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re: Pay $1,000 extra to house or invest?
Posted on 6/14/16 at 1:49 pm to statman34
Posted on 6/14/16 at 1:49 pm to statman34
As long as you're okay throwing basic concepts like opportunity cost, the time value of money and liquidity out the window to pursue this short sighted strategy, enjoy having no mortgage and no money for the next 6+ years.
Good luck getting access to your equity if you lose your job, get disabled or have a financial emergency. As someone with college expenses on the horizon, liquidity should be a bigger priority.
No matter the term left on your current mortgage, if you can get money at 3.75%, you should invest the surplus elsewhere. At a minimum, you stay liquid and get flexibility, not to mention you can buy assets that yield more than home equity. The yield on home equity is always 0%, plus you have to sell your house and incur very high transaction costs should you need to realize it.
Your house will never pay you dividends, produce earnings or appreciate more than equities (historically) or otherwise put money in your pocket.
Good luck getting access to your equity if you lose your job, get disabled or have a financial emergency. As someone with college expenses on the horizon, liquidity should be a bigger priority.
No matter the term left on your current mortgage, if you can get money at 3.75%, you should invest the surplus elsewhere. At a minimum, you stay liquid and get flexibility, not to mention you can buy assets that yield more than home equity. The yield on home equity is always 0%, plus you have to sell your house and incur very high transaction costs should you need to realize it.
Your house will never pay you dividends, produce earnings or appreciate more than equities (historically) or otherwise put money in your pocket.
2
Posted on 6/14/16 at 4:39 pm to GoIrish02
Do either of you have a 401k or other pre tax retirement plan? If you have $1000 post tax that's like $1250+ before taxes.
I'd take a 25% instant gain on a pre tax retirement plan first.
If your are planning on more kids $1000 doesn't go far.
No way especially with a mother would I rely on a pension requiring 30 years. I'd consider it pure fluff unless she is under 10 years away.
ETA: I'd also make sure you had at least $25k in equity in your house so if you ever need to sell you can walk away without owing anything.
I'd take a 25% instant gain on a pre tax retirement plan first.
If your are planning on more kids $1000 doesn't go far.
No way especially with a mother would I rely on a pension requiring 30 years. I'd consider it pure fluff unless she is under 10 years away.
ETA: I'd also make sure you had at least $25k in equity in your house so if you ever need to sell you can walk away without owing anything.
This post was edited on 6/14/16 at 4:47 pm
Posted on 6/14/16 at 6:27 pm to GoIrish02
What would you recommend as a way to invest that much money a month vs. paying down your mortgage. I am not eligible for Roth IRA and I am not experienced or comfortable with the stock market on my own. Just curious to see what other options I would have.
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