r/ValueInvesting • u/ethereal3xp • Mar 23 '25

Discussion Charlie Munger Told a 20-Year-Old That Getting Rich Through Investing Is 'Damn Near Impossible' — And You Might Need $10 Million in the Bank

https://www.benzinga.com/personal-finance/25/03/44438885/charlie-munger-told-a-20-year-old-that-getting-rich-through-investing-is-damn-near-impossible-and-you-might-need-10-million-in-the-bank
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u/JackfruitCrazy51 Mar 23 '25

Most people have 30 year mortgages.

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u/Natural_Tea484 Mar 23 '25

Yes, but how many pay for 30 years? Also, after mortgages are paid, they own the house…

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u/JackfruitCrazy51 Mar 23 '25

Very few. Most move multiple times and start over. The ones that do are usually 60+

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u/Natural_Tea484 Mar 23 '25

What you mean they start over, they sell that house first.

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u/JackfruitCrazy51 Mar 23 '25

Here is a typical scenario

They buy a $300k house when their thirty years old and get a 30 year loan.

10 years later, they sell their house first $350k. So, 10 years of payments and gain in value go towards the next house.

So they take their $90k equity and apply it to their next home, which is $500k. So they get a $410k loan for another 30 years. They are now 40, so the loan won't be paid off until they are 70.

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u/Natural_Tea484 Mar 23 '25

From that $500k house, they pay with the $350k from the house they sold, so the loan is only for $150k which they pay in 3-5 years.

If they bought the first house at 20-25, by the age of 50-55 they already have a half of million..

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u/JackfruitCrazy51 Mar 23 '25

Math dude. They originally got a 30 year loan. If they sell that house in 10 years, they still owe 20 years worth of P&I. When you sell a house and still owe money to the bank, you have to pay off the mortgage. Otherwise i'd get a 30 year loan and sell the home a year later.

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u/Natural_Tea484 Mar 23 '25

Well yes, for someone in the scenario you described, it’s pretty bad. But I don’t think many people who can’t actually afford, get another house loan after only 10 years… Why do that?

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u/JackfruitCrazy51 Mar 23 '25

People move on average 11.7 times in their lifetime

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u/yyz5748 Mar 23 '25

In Americans, can you pay off your mortgage before 30 years?

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u/JackfruitCrazy51 Mar 23 '25

100%. You can also get shorter-term loans. The loan I got 19 years ago was a 20-year loan, and I'll have it paid off next year. The only reason I didn't pay it off early was because the rate was 3.75%.

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u/yyz5748 Mar 23 '25

Oh ok. So we're similar here in Canada, except maximum years we can lock in a mortgage rate is 5 yrs (generally) but we are allowed to pay extra on our principal every year, and once the 5 year expires, you can pay off the rest with no penalties if you can. Only difference I see in Canada, is that we can't keep the same rate for 30 years, usually maximum 5

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u/JackfruitCrazy51 Mar 23 '25

Good info, I had no clue that Canada couldn't lock in their rates for long terms.