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Assuming you're already paying double on your 10 year mortgage, maxing 401k, enough emergency stash, what would you do with the remaining 3k take home?
Options:
- IRA (no ira account currently)
- save in cash
- pay down mortgage even further
- buy stocks/large caps
- mutual funds
- invest in local businesses? (don't know how to even go about this...)
- CD (at 1% return...)
- Other?
I do like the idea of having liquid assets, as you never know when the BEST opportunity on the planet may present itself and you won't be able to 'jump' on it, unless you have cash....as cash is always king it seems...
Of the options you describe, I'd get aggressive in paying down the mortgage. Aside from a few investments (junk bonds, a good mutual fund), there's few things that will pay you more in returns than the interest rate on your mortgage, which if you got more than two years ago, is likely north of 5% a year. Pay it off.
Then take the $3,000 a month and stick it into a diverse mix of mutual funds. I also suggest an IRA because if its benefits (and then invest said IRA into mutual funds/bonds, too).
Of the options you describe, I'd get aggressive in paying down the mortgage. Aside from a few investments (junk bonds, a good mutual fund), there's few things that will pay you more in returns than the interest rate on your mortgage, which if you got more than two years ago, is likely north of 5% a year. Pay it off.
Then take the $3,000 a month and stick it into a diverse mix of mutual funds. I also suggest an IRA because if its benefits (and then invest said IRA into mutual funds/bonds, too).
thanks.
my mortgage is only 3.25% for 9 more years, but with the double pay, it'll be paid off in 5. but you're right, the 3.25% is still higher than any CD or MMK out there.....I'm tempted to put the other 3k towards the mortgage too, but then I'm concerned that i won't have enough cash should a really nice investment property goes on the market next to the metro for example.....for that, equity won't help as you'd need the cash...right then and there.....
I'm also hesitant about stocks/mutuals as who knows when the volatile market may crash and burn? i feel like I've reached the limits of my risk tolerance with my maxed out 401k.....
I pick up 1 gold coin a month and invest the rest in the stock market. I feel pretty confident the end game for America's national debt is Hyperinflation. It's just a question of when, not if.
thanks.
my mortgage is only 3.25% for 9 more years, but with the double pay, it'll be paid off in 5. but you're right, the 3.25% is still higher than any CD or MMK out there.....I'm tempted to put the other 3k towards the mortgage too, but then I'm concerned that i won't have enough cash should a really nice investment property goes on the market next to the metro for example.....for that, equity won't help as you'd need the cash...right then and there.....
I'm also hesitant about stocks/mutuals as who knows when the volatile market may crash and burn? i feel like I've reached the limits of my risk tolerance with my maxed out 401k.....
hence the confusion...
Hi Thinking-man--
In order to ensure you don't get up a creek without a paddle, build up your net worth in absolute terms before speculating on property. It may cause some delay and you may miss an opportunity or three, but you can guarantee that you'll never go broke that way.
If you're risk averse about stocks/mutuals, then I would recommend muni bonds, which are Federally tax-exempt. A nominal yield of 3% is actually closer to 4% if you take into account not being Federally taxed.
As far as precious metals go, I think gold can be a decent store of value, but as a medium of exchange, gold is rubbish. You can't subdivide gold into small enough amounts to make it into a viable currency. In the unlikely event of a total currency collapse, a Krugerrand is like a $20,000 bill. Cool, and probably worth a lot, but not a movable currency.
If you absolutely want to hedge against currency collapse/significant inflation, I suggest moving 5-10% of your portfolio into silver and other metals - not the indexes, but actual physical metal locked away in a safe somewhere. One-ounce bars of silver, or even pre-65 quarters and dimes, are a much more viable means of exchange.
Maxing out an IRA comes out to about $416/month, and if you have a spouse, you can do another $416 for them. But that still leaves quite a bit. I'd probably take half and put it in a semi-liquid cash type asset, like CDs, where you are getting some interest as long as you leave them alone, but if you have to pull them out, all you lose is the interest. And then use the other half to pay down the mortgage further.
I would do all of the above. Divide the $3k into an IRA, cash, cd, and paying down your mortgage so all of your bases are covered. A little each month will add up to a big chuck in all of those departments, limits your risk and allows you to have cash in hand if needed.
Assuming you're already paying double on your 10 year mortgage, maxing 401k, enough emergency stash, what would you do with the remaining 3k take home?
- pay down mortgage even further
Pay Down the mortgage. Nothing like having your house paid off in no time.
Location: Chapel Hill, NC, formerly NoVA and Phila
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1. Definitely do an IRA - it's $5000k for the year - do it each year.
2. I assume you don't have children or I'd suggest a college fund.
3. With some of the rest, I'd put some aside toward a goal - do you need to replace a car in a few years? Do you want to save for a beach home? Other goals?
4. Lastly, I'd use some to travel or otherwise enjoy the funds. If you've got all of your bases covered, why not enjoy some of your hard-earned money?
The point of this is????? Make it any other dollar amount and the point would be?
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