Re: Would it be better to invest or pay down mortgage?
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I have somewhere in the neighborhood of 150k sitting in a low interest account (~4.5%), and want to move most of it. My job is fairly demanding on my time, so I am looking at either putting most of the money into index funds (spy, dia, vti, qqqq, etc.) or paying down my mortgage.
I owe a little more than 300k on my home, with a 6% fixed rate mortgage (~28 years left). Home value is probably currently somewhere between 600k - 700k. I am 40 yrs. old, married with 2 small children.
Which option do you all think would be better in the long run?
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You're 40 years old with 2 small children and 150k in savings. You are probably looking at retiring in your 60's (at the earliest) given that scenario.
Since your investor window is about 20 years minimum, you should definitely get your 150k more aggressively allocated than a mere 4.5% interest bearing account, and even more aggressive than just getting a guaranteed 6% return (which is what you get by paying down the mortgage).
Think of it this way. You're already heavily invested in property at a 2-1 ratio to your other investments (your ~300k in equity). that is a VERY conservative allocation already.
natedogg
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