How to take advantage of the low interest rates and invest into the market?

[Mman]

so why not borrow

never ever borrow to pump money into equities. Something about the market being able to remain illogical longer than you can remain solvent...

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[USCTrojan11]

If you have a high risk appetite and don't want to put huge amounts of capital down, you can buy way out of the money SPY options that expire in say...october...the contract prices are much lower than having to put down the capital for actual stock.

 

[Select All That Apply]

This thread feels like Mad Money, except my television is off and I'm on SDN instead of the WSB subreddit. Mikkel could actually be Jim Kramer though.

 

[anbuitachi]

This thread feels like Mad Money, except my television is off and I'm on SDN instead of the WSB subreddit. Mikkel could actually be Jim Kramer though.

well if you dont take risks, you wont get those big rewards

 

[leaverus]

The probability that an investment made at an S and p level of 2500 (like next week for example) is worth 20% more in 12 months is about 90%. In my lifetime, I have never seen such probability in any equity investment ever. Yes, I am putting my money where my mouth is and going from a 60%/40% allocation at the start of the crash to a 85%/15% allocation at 2200. Below 2100 I'd be 90/10. Even if we do not re-test 2200 again I'll be buying equities heavily once we get through April/early May. IMHO, the market will likely bounce quickly to 2800 once the pandemic gets under control.

How do you have the cash to keep investing so frequently? I only get paid once a month.

 

[Mman]

I placed all my money into 4/20 and 5/1 220 SPY puts

well that would seem like a quite dumb idea. You'd have better odds at a casino. I mean sure you might hit, but you also might go bust which would seem to be a not smart thing to do with retirement funds.

 

[Mad Jack]

The Republican party would love nothing more than a pretext for installing an autocratic regime. The longer this lasts, the longer they can brainwash the population, especially once they start censoring the press. Already Trump is trying to rewrite history.

I am much more afraid that we'll lose our democracy than of the economic losses. There is an increasing chance for the former. What we are seeing already is the severe erosion of democratic institutions, where nobody does the right thing because everybody is afraid to tell the emperor that he's naked.

I'm a actually shocked by how not authoritarian he has been. He seems to understand that taking more responsibility would also give him more burden for the outcomes, and thus is trying to be as hands off as possible. Trump wants money and power, but I think he damn well knows he couldn't pull off a dictatorship.

 

[btbam]

I placed all my money into 4/20 and 5/1 220 SPY puts

well good thing you’re Kevin Durant so you’ve got some extra money to burn. Theta decay is already starting to kill whatever theoretical profits you’ll make.

 

[vector2]

I placed all my money into 4/20 and 5/1 220 SPY puts

At least ladder by selling some deep out of the money puts. Or better yet don't f with options.

 

[Mman]

I placed all my money into 4/20 and 5/1 220 SPY puts

for the sake of curiosity, what exactly was your cost for each of those? 4/20 currently trades for about 80 cents per share and 5/1 for 2.27 per share. I'm assuming you probably paid a good bit more and your breakeven would maybe be SPY at 215 or 214 or so which is nearly a 20% drop from current market levels.

Are you planning on holding til expiration and probably losing everything or are you going to cut your losses and hedge it?

 

[deleted131481]

I spent $100 on put options on Apple about 10 years ago. It promptly went to zero, but I consider it money well spent - that was the first and last time I purchased options.

I suspect op has payed for a similar valuable lesson.

 

[chocomorsel]

How do you have the cash to keep investing so frequently? I only get paid once a month.

He’s old, been playing a while and presumably has lots of savings to play with.
Besides isn’t once a month deposits enough? Long as its regular? According to the financial experts?

 

[leaverus]

He’s old, been playing a while and presumably has lots of savings to play with.
Besides isn’t once a month deposits enough? Long as its regular? According to the financial experts?

yes, he is old. but i assume his savings are tied up in equities already and not liquid. you're right though, during normal times once a month DCA would be fine, but he was talking about taking advantage of this downturn. I guess he was just referring to rebalancing.

 

[Mman]

Sure, you don't have a pile of cash around to invest because of prepaying the mortgage, but if you refinanced like I did, my rate is 40% less than before. I can put a lot more money into the market now because my monthly expenses are a lot less.

How long will it take to get to DOW 30k? 6 months? 1 year? 3 years? Impossible to know, but if you bought at DOW 30k before, that time you wait to get back to 30k to break even is time that could have been shortened if you prepaid. In other words, stocks held waiting for appreciation back to baseline is money and time wasted.

I have lots of retirement money invested at market highs, so it's not like I'm hoping things never recover.

and just to recap, anybody that paid off a mortgage was still a terrible idea from a financial point of view. S&P is up approximately 47% (including dividends) since March 1, 2020. Meanwhile almost any mortgage could have been refinanced to 3% or less this summer.

Over the short terms stocks go up and down. Over a long enough term they go up. Mortgages are fixed in rate, can potentially be lowered via refinance any number of times, have tax deductible interest, and are a hedge against inflation.

Paying off early is an emotional help, not a financial help. And I'm not against that if you need it to help make better decisions with the rest of your life, just don't pretend you will come financially ahead by doing it.

 

[okayplayer]

and just to recap, anybody that paid off a mortgage was still a terrible idea from a financial point of view. S&P is up approximately 47% (including dividends) since March 1, 2020. Meanwhile almost any mortgage could have been refinanced to 3% or less this summer.

Over the short terms stocks go up and down. Over a long enough term they go up. Mortgages are fixed in rate, can potentially be lowered via refinance any number of times, have tax deductible interest, and are a hedge against inflation.

Paying off early is an emotional help, not a financial help. And I'm not against that if you need it to help make better decisions with the rest of your life, just don't pretend you will come financially ahead by doing it.

Curious how far you push this. If your wife wants a new Audi ($50k) do you pay cash or finance at 2% for 5 years and invest that $50k?

 

[Mman]

Curious how far you push this. If your wife wants a new Audi ($50k) do you pay cash or finance at 2% for 5 years and invest that $50k?

Car interest is not tax deductible and the loan term is very short compared to a 30 year mortgage so it is far less certain that stocks will outperform over that time frame.

I don't really push anything. Just pointing out that going crazy to pay off a mortgage early is almost never a good idea if your goal is to maximize your net worth and/or retire as early as possible. A mortgage is a unique category of debt and rules that apply to other debts don't really apply.

 

[okayplayer]

Car interest is not tax deductible and the loan term is very short compared to a 30 year mortgage so it is far less certain that stocks will outperform over that time frame.

I don't really push anything. Just pointing out that going crazy to pay off a mortgage early is almost never a good idea if your goal is to maximize your net worth and/or retire as early as possible. A mortgage is a unique category of debt and rules that apply to other debts don't really apply.

Did you take out a 15 or 30 year mortgage?

 

[deleted162650]

Curious how far you push this. If your wife wants a new Audi ($50k) do you pay cash or finance at 2% for 5 years and invest that $50k?

Both mine and wife’s car I got for 0% financing. Easy decision to take the free money.

 

[okayplayer]

I’m debt averse and I admit it will probably end up having cost me when I go to retire. Fine with a mortgage ($3.8k /mo for a 15yr note including prop tax) but I really just don’t want any other debt.

Examples...car loan has $35k left @2.3%. Paying off next month. Pissed I even had a loan to begin with (long story). Stud loans $200k left. Will eat at me until the day it is retired.

I crave cash flow that is very positive every month. I don’t like $800 for this car, $3k for this stud loan, etc.

 

[anonperson]

In the last 12 months, mortgage rates have been incredible. I went from 4% to 3.25% and now 2.75 (30 year fixed). Lender credits offset any fees so nothing out of pocket. My rates could have been lower but my loan to value ratio wasn't great.

Anyone who has a mortgage should have refinanced into a lower rate in the last year. It was too easy.

There really is no logical reason to pay this off early. Taking into account inflation, the bank is valuing the dollar they get today as the same they will get in 30 years. That is an amazing deal for homeowners.

Mortgage debt shouldn't be feared. It's the cheapest money you can borrow.

Unless I can pay off my home in one fell swoop, I don't want to put extra money into my mortgage when I can invest it instead. Why lose the liquidity? With stocks/ bonds, I can easily sell if I need the funds but I can't sell part of my house.

 

[BLADEMDA]

In the last 12 months, mortgage rates have been incredible. I went from 4% to 3.25% and now 2.75 (30 year fixed). Lender credits offset any fees so nothing out of pocket. My rates could have been lower but my loan to value ratio wasn't great.

Anyone who has a mortgage should have refinanced into a lower rate in the last year. It was too easy.

There really is no logical reason to pay this off early. Taking into account inflation, the bank is valuing the dollar they get today as the same they will get in 30 years. That is an amazing deal for homeowners.

Mortgage debt shouldn't be feared. It's the cheapest money you can borrow.

Unless I can pay off my home in one fell swoop, I don't want to put extra money into my mortgage when I can invest it instead. Why lose the liquidity? With stocks/ bonds, I can easily sell if I need the funds but I can't sell part of my house.

Anyone looking to buy a home should definitely take advantage of these low interest rates. With inflation (3-4%) a distinct possibility locking in a 30 year mortgage below 3% is a smart decision. Buying that dream house today at 3% is a great deal considering the value of the US Dollar in 30 years.

As for paying off your home, typically most just took a 15 year mortgage and that allowed the home to be paid off prior to retirement. If you are fairly young or just starting in your career a 30 year mortgage is a good way to qualify for that new house.

 

[Shimmy8]

Used to be in the camp of zero debt ASAP. I was paying off student loans aggressively, extra payment on house, paid off my new car, etc.

Fast forward a year...I’ve refinanced my student loans to 2.1%, refinancing my home as we speak to fixed 2.625%, and going in with my parents on investment properties. The rates are too great to not take advantage.

It’s taken a complete mental reset of my financial mindset, but I’m currently happy with my plan.

 

[Mman]

Did you take out a 15 or 30 year mortgage?

I have a 30 year mortgage but pay some extra each month. I target the monthly payments to finish paying it when I retire. I acknowledge it is not the wisest to pay it off sooner, but feels like a nice time to target it ending.

 

[Mman]

It’s taken a complete mental reset of my financial mindset, but I’m currently happy with my plan.

I am similar. It is hard for me to not just write a check and end the mortgage, but I have forced myself to be disciplined and leave that money invested for the long haul.

 

[OneFellSwoop]

I appreciate this discussion. It has made me recalibrate some of my thinking.

Some questions:
Isn’t paying off more mortgage vs stock investing an apples to oranges comparison because of the risk differential (mortgage more like fixed income and stocks as equity)? So you are taking a much greater uncompensated risk to invest in equities and the comparison should be more toward your bond allocation.

For instance, my extra each month toward mortgage I figure into my fixed income and therefore reduce the amount of bonds I own. It diversifies the bonds a little because a portion of that is building equity in property (primary home).

So in deciding whether or not to put more into mortgage would a comparison of bond rates vs your mortgage rate be more appropriate as opposed to comparing mortgage to equities return?

 

[Mman]

I appreciate this discussion. It has made me recalibrate some of my thinking.

Some questions:
Isn’t paying off more mortgage vs stock investing an apples to oranges comparison because of the risk differential (mortgage more like fixed income and stocks as equity)? So you are taking a much greater uncompensated risk to invest in equities and the comparison should be more toward your bond allocation.

For instance, my extra each month toward mortgage I figure into my fixed income and therefore reduce the amount of bonds I own. It diversifies the bonds a little because a portion of that is building equity in property (primary home).

So in deciding whether or not to put more into mortgage would a comparison of bond rates vs your mortgage rate be more appropriate as opposed to comparing mortgage to equities return?

A mortgage is more bond like, but even then it is worse. The mortgage is simple interest which is a smaller and smaller amount each year. A bond allocation is compound interest that gains more and more every year. Plus the mortgage interest is tax deductible so the effective rate is much lower than the stated rate.

 

[Hork Bajir]

I have an unrelated question for the financial gurus on here. I’m pretty financially naive, element to educate myself but still feel like I’m missing some basic knowledge. The gist of my question is- where should I keep my money that might be spent in the next year or two?

I’m finishing fellowship soon, and worked as an attending in academics for one year prior to that. Starting at a PP this summer, with expected annual income around 400K. I have 130K left in student loans, and about 25K in a vanguard account which is 100% index fund/equities (VTI). I have about 175K in a money market account at my bank, which is currently earning essentially no interest. Apart from some money in a 403(b) and various other retirement accounts that I won’t be touching, I don’t have anything else in the way of assets.

I know that I should put more of my money into the market. However, I’ll be moving in a few months, looking to buy a house within the next year or two, and additionally I want to have some kind of emergency fund. I’m a bit hesitant to put all of the remainder of my money into my vanguard account given the short term volatility, along with my anticipated expenses within the next 1-2 years.. Other than the need for short and medium term reserves, I’m not trying to do anything fancy (no crypto, day trading, etc- just common sense stuff).

If you were me, where would you put the money that is currently in my money market account?

Apologies for what I would imagine is a very basic question. I know a thing or two about anesthesia, but when it comes to the money stuff I’m still a beginner.

 

[chocomorsel]

and just to recap, anybody that paid off a mortgage was still a terrible idea from a financial point of view. S&P is up approximately 47% (including dividends) since March 1, 2020. Meanwhile almost any mortgage could have been refinanced to 3% or less this summer.

Over the short terms stocks go up and down. Over a long enough term they go up. Mortgages are fixed in rate, can potentially be lowered via refinance any number of times, have tax deductible interest, and are a hedge against inflation.

Paying off early is an emotional help, not a financial help. And I'm not against that if you need it to help make better decisions with the rest of your life, just don't pretend you will come financially ahead by doing it.

My mortgage was <100k at 5.5%, and the other was also <100k at 3.8%. Hard to refinance less than 100k. So paid them off instead.

 

[partydoc]

I have an unrelated question for the financial gurus on here. I’m pretty financially naive, element to educate myself but still feel like I’m missing some basic knowledge. The gist of my question is- where should I keep my money that might be spent in the next year or two?

I’m finishing fellowship soon, and worked as an attending in academics for one year prior to that. Starting at a PP this summer, with expected annual income around 400K. I have 130K left in student loans, and about 25K in a vanguard account which is 100% index fund/equities (VTI). I have about 175K in a money market account at my bank, which is currently earning essentially no interest. Apart from some money in a 403(b) and various other retirement accounts that I won’t be touching, I don’t have anything else in the way of assets.

I know that I should put more of my money into the market. However, I’ll be moving in a few months, looking to buy a house within the next year or two, and additionally I want to have some kind of emergency fund. I’m a bit hesitant to put all of the remainder of my money into my vanguard account given the short term volatility, along with my anticipated expenses within the next 1-2 years.. Other than the need for short and medium term reserves, I’m not trying to do anything fancy (no crypto, day trading, etc- just common sense stuff).

If you were me, where would you put the money that is currently in my money market account?

Apologies for what I would imagine is a very basic question. I know a thing or two about anesthesia, but when it comes to the money stuff I’m still a beginner.

Find yourself a high yield savings account. Interest rates right now suck tho

 

[GassYous]

I have an unrelated question for the financial gurus on here. I’m pretty financially naive, element to educate myself but still feel like I’m missing some basic knowledge. The gist of my question is- where should I keep my money that might be spent in the next year or two?

I’m finishing fellowship soon, and worked as an attending in academics for one year prior to that. Starting at a PP this summer, with expected annual income around 400K. I have 130K left in student loans, and about 25K in a vanguard account which is 100% index fund/equities (VTI). I have about 175K in a money market account at my bank, which is currently earning essentially no interest. Apart from some money in a 403(b) and various other retirement accounts that I won’t be touching, I don’t have anything else in the way of assets.

I know that I should put more of my money into the market. However, I’ll be moving in a few months, looking to buy a house within the next year or two, and additionally I want to have some kind of emergency fund. I’m a bit hesitant to put all of the remainder of my money into my vanguard account given the short term volatility, along with my anticipated expenses within the next 1-2 years.. Other than the need for short and medium term reserves, I’m not trying to do anything fancy (no crypto, day trading, etc- just common sense stuff).

If you were me, where would you put the money that is currently in my money market account?

Apologies for what I would imagine is a very basic question. I know a thing or two about anesthesia, but when it comes to the money stuff I’m still a beginner.

I feel like if I were using it to pay the loan I would put it in a 529 and if I was looking to put it in a mortgage I'd get a 1-2 year treasury bond.

 

[abolt18]

Same thing I'm doing with my emergency fund (and what I'll do when it comes time to save up for a house down payment). Open a high yield savings account with the institution that will give you the best rate. When I opened mine it was Ally bank. Very easy to do and at that time I was getting >2% interest rate! With all rates dropping, it is down to 0.5% but that is still likely better than what you're getting from the money market account.

If it's money you'll potentially need in the next year or two, then don't put it in anything more risky than that.

 

[deleted126335]

They way to look at your portfolio is as a whole. There are risk assets and riskless assets. Paying off a mortgage is kin to holding more riskless assets. There is no riskless asset whose return outstrips paying down a mortgage at this time.

 

[Mman]

They way to look at your portfolio is as a whole. There are risk assets and riskless assets. Paying off a mortgage is kin to holding more riskless assets. There is no riskless asset whose return outstrips paying down a mortgage at this time.

A 30 year treasury currently yielding about 2.5% provides a greater return than something like a 3 or 3.5% mortgage over that same time frame because the mortgage is tax deductible and simple interest that lessens over the course of the mortgage.

 

[Shimmy8]

For me it's not really about the actual math with rates, etc., it's about opportunity.

I have opportunities now that I’m not sure will be available to me in the future. Sure it’s a “risk” not paying off the student loans with excess funds, but I’m very happy with my choices thus far and can sleep at night, which is half the battle.

 

[BLADEMDA]

I have an unrelated question for the financial gurus on here. I’m pretty financially naive, element to educate myself but still feel like I’m missing some basic knowledge. The gist of my question is- where should I keep my money that might be spent in the next year or two?

I’m finishing fellowship soon, and worked as an attending in academics for one year prior to that. Starting at a PP this summer, with expected annual income around 400K. I have 130K left in student loans, and about 25K in a vanguard account which is 100% index fund/equities (VTI). I have about 175K in a money market account at my bank, which is currently earning essentially no interest. Apart from some money in a 403(b) and various other retirement accounts that I won’t be touching, I don’t have anything else in the way of assets.

I know that I should put more of my money into the market. However, I’ll be moving in a few months, looking to buy a house within the next year or two, and additionally I want to have some kind of emergency fund. I’m a bit hesitant to put all of the remainder of my money into my vanguard account given the short term volatility, along with my anticipated expenses within the next 1-2 years.. Other than the need for short and medium term reserves, I’m not trying to do anything fancy (no crypto, day trading, etc- just common sense stuff).

If you were me, where would you put the money that is currently in my money market account?

Apologies for what I would imagine is a very basic question. I know a thing or two about anesthesia, but when it comes to the money stuff I’m still a beginner.

Here is my 2 cents (5 cents with inflation)

1. You need an emergency fund with 60-90 days cash in it. Some say 6 months but I disagree because the first 3 years post residency cash is at a premium. You can and should secure a personal line of credit ( don't tap it) so 60 days is what I recommend.

2. No high interest rate debt. That means all debt over 5% should be eliminated first.

3. Student loans- If the interest rate is low (less than 3%) don't pay them off quickly. But, if the interest rate is high then target the loans with 2-3 X the monthly amount owed.

4. Housing- I recommend you purchase something with interests rates this low. Condo? Small Home? Use your cash and savings to put money down to avoid mortgage insurance.

5. Stocks- This is still your best bet for growth and long term wealth. The gap between value stocks and growth is substantial as is emerging markets/foreign equities vs USA.

I can't recommend bonds or CDs if you have any debt over 5% as the debt is more expensive to service than any fixed income will produce.

Others may recommend a much more fancy investment plan but if you keep plugging away at this over the next 25 years I humbly believe you will beat 80% of the so called experts.

I do think you should keep some cash on the sideline for market corrections but the majority of your money should be invested at all times.

One last comment is don't start by being "house poor" but rather buy a middle range home/condo so if you need to sell in 2-3 years you will recapture most, if not all, your hard earned money. Your first house is rarely your last house.

 

[BLADEMDA]

For me it's not really about the actual math with rates, etc., it's about opportunity.

I have opportunities now that I’m not sure will be available to me in the future. Sure it’s a “risk” not paying off the student loans with excess funds, but I’m very happy with my choices thus far and can sleep at night, which is half the battle.

But it is about the math. Inflation and devaluation of the US dollar is a real risk. If you can secure real estate today with interest rates less than 3% then by all means go for it. I still think if your student loans carry more than 3% interest rate you should refinance them or pay them off.

I would not be happy being age 50 with student loan debt but to each his/her own. Part of MY financial planning was being 100% debt free by age 45 and I accomplished that task. For others, the lure of "cheap money" is simply too good to pass up and the math certainly agrees with them.

 

[Kr#36]

If you have a high risk appetite and don't want to put huge amounts of capital down, you can buy way out of the money SPY options that expire in say...october...the contract prices are much lower than having to put down the capital for actual stock.

I was just reading through this thread minding my own business when I see someone suggested taking out a loan to yolo out of the money SPY options lol. Man I love this place and I mean it sincerely.

 

[Mman]

But it is about the math.

I would not be happy being age 50 with student loan debt but to each his/her own.

It kinda depends what rate you are paying on that student loan debt. When I consolidated mine at age 26 (for 30 years), it was at 1.7%. It's boring to watch that money come out of my bank account each month, but why ever pay it off??? Now if you are paying 8%, the math changes a bit.

It is always about the math.

 

[okayplayer]

It kinda depends what rate you are paying on that student loan debt. When I consolidated mine at age 26 (for 30 years), it was at 1.7%. It's boring to watch that money come out of my bank account each month, but why ever pay it off??? Now if you are paying 8%, the math changes a bit.

It is always about the math.

I have $200k left at 2.6% fixed (6 years left). Have $10k/mo extra to deploy to repaying debt or investing (after all living expenses/minimum payments and maxing retirement etc)...how would you handle that?

 

[anonperson]

I have an unrelated question for the financial gurus on here. I’m pretty financially naive, element to educate myself but still feel like I’m missing some basic knowledge. The gist of my question is- where should I keep my money that might be spent in the next year or two?

I’m finishing fellowship soon, and worked as an attending in academics for one year prior to that. Starting at a PP this summer, with expected annual income around 400K. I have 130K left in student loans, and about 25K in a vanguard account which is 100% index fund/equities (VTI). I have about 175K in a money market account at my bank, which is currently earning essentially no interest. Apart from some money in a 403(b) and various other retirement accounts that I won’t be touching, I don’t have anything else in the way of assets.

I know that I should put more of my money into the market. However, I’ll be moving in a few months, looking to buy a house within the next year or two, and additionally I want to have some kind of emergency fund. I’m a bit hesitant to put all of the remainder of my money into my vanguard account given the short term volatility, along with my anticipated expenses within the next 1-2 years.. Other than the need for short and medium term reserves, I’m not trying to do anything fancy (no crypto, day trading, etc- just common sense stuff).

If you were me, where would you put the money that is currently in my money market account?

Apologies for what I would imagine is a very basic question. I know a thing or two about anesthesia, but when it comes to the money stuff I’m still a beginner.

Bogleheads

www.bogleheads.org

Educate yourself. No one will care about your money as much as yourself.

- if you are planning on using your 175k in the next 1 to 2 years, putting it into the market is not a good idea. If the market drops 20% , that is a huge hit especially if you need the money soon.

Try a "high yield" savings account (Marcus or Ally) in an online bank. I use Marcus. They offer no penalty CDs as well. FDIC insured as well.

-Make a budget of your upcoming expenses and an investment plan

- Once you have a legitimate budget, then you can set aside 3 to 6 months as an emergency fund

-Maximize tax advantaged space. 401k, backdoor Roth IRA, HSA, etc. If you are 1099, you will have more flexibility .

- open a brokerage account and invest in low cost index funds (VTI/VTSAX etc )

- don't jump the gun on anything just yet. Spend a month or two reading and learning. You won't miss out on anything

- Don't become house poor. Feel free to buy a house but make sure it is within budget and easy to sell (don't buy the best house in a crappy city etc)

- you can have anything you want, but you can't have everything

 

[anonperson]

I have $200k left at 2.6% fixed (6 years left). Have $10k/mo extra to deploy to repaying debt or investing (after all living expenses/minimum payments and maxing retirement etc)...how would you handle that?

10,000 a month invested in VTI over ~5 years

That is a total of 600,000 over 5 years as principle.

Monte Carlo Simulation

Online Monte Carlo simulation tool to test long term expected portfolio growth and portfolio survival during retirement

www.portfoliovisualizer.com

According to this simulation, the 50th percentile outcome is an ending portfolio of ~$839,000.

Compare that to the amount of interest paid out over that time frame as well.

 

[Mman]

I have $200k left at 2.6% fixed (6 years left). Have $10k/mo extra to deploy to repaying debt or investing (after all living expenses/minimum payments and maxing retirement etc)...how would you handle that?

such a low rate would be in no hurry to pay it off personally. I'd probably invest everything or at least most of it. If you want to be conservative invest it 60/40, or maybe at worst invest 2/3 and pay 1/3 towards the debt.

 

[doctalaughs]

You also have to consider psychology and discipline in the mortgage vs stock market decision.

Sure, if you invest every penny that would have gone to paying down a 3% mortgage into the stock market (or doing a 30 yr vs 10 yr loan), you’ll come out ahead.

That being said, most people paying LESS on the mortgage have more “free” money in the budget. If just 10% of that instead goes to toys/vacation/expensive dinners etc then you would have been better off paying low interest debt off.

I like locking in that low risk free return in my budget as a fixed line-item. Mathematically it’s a slight disadvantage (in theory).

 

[nimbus]

I have $200k left at 2.6% fixed (6 years left). Have $10k/mo extra to deploy to repaying debt or investing (after all living expenses/minimum payments and maxing retirement etc)...how would you handle that?

Invest.

 

[Southpaw]

I have $200k left at 2.6% fixed (6 years left). Have $10k/mo extra to deploy to repaying debt or investing (after all living expenses/minimum payments and maxing retirement etc)...how would you handle that?

I paid off roughly 180k in student loans a couple years ago. I think you and I have been out of residency roughly the same amount of time. certainly the right financial move at the time was to invest, but in no way whatsoever do I regret the move. I absolutely hated sending in that student loan check every month.

 

[sethco]

I have $200k left at 2.6% fixed (6 years left). Have $10k/mo extra to deploy to repaying debt or investing (after all living expenses/minimum payments and maxing retirement etc)...how would you handle that?

Bitcoin and Gamestop

🚀🚀🚀🚀

 

[partydoc]

I have $200k left at 2.6% fixed (6 years left). Have $10k/mo extra to deploy to repaying debt or investing (after all living expenses/minimum payments and maxing retirement etc)...how would you handle that?

I do 50/50 loans vs investing, helps me sleep better at night.

 

[Drwine]

Nothing compares to the freedom that being debt free offers. You can then live by the real golden rule. He/she who has the gold rules. Having no payments leaves a lot more to invest.

 

[Mman]

On a related note:

Everyone who told me I was wrong to prepay my mortgage instead of investing:

You were wrong.

I know this poster is banned, but worth pointing out that no it did not work out well for him/her financially despite feeling good for a few months. Stock market is up like 50% since November of 2019 or whenever exactly it was he/she dumped all the cash into paying off a 5% mortgage. But even that undersells the benefit to not paying off early because of....

1) could have refinanced into a significantly lower rate than 5%
2) big increase in inflation last 12 months means mortgage payments are much cheaper in real (net inflation) terms than they were previously. A mortgage is a great hedge against inflation.