Planned Assets Planning Blog

With mortgage rate at one of the lowest rates in history, now is a good time to consider refinancing if you mortgage is over 5% interest, but which mortgage is best 15 year or 30 year.

Most people think the quicker you pay your home off the less you have to pay so those that can afford a 15 year mortgage so choose.  Those who can’t afford a 15 mortgage send in extra premiums to get the principal down and pay off the mortgage as soon as possible.  The common belief is paying your mortgage off as soon as possible will save you money.  We were all raised to believe this; it’s possibly in our DNA.  But will you really save more money paying off your mortgage?   If you are disciplined, the answer is NO!

The answer is based on a number of factors but the two most important are arbitrage and opportunity cost.  The first factor that must be understood is that there is math and there is money and using straight math the answer favors a shorter term mortgage while the math of money does not.  Consider if I have a mortgage of $250,000 at 4% for 15 years my premium is $1,849.22 per month $9,018 per year more than a 30 year note.  Over the 15 year period I have paid $82,859 in interest with a 30 year mortgage at the 15^th year I still owe $151,954, using safe investments, if I invest my money not spent on the 15 year mortgage over this period I could have earned $203,825 at 6%.  With this amount it is my choice to pay off the house or maintain control of the money for other opportunities and a higher return at the end of 30 years.

If I complete a 15 year mortgage and then invest the after tax house payment at 6% for 15 years I will have $410,632, but continuing to use the 30 year mortgage concept I will have $665,123.  More importantly I will have maintained control of my money for other opportunities of higher return.  What impact would an extra $254,491 have on your retirement income?

Is now the time to have a conversation concerning your plans for wealth management, how you can stop wealth transfers and develop a retirement income you can count on?  When you lose a dollar you did not have to lose, you not only lose the dollar but the future return that dollar could have earned. Time is not on your side concerning wealth transfers.  A conversation with us today could save tomorrow.  Please call us at 888 270 9870 or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it. , today!

Most Americans fail to recognize their limited Money Management skills and inability to focus what little free time is actually allotted to planning their financial future.  Because of lack of time, information or ineffective planning, money trickles out of income continuously, unnecessarily and unknowingly reducing savings and life style.

While increasing rates of return on saved assets is always helpful the associated increase of risk is not.  Today, many people are investing more aggressively in hopes higher returns will recover lost earnings or close a savings gap.  To close a savings gap or increase wealth accumulation, most financial professionals recommend maximizing the tax-efficiency of your portfolio, reviewing your asset allocation, and of course, “saving more and spending less.”  Always good advice, but you have taken these courses of action to the best of yours and your advisors capability and find it is not enough.  Now, apparently your only option is to spend less and reduce your standard of living or ramp up investment risk in hopes higher returns will close the savings gap.

Instead of searching for the perfect investment formula; we find the greatest potential for wealth accumulation is not higher return on your investment, but finding those places where inefficiency and resultant opportunity cost drain away income for savings and life style.  We call this drain “Wealth Transfers”; defined as unnecessary and unknowingly transfers of income out of the family.  It is not unusual to find wealth transfers of 15, 20% or more of earned income within a family.  We think stopping wealth transfers and redirecting part to saving and part to life style is more effective, safer and satisfying than taking additional investment risk.

We are Planned Assets and we would like to have a conversation with you about a subject you or your financial advisor may not be familiar with, Wealth Transfers.  Everyday wealth transfers erode saving and reduce life style by stealing income from Americans.  Saving 10, 15, even 20% of income due to wealth transfers is more effective and safer than increasing rates of return. 

If spending a small amount of time having this type conversation makes sense to please register at [link], call (888 270 870) or email ( This e-mail address is being protected from spambots. You need JavaScript enabled to view it. ) Hubert W. McMinn.  There is no cost for the conversation just a small investment of your time and the return could be significant.