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Strategies & Market Trends : Mish's Global Economic Trend Analysis
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To: valueminded who wrote (51772)5/26/2006 1:27:16 PM
From: benwood  Read Replies (1) of 116555
 
My savings account rate is 4.15% right now, and my mortgage is 4.50%. However, I get a small deduction on the mortgage. My marginal rate is 27% I believe, but because the standard deduction is fairly high for me, my effective deduction is closer to 10% of the mortgage interest. So my effective mortgage interest rate is actually about 4.5 * .90 = 4.05%.

My savings is taxed *at* the marginal rate of 27% or so, so I'm actually only making 3.03% net on the savings. The savings break-even point for me (with just barely enough deductions to itemize) is about 4.05 * 1 / (1 - 0.27) or 5.55%. I still can't get that easily with risk free money. I can get that in certain lower risk dividend plays, however, but I am taking on some risk with that (and/or currency risk e.g. FAX, which can be a good thing).
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