest. If we're talking about young people that wouldn't have home equity to borrow against, I'm not sure how else they would borrow that money but say they (stupidly) took out a cash advance on a credit card to buy stocks. Theoretically, you could be paying off part of the balance on the credit card every month whether or not the stocks lost value. But I can't say I'd want to take that route myself! All in all it sounds like a pretty stupid idea to me. Of course you are imbalanced over time, as the whole point is to have more money that you started out with! This does seem like a weird concept. They mention that people do it all the time with real estate. Maybe I’m understanding it wrong, but there are no margin calls in real estate. If your house drops in value, the bank doesn’t call in the loan and make you sell your house, do they? As long as you keep making your mortgage payments you get to keep living there.
But then again, buying stocks on margin isn’t the only way to borrow to invest. If we’re talking about young people that wouldn’t have home equity to borrow against, I’m not sure how else they would borrow that money but say they (stupidly) took out a cash advance on a credit card to buy stocks. Theoretically, you could be paying off part of the balance on the credit card every month whether or not the stocks lost value. But I can’t say I’d want to take that route myself! All in all it sounds like a pretty stupid idea to me. Of course you are imbalanced over time, as the whole point is to have more money that you started out with!

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