Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Many years of scrimping and sacrifice have finally paid off. I sold my house in the city and bought a small cottage at the beach (not ON the beach, mind you). I made a profit on the sale and the house I bought is very modest.
My mortgage on the new house is $100,000 at just over 5% interest (it is higher than normal because it is a manufactured home). The payment is about 29% of my take home pay.
With the proceeds from the sale I:
Paid back my mom what I owed her.
Topped off my IRAs for the year.
paid off my credit card.
put $10,000 into my deferred annuity
built a $6,000 CD ladder.
Took a nice week long vacation to Ireland (my first international travel ever).
Just found out I'm getting a nice $2000 back from my escrow account.
I am a teacher so I don't make enough money to owe capital gains. (whew!)
my old insurance company wouldn't insure a manufactured home, so I have new insurance which is cheaper than my old including car insurance, so I'm saving a lot right there.
The home needs a few repairs, a new sofa, new used washer/dryer, a bathroom reno, and some cosmetic touch ups. I also plan to renovate a shed into sleeping space that my kids can use when they visit. I don't dare over improve the house because as a manufactured home it appraises much lower than market value. My current estimates for this work are running at $40,000.
In general I pay my credit card balance each month. My only goal besides retirement is to take a nice vacation each year (which for me would be driving a camper across a different country each summer).
So call it $100,000 in my checking account. I am open to suggestions as to what to do with this money.
I have tried to run retirement calculators to see how much I should have in savings but they all focus on monthly contribution and don't say what my lump total should be right now (at age 51). I can add as much as I want to the Annuity. This is a Fidelity account and I have doubled my money in the last 8 years. I do not know what other ways I could save for retirement other than buy time from the state teachers retirement system
I was keen on the idea of pay off the mortgage as far as I can, but I don't know how to calculate the tax deduction of paying mortgage interest vs. the interest income of any other investment tools I could use. IF i pay off the mortgage, I still need to know where to put that money each month.
That interest rate is high, so it does add value to the idea of paying it off sooner. If I had a 5% mortgage I’d pay it off right away because I can’t safely get better than 2.5% on my money right now and I’m not in need of higher risk investments. For you though, hmm, 51 so you plan to retire when? You still could have some time to be in the market and hold onto your stocks until it makes sense to sell them. I wouldn’t retire during a recession, for instance.
100,000 to invest. Ok
There is really very little information to give you detail advice.
When are you going to renovate the home? Now then put 40,000 in an on line checking account. This should give you a little interest and a lot better that a local bank
You need an emergency fund. Assume yo are working so lets say 6 months of livings expenses. I would put this in CD's from an online bank. Check to see if you can cash these in when you need them. You probably can with a loss of say 6 months interest. Lets say this is 20,000 so you have 60,000 left.
I would not put any money in the deferred annuity.
Paying down your mortgage is ok. You probably do not get a tax benefit from your mortgage interest.
I would tend to put the balance in index funds for the future. Part can be set asside in a CD for your vacations.
I agree with not putting anything else into the annuity, especially since it sounds like you'll have a decent pension.
Don't do anything right away. Educate yourself first. I highly recommend the "Dummies" books because they explain things clearly and with a sense of humor. Look into the ones in investments, especially ETFs. Also do reading on "asset allocation". If I had it to do over again I'd just do a simple portfolio of maybe 4 ETFs- bonds, large-cap, small-cap, international, for example. The allocations and the specific ETFs are decisions you have to make but there are plenty of people on this and other Boards who invest this way. Once you make those decisions, you might also want to dollar-cost average by investing maybe 10% each month till it's all invested. The market has been doing very well for years and that way if there's a large drop you have money to buy in at the lower values.
Age 51 is 14 years away from Medicare eligibility and health insurance costs and deductibles are rising each year. That is a wild card which can change through the years, even if something is promised/guaranteed in your pension.
Be careful with your investing; like the others have said, balance your risk.
Many years of scrimping and sacrifice have finally paid off. I sold my house in the city and bought a small cottage at the beach (not ON the beach, mind you). I made a profit on the sale and the house I bought is very modest.
My mortgage on the new house is $100,000 at just over 5% interest (it is higher than normal because it is a manufactured home). The payment is about 29% of my take home pay.
With the proceeds from the sale I:
Paid back my mom what I owed her.
Topped off my IRAs for the year.
paid off my credit card.
put $10,000 into my deferred annuity
built a $6,000 CD ladder.
Took a nice week long vacation to Ireland (my first international travel ever).
Just found out I'm getting a nice $2000 back from my escrow account.
I am a teacher so I don't make enough money to owe capital gains. (whew!)
my old insurance company wouldn't insure a manufactured home, so I have new insurance which is cheaper than my old including car insurance, so I'm saving a lot right there.
The home needs a few repairs, a new sofa, new used washer/dryer, a bathroom reno, and some cosmetic touch ups. I also plan to renovate a shed into sleeping space that my kids can use when they visit. I don't dare over improve the house because as a manufactured home it appraises much lower than market value. My current estimates for this work are running at $40,000.
In general I pay my credit card balance each month. My only goal besides retirement is to take a nice vacation each year (which for me would be driving a camper across a different country each summer).
So call it $100,000 in my checking account. I am open to suggestions as to what to do with this money.
I have tried to run retirement calculators to see how much I should have in savings but they all focus on monthly contribution and don't say what my lump total should be right now (at age 51). I can add as much as I want to the Annuity. This is a Fidelity account and I have doubled my money in the last 8 years. I do not know what other ways I could save for retirement other than buy time from the state teachers retirement system
I was keen on the idea of pay off the mortgage as far as I can, but I don't know how to calculate the tax deduction of paying mortgage interest vs. the interest income of any other investment tools I could use. IF i pay off the mortgage, I still need to know where to put that money each month.
WWYD?
You aren't likely getting any tax deduction from interest on your mortgage. You would have to be paying a lot of interest to get one that exceeds your standard deduction. So you are essentially getting a 5% return if you pay off any amount on your mortgage, which really isn't bad.
I wasn't clear on whether the 40k in repairs was already taken into account when you said you had 100k to invest.
In any case, I know S&P 500 Index funds are all the rage, but I actually like Vanguard Dividend Appreciation Index (VDADX or the etf version) is VIG better. It's still an index fund but focuses on companies that have increased their dividends for 10 years in a row. It tends to be more stable than an S&P 500 index fund (i.e. loses less in bad markets, but doesn't go up as much in good markets). Over the long run it should match the returns of the S&P 500 with less volatility.
I wouldn't put any more in a variable annuity. They tend to have a bunch of rip off hidden fees.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
