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Comment by gbalduzzi | Hacker News Reader

Sure, and what happens when, after you do that, some calamity happens and stocks go down by more than 50%, you lose your job and you can't pay the mortgage anymore?

That is of course extreme, but proves the article point: by not having debt, you can sustain a much broaden series of events.

As everything in life, it's a spectrum. I think it's pretty reasonable to accept the "sustainability narrowing" that comes from an affordable mortgage, but I avoid taking debt for other goods that are less important and would limit my ability to withstand unexpected events and accidents

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You can easily plan for such events.

What if your house collapses due to some event that is not covered by your insurance and you used all the capital to purchase it? This is as an extreme example as the market dropping 50%.

Surviving market crashes is not rocket science, don't be 100% in stocks. Have a decent emergency fund if you have a family, have some bonds, have a house with decent equity, and don't subscribe to consumerism.

> What if your house collapses due to some event that is not covered by your insurance and you used all the capital to purchase it? This is as an extreme example as the market dropping 50%.

Quite a lot of people have experienced a market dropping 50% - not so many have seen their house collapse due to some event not covered by their insurance.

At least the stock market has bounced back, can't say the same about that house.

> what happens when, after you do that, some calamity happens and stocks go down by more than 50%, you lose your job and you can't pay the mortgage anymore?

> That is of course extreme

I don’t think that’s even that extreme. In 2020 the market crashed something like 40% and at the same time vast swaths of the population became unemployed. All of my grandparents experienced the great depression. We will be very fortunate if we aren’t heavily hit by war or economic disasters for the rest of our life.

If you held the stock for more than ten years, you are likely ahead because the stock doubled. If not, you still have money to pay your mortgage.

Most people pay extra to mortgage gradually. Until it is paid off, they face the same risk of foreclosure. What happens if you lose your job with one year left? You lose the house, you can't pay your bills cause banks won't give you home equity loan.

Liquidity is more important for most people than returns. Money saved in a house is a huge risk.

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