Re: Would it be better to invest or pay down mortgage?
 

OK, I got the answer I think I already knew, that I should invest the money, I just wanted some validation.

I have been reading through past threads and other investment websites. I would like to keep it simple to start with. Would an allocation of

60% VTI
30% EFA
10% VWO
(an alocation suggested by spider in another thread)

be sufficiently diversified, or would I be better off with more funds, like:

10% SPY
10% VTV
10% IWC
10% VBR
10% VNQ
10% EFA
10% EFV
20% DLS
10% VWO

(ETF Equity Buy and hold portfolio suggested by fundadvice.com )?

I plan on buying about 100k in fairly short order, and then adding 2k/month indefinitely. I hope to do any balancing by alocating monthly additions to try and maintain percentages. Any thoughts?

Re: Would it be better to invest or pay down mortgage?
 

Do not invest it.

Re: Would it be better to invest or pay down mortgage?
 

[ QUOTE ]
Do not invest it.

[/ QUOTE ]

Are you suggesting he stuff it in his mattress or bury it in his backyard inside of a coffee can? SHEESH!!

Jimbo

Re: Would it be better to invest or pay down mortgage?
 

"The the tax write off alone from carrying a mortgage is well worth it."

This cracks me up, lol. I see it over and over.
Someone please explain to me why paying $10K in interest, to save $2.5K in taxes is good?

Re: Would it be better to invest or pay down mortgage?
 

Right now I think cash is cool. Markets are relatively high and many believe the recent credit scare is only the begining. The FED's main objective is to maintain pice stability and with Gold and Oil taking off I don't think they can continue to bail out lenders by supplying liquidity, pain will be the only option. Pain will create opportunities in stocks.

I would also consider income real estate if you can buy a good property at a decent CAP rate. Depriciation, cash flow and inflation protection make conservatively financed income real estate a great investment. The investment can cause a few headaches though.

Re: Would it be better to invest or pay down mortgage?
 

[ QUOTE ]
Someone please explain to me why paying $10K in interest, to save $2.5K in taxes is good?

[/ QUOTE ]Say your loan amount is $200,000 and intrest rate is 5%, then you'll indeed pay $10k in intrest. But since you only have to pay $7.5k, you really only payed a 3.75% intrest rate. If you can get higher than a 3.75% intrest rate with your money, then taking the loan would be +EV.

Given a possible return rate of r, a mortgage rate of m, and income tax rate of t, we would need (m - t) < r for the mortgage to be +EV. If the calcs I just did in my head are correct, at least.

Re: Would it be better to invest or pay down mortgage?
 

[ QUOTE ]
[ QUOTE ]
Someone please explain to me why paying $10K in interest, to save $2.5K in taxes is good?

[/ QUOTE ]Say your loan amount is $200,000 and intrest rate is 5%, then you'll indeed pay $10k in intrest. But since you only have to pay $7.5k, you really only payed a 3.75% intrest rate. If you can get higher than a 3.75% intrest rate with your money, then taking the loan would be +EV.

Given a possible return rate of r, a mortgage rate of m, and income tax rate of t, we would need (m - t) < r for the mortgage to be +EV. If the calcs I just did in my head are correct, at least.

[/ QUOTE ]

This is a level right?
possibe? this implies risk? No?
go back to the drawing board plz.

Re: Would it be better to invest or pay down mortgage?
 

My advice to you:
Invest as much as possible allowed by tax codes in 401K, roth, etc. Invest in most efficient 529's for children. These generate tax free gains.
Then pay-off motgage as quick as possible.

Re: Would it be better to invest or pay down mortgage?
 

[ QUOTE ]
[ QUOTE ]
[ QUOTE ]
Someone please explain to me why paying $10K in interest, to save $2.5K in taxes is good?

[/ QUOTE ]Say your loan amount is $200,000 and intrest rate is 5%, then you'll indeed pay $10k in intrest. But since you only have to pay $7.5k, you really only payed a 3.75% intrest rate. If you can get higher than a 3.75% intrest rate with your money, then taking the loan would be +EV.

Given a possible return rate of r, a mortgage rate of m, and income tax rate of t, we would need (m - t) < r for the mortgage to be +EV. If the calcs I just did in my head are correct, at least.

[/ QUOTE ]

This is a level right?
possibe? this implies risk? No?
go back to the drawing board plz.

[/ QUOTE ]

I'm wondering if you're leveling now.

Re: Would it be better to invest or pay down mortgage?
 

[ QUOTE ]
My advice to you:
Invest as much as possible allowed by tax codes in 401K, roth, etc. Invest in most efficient 529's for children. These generate tax free gains.
Then pay-off motgage as quick as possible.

[/ QUOTE ]

Good advice. No, great advice. I would keep the lquidity though. You could even put the money in a tax free money market and continue to deduct the mortgage interest.