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Old 04-14-2015, 03:37 PM
 
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I hate debt and would pay off my mortgage. I don't see the point in paying the bank interest just to save a little bit in taxes. I may not make as much in the long run by paying off my house vs investing. However, I will sleep better at night.

Is your financial advisor making money off of whatever stocks/bonds he sells you?
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Old 04-14-2015, 03:44 PM
 
Location: The Triad (NC)
28,537 posts, read 62,253,689 times
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Quote:
Originally Posted by FireFly2 View Post
I hate debt and would pay off my mortgage.
I don't see the point in paying the bank interest...
Approaching retirement age... a mortgage should be well past the interest paying stage.
Assuming so, making that payment is like having a savings account.

Compound that with the intent to sell and move to a smaller place soon...
and there's no reason to pass on the growth/income that investing that money can yield.

The only real concern is whether the OP has the steady income.
They seem to have that.
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Old 04-14-2015, 03:52 PM
 
29,793 posts, read 34,889,516 times
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Quote:
Originally Posted by FireFly2 View Post
I hate debt and would pay off my mortgage. I don't see the point in paying the bank interest just to save a little bit in taxes. I may not make as much in the long run by paying off my house vs investing. However, I will sleep better at night.

Is your financial advisor making money off of whatever stocks/bonds he sells you?
It is about ROI on the investments vs interest charges and the options liquidity gives you. The cheapest easiest access to money is a withdrawal from a taxable account. Whether in mutual funds, bonds, money markets or a non CD bank account. Need 15K piece of cake.
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Old 04-14-2015, 03:54 PM
 
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Quote:
Originally Posted by eastmemphisguy View Post
"Stocks and bonds" is a very vague term. Should you invest in junk bonds and dot com startups? Of course not! But you can pretty easily put at least part of your money in a conservative index fund that is tied to the S&P or another broad index. It can go down over a period of a few years, but it always comes right back and then some. Mathematically, it's the opposite of Vegas. In Vegas, you may win for a little while, but, if you don't quit while you're ahead, eventually your result is going to look like the odds of whatever you are playing, which is to say you will lose. Similarly but with the opposite result, with a reasonable and diverse portfolio, while it is possible to be down at first, the odds are going to leave you in positive territory as long as you don't quit while you are behind.
Whatever you do, leave some money that is easily accessible in case life throws something ugly and expensive at you! If you put all your money in house, you can't get that money without selling your house, which is expensive, difficult, and unpleasant.
25% cash, 50% bonds, 25% equity funds might work or even 20/30/30% would give them flexibility with a cash available of 40-50K etc etc etc.
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Old 04-14-2015, 03:56 PM
 
29,793 posts, read 34,889,516 times
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Quote:
Originally Posted by whocares811 View Post
Thanks for all the advice so far. VERY much appreciated!
Not trying to be snarky but keep in the back of your mind and no need to comment and ask people, but how many responding have 200k to be planning with themselves along with pensions and SS that pay their expenses? You did ask similar situation.
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Old 04-14-2015, 04:02 PM
 
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We sold our home. Paid cash for a new smaller retirement home. Invested the remaining cash. We decided to have no mortgage because if one of us passes, it would be difficult for the remaining one to pay a mortgage and still have enough left to enjoy life. We don't need the tax write off (which wouldn't be much anyway). We are currently able to save each month, but as we age we may have to pay for more services rather than do it all ourselves. Bassically, we tried to plan for the long run, not just how things are now.
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Old 04-14-2015, 05:36 PM
 
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I had a similar situation, except I didn't inherit it. Some tips, in general....nothing specific, though:

1. One word: Bonds. NOT bond funds. Bonds. Corporate bonds, govt bonds. For SOME of the $. You get a specific yield for a specific period of time. Don't go for a long period of time. We are in a very low interest environment, so interest rates will be going up. As interest rates go up, you can buy more bonds. Low risk.

2. There is a tipping point in deciding whether to pay off the mortgage, which is....is the interest rate on the mortgage so low that you know you can make a higher return than that elsewhere? I could. But you are uncomfortable with investing, so that throws a kink into things. When you pay off your house, you are getting a return of 3.75% or thereabouts. Which leads me to.....

3. It's time to buy two or three major mainstream informative educational investment books. It would help if you know just the basics of investing. It's not rocket science. There are basics, and if you know those, you should be able to conservatively and comfortably invest some of your $ for the future. I can suggest some if you want, or you can Google around to see what the standard books are.

4. Money in a bank account? This is safe, in an FDIC insured account. And it's liquid. But be aware that if the interest you earn is lower than the inflation rate, you will actually be losing money. You need a savings/liquid account of only a certain amount for emergencies.

5. Annuities. DON'T buy an annuity without seeking advice anywhere and everywhere you can. They have high fees, are part of sales programs, and it's a setup such that they make it seem that you get more $ than you really do, because they are paying you your own principal back.

6. Don't buy investments from insurance companies. Insurance companies are for insurance, and investment companies and brokerages are for investments.

7. Pay off the car loan for sure.

8. If you would feel comfortable not having a mortgage, then pay off the house. There's something to be said for the security of owning your home outright. If you are 10 years into the loan, you've used up most of the tax advantages of the interest. You sound as if you don't mind the mortgage, though.

So I would not pay off the mortgage, IF I needed that money to invest to make more than 3.75%. If I had other money to invest, though, I might consider paying off the mtge. But I probably would end up not paying off the mortgage, and investing to try to make more than 5% in investments (which should be easy). But that's me. I know a bit about investing. So I don't know what I'd do if I knew nothing about investments.

I wouldn't hire a financial guru to invest for you. Their fees are high, and you still need to understand investments so that you understand what he is doing. Better to preserve your capital and know what you're doing, than to put it in the hands of someone else, when you wouldn't be able to know if what they're doing is not right for you. No one cares about your money as much as you do, is my opinion.

EDIT to add: I would pay off the mtge before I put the money in a low interest bank or money market account BECAUSE when I pay off my mortgage, I would have earned a guaranteed no-risk return of 3.75% on the money (less any tax benefit for the interest deduction, which there may not be much of one now).

When I had the chance to pay off my house years ago, I did. That was because my interest rate was 7.5%, which would have been difficult for me at that time to reliably get through investments (I didn't know about investing then). So I MADE 7.5% when I paid off that loan, less any tax benefit for the tax deduction (but I was more than 10 years into the loan).

What state are you going to move to? Reason I ask is that I'm going to move, too. But I'm staying in state.

Last edited by bpollen; 04-14-2015 at 05:47 PM..
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Old 04-14-2015, 05:39 PM
 
Location: Kalamalka Lake, B.C.
3,044 posts, read 4,020,006 times
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Up here in Canada we're not allowed to write off our mortgage interest, but C. anyway really love keeping their homes paid off. But what I would do with a lot of cash is not have it all in one place. You can stay in cash but the more liquid the less interest return, meaning a net loss over several years of your accumulated capital.

Also having it in one place means it can be stolen out from under you easily, as so many of the Madoff clients found. Spread it out and around a little so that shyster family lawer doesn't walk off with all of it, as one friend found out the hard way.
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Old 04-14-2015, 05:51 PM
 
6,307 posts, read 4,752,208 times
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Quote:
Originally Posted by FireFly2 View Post
I hate debt and would pay off my mortgage. I don't see the point in paying the bank interest just to save a little bit in taxes. I may not make as much in the long run by paying off my house vs investing. However, I will sleep better at night.........
Then don't think of it as debt. Instead think about how foolish the bank is to give you money at a ridiculously low rate so you can invest and make more money. People seem to want to blame rich people for getting richer but when they have a wonderful opportunity to make money they get nervous and ignore the opportunity.

My mortgage does not save me just "a little bit in taxes." Taxes are very progressive. My mortgage and other deductions reduce my taxes to almost nothing. Without the mortgage I would need to take the standard deduction and pay thousands more in taxes.

So someone who takes your advice can end up losing thousands in income and paying thousands more in taxes.....every year. That is a horrible price to pay because you "hate debt."
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Old 04-14-2015, 06:00 PM
 
6,307 posts, read 4,752,208 times
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Originally Posted by Harpaint View Post
...... We decided to have no mortgage because if one of us passes, it would be difficult for the remaining one to pay a mortgage and still have enough left to enjoy life. ......
WHY?? You would still have the same money you would have used to pay off the mortgage and in addition you would have the investment returns that money generated. One top of that the mortgage keeps getting smaller as time goes by.
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