Would it be better to invest or pay down mortgage?

[PRE]

Do not invest it.

[Jimbo]

[ 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

[Mark1808]

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.

[Prime Time]

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.

[Mark1808]

[ 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.

[Ray Zee]

pay down the mortgage and keep some money in reserve for good deals. in this world you sit so much better without debt, and then can make better financial decisions and live a more carefree life.
this is a guaranteed 6% investment for your money. you cant get that now or any time in the near future.
good luck with life mano

[abuljooj]

FWIW I would bet $150k on black and flip the table if it lands on red. jk

all depends on how your life would be affected if you lost a decent amount of that 150k. if it would ruin your life than pay off your mortgage, if not then invest in a pretty aggressive portfolio. Maybe consider taking 10k and invest in some penny stocks...may hit big! good luck

[Duck Rabbit]

I don't mean to hijack the thread, but can we look at a hypothetical situation where investor has lots of cash (let's say 5 million) and wants to buy a $500,000 house. Money is not a concern for the investor. Assuming a 6% fixed rate on the mortgage and 9% annual returns in the market. Wouldn't they always be better off making as small a down payment as possible and putting the rest in the market? I've heard arguments that you should try to pay off your mortgage as soon as possible, but I don't really understand that idea. As long as your mortgage interest rate is lower than the return you expect to make in the market long term, it seems it would be wise to put it in the market, regardless of one's financial situation.

[Jimbo]

The only problem is that your 6% will remain fixed but your 9% return may not, in fact you could lose your entire investment and be broke and still have a mortgage. Now if you are talking about Bill Gates type of money his ROR is so low it would never matter either way but in your example of 5 million the ROR may be a deciding factor.

Jimbo

[mtgordon]

I think an even larger factor is what if you lose all of the money? If you have a very stable job that you are very very unlikely to lose and if you did you could get another one easily then invest the money. If you lose it you can still make your payments and live off of that.

Obviously nobody has that secure of a job nor are they necessarily able to handle the idea of losing all their money but I think the idea is still valid.