Dear Quentin, I currently owe $300,000 on my house with a 2.5%, 30-year mortgage. I am maxing out my retirement accounts — IRA and 401 — and looking to retire in less than 10 years. I will receive an inheritance of at least $300,000, so I will be able to pay off the house.
As my colleague Aarthi Swaminathan put it: “While the price of their car, gas, electricity, and other expenses go up, that homeowner will also see their home value rise with inflation. Yet their mortgage rate remains the same as it is not inflation adjusted, which means they’re still paying the same rate that they were pre-inflation.”
Your tax-advantaged retirement savings at, say, 6% will be doing a lot of the heavy lifting for you, offsetting your 2.5% interest rate, assuming that you have a healthy 401 and IRA. Talk to a financial adviser, and make sure that you would still have enough to live comfortably and pay down your mortgage and/or downsize.
Continue to max out those accounts. “I assume you are over 50, so you can put $7,000 into an IRA and $26,000 into your 401. I have been doing this for 36 years and I have yet to meet someone who put away too much for retirement,” Pon added. “I strongly suggest you continue to max out your retirement plans so your retirement will be more secure.”
If it were me? I’d pay off the loan. I don’t like debt. We spend the first part of our lives desperate to get a mortgage, and then the rest worrying about paying it off. They are a necessary, if sometimes unhealthy, obsession. Mortgages give us something to focus on aside from the other “M” word: our mortality.Check out the Moneyist private Facebook group, where we look for answers to life’s thorniest money issues. Readers write in to me with all sorts of dilemmas.
Source: Loan Digest (loandigest.net)
Mortage, obvs. Then invest what you'd pay on your mortage.
Makes little sense to pay off a mortgage at 2.5% unless you have fully funded your retirement.
I got 7 inheritances in my email aswell lmfao
You’re lucky a family member died? You suck.
I would say paying off the mortgage is an investment 🤷🏾♂️
Get divorced before you get it. That’s step 1 or you will lose half of it in its entirety! 🤣
I would put aside 50k for the mortgage and look into some solid indiex/ETF’s and have a couple other categories for stocks.
Pay off your mortgage, then use the equivalent amount you used to pay towards it to invest monthly. Great way to DCA into what ever investment you’d like. I could have done the same back in 2021 and I needed up riding my profits in half. My goal was to pay my mortgage off😢
Invest it in the S&P, the real return will outperform the sums that’ll be paid on your mortgage
Just buy Bitcoin, keep working, forget about it for 5 years then boom 🤯 you are either richer or poorer
All on black 😳
Invest it in large, safe, well-known and proven companies where this is no risk. Companies like Worldcom, Lehman Brothers, AIG, Countrywide and Enron. And be sure to diversify, so add in some Blockbuster as well.
Invest on wish lol
If you have a low interest rate, invest it
Something isn’t right with the first sentence in this article. It’s contradictory to itself and the rest of the paragraph.
No one knows what the world will be tomorrow😆 Investment doubles
Always pay off debts first before investing . Invest only when you can afford to lose all at any moment
Put it on the chiefs tomorrow. It’s a lock
Invest it in $CLOV
Invest the money wisely to pay off the accrued mortgage later and still have something left
Pay of the mortgage or if you can invest and make a monthly income that can pay off the monthly instalment that will be s better choice
Today’s market - take advantage of it - pay some down and invest some. Keep interest low and principle higher.
Paying off your house is investing the money.
Invest
Is that before or after taxes?
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