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Strategies & Market Trends : Heinz Blasnik- Views You Can Use -- Ignore unavailable to you. Want to Upgrade?

To: LLCF who wrote (2884)	7/1/2003 11:01:13 AM
From: Mark Adams	Respond to of 4907

Another thing I think seniors could be doing is paying off mortgages I agree- though for some seniors this isn't an issue. They already live a mortgage free life, either in some sort of assisted living mode or in condo like retirement communities dotting FL and AZ. AND paying of their kids mortgages [making mortage loans for their kids]. I've considered this in the past. This has hidden risk- what happens if the kids divorce? What happens if they are sued, and lose the property in a judgement? I concluded that the spread between MTG rates and what the bank pays on deposits offset the added risk. Back then, we were talking 6% deposit rates and 7% mtg rates, though. As Grant pointed out, I-Bonds can soak up limited liquidity. They were a much better buy prior to May, when the real portion dropped another 1/2%. I expect the headline yield on them to drop come Nov, but probably will still exceed that available on five year treasuries. I think people don't value the put option enough- you aren't exposed to the same loss potential as you are with Bonds.