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Thread: Pay Down Mortgage or Invest?
05-11-2020, 11:22 AM #1
Pay Down Mortgage or Invest?
Hello and thank you for reading this.
I'm 54 and we owe $115K on home worth $230K. Still working and planning to retire in a few years. We have savings, 401K and pension. The only debt we have is house.
We make double payments on mortgage with 3.3% APR and intend to pay off within 3 years. Planning to receive an inheritance soon of ~$50K.
Should I pay down mortgage debt further, invest in mutual funds or split between the two?
05-11-2020, 03:29 PM #2
Hello also from Michigan.
05-18-2020, 12:35 PM #3
I would pay it down if you can. I am all paid off, 100% of everything and so crises like the quarantine, possible job loss, etc, are not as scary for me financially. The rest is still stressful, but I can't lose my home as easily as those with a mortgage.
BUT that is my risk tolerance. I paid off mortgage before investing. Investments can always lose money, they are not a guaranteed profit at any given rate.
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05-18-2020, 01:57 PM #4
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Risk tolerance is a big factor. Related to that is job security. How secure is your job? How secure is your partner's job?
My husband and I both have extremely secure jobs, so we might make some decisions that would be risky for other people.
Taxes are another factor. We do not pay taxes on the money we put into our retirement fund. That was a big factor in our decision to throw extra money in retirement investment instead of mortgage.
Does your employer do matching funds for retirement? Always contribute at least the amount you get matching funds for. (We get matching for the first five percent, but we contribute more than five percent.)
Another thing to keep in mind is that the stock market is really uncertain now. It might be that you wind up buying when stocks are at their lowest and make a ton of money. Or you could buy stocks and have the stock market fall a lot more.
If you do invest, I would pick some pretty conservative investments.KathyB
05-19-2020, 08:15 PM #5
What types of investments are you considering?
I would consider doing both, if you can. Right now is probably a great time to invest and even if you invest a little, it may earn quite a bit in the future. If it was me and I had income to do what I wanted, I'd invest a little and throw more towards the mortgage.