Making extra principal payments is essentially the same as buying illiquid zero coupon bonds that mature in the month that the loan finishes amortizing. When I have made extra payments, I have compared to the rate I could get with zero coupon Treasuries. When the rate on the latter was high, I started building a ladder that would have covered the payments at the end of the amortization period.
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Making extra principal payments is essentially the same as buying illiquid zero coupon bonds that mature in the month that the loan finishes amortizing. When I have made extra payments, I have compared to the rate I could get with zero coupon Treasuries. When the rate on the latter was high, I started building a ladder that would have covered the payments at the end of the amortization period.
Post: Matters of Principal
Link to comment from March 23, 2024