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Paying off your mortgage while you are that young is rarely a good idea. I dont know enough about your situation to say yes or not but I will say that a mortgage can be a huge asset if used properly.
I would suggest reading Missed Fortune 101 Doug Andrews.
Thank you all for taking the time to give me your thoughts. Financial planners are usually out for a profit and advise you in the ways that are most beneficial to them. This has been my experience. They all have their own opinions too and the reason I asked for advice in the form of a blog was that I wanted many varied ideas to think about and choose from. I think too many of us let financial planners do everything and we should really be more proactive in making more of our own decisions based on research, reviewing and just what feels right. We ended up putting a chunk into our home and refiniancing. This lowered our mortgage significantly, increased our equity and lessened the monthly burden on our household. I am very glad we made this decision- had we invested it as my financial advisor suggested, it would have plummited and we would have lost a chunk (as my whole portfolio is down now and continuing to decline). At least we have equity in our home and it is not worth less than what we put into it judging by our appraisal last year. We aren't moving so that isn't an issue now anyway. The real estate market will rebound before the stock market imo so by the time we are ready for a move, it will likely have turned around.
We are seriously considering taking full charge of our IRAs, getting a self-directed account through Pensco Trust and investing a huge chunk of our money into the real estate market and out of american equities (for the most part). I think Oppenheimer has some outstanding funds that have a more global vision and I just don't see the market really making us much by the time we retire in 15-25 years. I see real estate is doing and will do more for us. What are people's opinions on real estate investing? What funds are you specifically interested in... those of you who are all for it? We are diversifying... just changing the portfolio. What percentage of your wealth do you think should be in real estate for someone planning on retiring in 15-25 years? I look forward to hearing what you all have to say about this one!
Good reputable financial planners aren't successful unless that make a good return for their clients. Yes there reason for working is to make money, but I don't think you're giving them a fair shake. You truly need the advice of someone knowledgeable, plus your accountant or a CPA who can tell you about your tax liabilities and the best way to go as far as the IRS is concerned.
I find a little weird that this thread is over 3 years old but you're just now checking in to thank people for advice. Still considering your options?
No actually forgot totally about it! I didn't know I had to "suscribe to the thread" so I assumed no one commented because I did not get an email letting me know someone did! I have been on other forums that automatically let you know when someone has responded and thought this would be the same. I happened to come on here today to ask a question about spiders (we are having a black widow issue) and logged in to see my old question had been answered and viewed a ton of times. Surprise, Surprise. So I wanted to thank everyone who responded- I would have done it sooner but I did not know how this forum worked.
I tend to be a little skeptical by nature- especially since my father passed away. He was a great financial person and would negotiate rates with his financial advisor. As soon as he died, they upped their percentage thinking we would not notice. We didn't until my mother switched to another firm who pointed out what they had done and when they had done it. It was pretty discouraging they would not honor the negotiated rate after his death. The few financial guys I have interviewed since don't seem to have the same perspective I have on the economy and market. I hardly want to put my retirement funds with someone who doesn't have a global perspective and continues to hold/wishes to hold 63% of my portfolio in US Equities. EEk. That is an out-dated perspective and certainly won't provide well for my golden years.
Times are a changin'... hate to say it. We had a manufacturing company for 82 years- 100% american-made. Few people buy american anymore and our company died with my father. I have grown to have less faith in our country as people won't spend for the labor we need to survive. The days of manufacturing are grinding to a halt and with that will come a steady decline in american-based companies. I will still keep my money in american companies who trade overseas or have a good portion of their earnings internationally- just not the ones who depend heavily on US consumption- too much global competition now- Coke is a great example... lots of international equity- pretty boring stock all around though. This is all my opinion and there are plenty who would argue this and that is great- glad we have the freedom to debate!
Anyway- if anyone would answer how they feel about real-estate investing and what funds they are specifically supporting, I am all ears! I am just starting to educate myself in this arena so any information you can give me is really helpful! For those with negative comments, please just go on to the next blog- I want to focus on the positive and the future! Hope to hear from those with insight and information! Thanks! (sorry for the rant but I wanted to explain the long break in my response, some background and a bit on my perspective to date)
Pay off the mortgage. You can't make a better investment in today's investing climate. There is NO advanatge to holding a mortgage if you don't need to...taxes, or otherwsie. It is still MORE money out of your pocket, regardless of any deductions which you might get on your taxes.
Save the monthly payment in a secure investment.
If you have an emergency cash need down the road which is greater than your savings from the mortgage payments, take a Home Equity Loan. They will always be available if your asset is good and your credit history is reasonable.
House rich; cash poor for a few months.....but you will be fine and you'll never regret the day you did the sensible thing.
Ted- I totally agree! For credit reasons, I want to keep some mortgage on the house so our score remains high. We have no debt at all and 73K on our mortgage now- about $564 per month. Very glad we did this. What i am interested in doing now is diversifying an existing IRA. It is heavily in US equities and I am learning more about real-estate investing and adding that element to the mix. We are considering a self-directed IRA. We can't possibly do worse than what our financial guys have done for us. LOL I just feel that real-estate is a need and a want... something that may go down here and there but people will always need shelter. That is a given. I just personally feel it is less of a gamble. I feel out of control with the market as it is and I just don't enjoy it like some people do. I would rather buy land or an office building, collect rent and put it right back into the IRA- tax free. I think that will help my husband and I more in the long run. Look forward to hearing from people who are doing this now and have a few words of wisdom! I wish my dad was here, it is a scary world and he always made me feel so secure- someone I could trust and turn to with financial questions. Kind of sad I am on a blog, but I have actually gotten a lot of interesting perspectives by throwing out questions in this manner. No, I don't do what everyone one says financial forums! But I like to weigh the answers and make decisions for myself now. (I do consult a great Tax Attorney).
Pay down that mortgage by HALF, keep a substantial amount (50% of the inheritance) on a high yield account and diversify that investment, and save the differential of the new reduced house payment.
For Real Estate investment, you need a REIT (Real Estate Investment Trust). This will diversify your investment over many properties, usually in many different geographic areas. Plus, you will have professional management that will keep you from having to deal with the Terrible "T"s: Tenants, toilets, teenagers, and trash.
REITs typically specialize in certain types of rentals: Office buildings, shopping malls, multi-family housing, hotels, retail stores, and even mortgages. I would suggest investing in several different kinds. However, I doubt many or any US listed REITs invest outside of the United States.
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