u/Particular_Row_4317

A few of you asked for the mortgage version in the car thread, so here it is.

The setup: $400k mortgage at 6.5%, 30 years, payment $2,528 a month, and $500 a month spare. One person puts the $500 on principal, pays the house off in year 20, then invests the whole $3,028 every month until 65. The other pays the normal mortgage and invests the $500 from day one. Both invest 80/20 stocks and bonds, both start at 35. I ran each path 10,000 times on US market history from 1871 to 2025. Everything is in today's dollars.

At 65, the median payoff person had $341,847. The median investor had $441,026. Investing came out ahead in 74 of every 100 lives.

Even the bad outcomes held up. In the worst 10% of runs, the investor still ended slightly ahead, $204k vs $182k.

The whole thing comes down to one number. To tie a 6.5% mortgage, investing needs about 6.7% a year. An 80/20 mix has averaged about 8.7% a year since 1871. That gap is why investing usually wins, and it's why your rate matters so much:

3% mortgage: investing wins 97 of 100 ($441k vs $213k)

5%: 89 of 100 ($441k vs $277k)

6.5%: 74 of 100 ($441k vs $342k)

7.5%: 61 of 100 ($441k vs $393k)

One of you in the car thread gave me real numbers: $465k left at 5.37%, 28 years to go, $400 extra a month. Investing won 85 of 100, $308k vs $201k.

When does paying it off win? When a bad crash hits in the first few years. I forced the 5 worst years in history to come first, and paying it off won 53 of 100. So prepaying works like insurance against bad timing.

Job loss is the other thing people miss. Extra principal payments don't lower your monthly bill. In year 10 the payoff person still owes $2,528 a month and has no cash to show for it, while the investor has about $80k she could sell. After year 20 it flips, because the payoff person has no mortgage at all.

What this doesn't include: taxes, the mortgage interest deduction, refinancing, PMI, and the peace of mind of owning your house. Emergency fund comes first either way.

Made a visual version that follows one of these lives year by year, including the year it hit 2008: https://www.youtube.com/watch?v=pZqgELyVNRI

This is for educational purposes only, not financial advice no self promotion. Your own situation matters more than any simulation.

Drop your rate, balance, years left and extra payment if you want yours run.

I built a simulator for this, so the numbers are mine, not a blog's.

Two people, 25, same salary. One buys a new $50k SUV every 6 years. The other keeps theirs 10 years. Whoever pays less in a month invests the difference in a plain 80/20 index fund. Trade-ins are counted (35% of the price back at 6 years, 15% at 10), loans at today's average rate, $100 a month set aside for repairs once the car is out of warranty, everything in today's dollars after inflation. Then each life is run 10,000 times against 40-year stretches pulled from real market history since 1871, including the Depression, the 1970s, 2000 and 2008.

Same SUV, just kept 10 years instead of 6: the keeper is ahead by $165,000 at 65 in the median run, and ahead in all 10,000 runs. The worst 1-in-100 market still leaves a $43,000 gap.

Cheaper car ($28k compact) kept 10 years vs the new SUV every 6: $656,000 ahead in the median run. Worst 1-in-100 market: $158,000.

If the new-SUV person pays the actual US average new-car payment every month ($765, Experian) instead of the trade-in version, it's $881,000. That's the version in the chart: the green fan is all 10,000 runs, the amber line is one of them, the bars are the unlucky 10%, the median and the lucky 10%.

The part that surprised me is how late it happens. Year 10 the account is around $60k and looks pointless. Year 12 it loses a quarter of its value in one autumn. The crossover, where the account earns more in a year than the car money going in, is around year 20. The car stops mattering after that.

What it doesn't know: whether the SUV person invests too (then the gap is just the car money), whether an old car breaks worse than $100 a month, and whether you'd keep transferring the money for 40 years. Most people don't.

What's your car payment, and how long have you had the car? I'll run the most common answer.

Edited: Really appreciate everyone response so I have made a Video version (Educational Purpose) for you guys (one of the 10,000 lives, year by year, 6 minutes): https://youtu.be/buGAlCyGSAE

Most tools we use here (cFIREsim, FICalc, Trinity) replay history in order: start 1871, start 1872, and so on. Those 125 windows overlap, so they mostly share the same years. I wanted to see what happens when you break the order.

The setup: $1M, 60/40 US stocks and bonds, rebalanced yearly. $40k withdrawn in year 1, raised with inflation every year after. 0.1% fees. 30 years. Data is Shiller's annual US stock, bond and CPI series, 1871 to 2025, real returns. Each run stitches six random 5-year blocks of real history together, and blocks can repeat. 10,000 runs. No Social Security, no taxes.

Results: 94.0% of runs survived 30 years. Median ending balance $1.79M in today's dollars. The earliest failure was year 14, and 499 of the 603 failures happened in years 22 to 30.

The part that surprised me: 580 of the 603 failures contained either 1916 to 1920 or 1973 to 1981 somewhere in their 30 years. 1929 and 2008 barely show up. Sharp crashes followed by recoveries don't kill a 60/40 on a real-dollar withdrawal. What kills it is 5 to 9 years where stocks go flat, bonds lose to inflation, and your withdrawal keeps rising with CPI.

Two variants: dropping to $35k a year lifts survival to 97.4%. Keeping $40k but cutting it 10% after any bad year (restored when the balance recovers) gives 96.3%. A rule you'd actually follow in a bad decade buys about 2 points without a permanent cut.

Caveats: block bootstrap can deal the same bad block twice, which is harsher than real history, so 94% is probably a touch pessimistic versus sequential tools (usually 95 to 96% for this setup). Shiller's bond series is a 10-year Treasury proxy, not total bond market.

Question: if inflation stretches are the real failure mode and crashes mostly aren't, does that change how you'd hold the bond side? I haven't run TIPS because the series doesn't go back far enough. Happy to run other withdrawal rates or allocations if people want them.

I also plotted all 10,000 runs as one fan chart and traced a single failed run year by year, which made the pattern a lot clearer than the summary numbers. If that's useful to anyone here it’s https://youtu.be/JKY8slMNA3I?si=3viz8x7WB9ZTvJ8I. Same for other withdrawal rates or allocations.