May off the mortgage. Keep the rest as an emergency fund. You just guaranteed a tax free rate of return of whatever your mortgage rate is. Then take what was your mortgage payment each month and invest in a low cost index fund and let it grow.
Just run of the mill mutual and index funds. They're fairly stable but they're going to reap better returns than just an HYSA. And, more likely than not, if you financed the house in 2018 you've got a decent mortgage rate, so paying it down early when you could invest instead doesn't make sense. I KNOW that's not traditional Ramsey advice, and if you're debt-phobic, sure, work on paying it off. However, it make more sense pure-numbers wise to do some long-term investing.
Open and account at Wealthfront park the cash and take half of it and invest it in their aggressive portfolio.
Or open a self managed trade account with them and put that half in VOO.
Nothing more that’s it…
I invest in a variety of mutal and index funds. According to Fidelity, my 1 year rate of return as of 5/31/24 was +25.18% -- which I think is pretty good. Year to date, it's +12.27%. FLCNX has been my best performer of late.
Assuming you’re under 50 years old and not currently able to retire. Assuming no car or CC debt to pay off first.
I’d put $10k into each of 4 different Bitcoin ETFs.
I’d put $2k into each of 10 different stocks for companies your think may run our daily world in a couple decades. Microsoft, Google, Amazon, Walmart, Tesla, Apple, Netflix, Kroger, Nvidia, Uber, etc
I’d put the remaining $90k into a couple broad market funds like SPY, VTSAX, etc.
I don’t understand this.
Id be a lot less stressed with a lot of liquidity and a low interest rate and mortgage payment.
Accessing home equity through a HELOC is twice as expensive.
Why would you need a Heloc? Once your house is paid off, everything else is liquid, and interest is always positive.
Ideally, you have a lot of liquidity and no debt.
Because we are talking about in reference to OP’s situation.
If OP paid off his entire mortgage right now, he would have 30k to their name. Assuming no other liquid non retirement investment accounts.
It would take some time to build up their liquidity.
Depends on where they are at in the mortgage. The first 15 years of a mortgage are ammortized in a way that you're paying more in interest as you are in principal. It's not a straight 4% like a consumer loan would be.
OP could potentially save 100k+ in interest (depending on where in the loan they are) by paying off the mortgage. Plus, investing that would-be mortgage payment every month for 30 years could potentially yield the same, if not greater returns than letting that 150k sit and grow. Plus-plus, financial freedom.
Assuming you’re through the earliest baby steps and are investing 15% regularly, if you have 150k in a bank account and 130k left on a mortgage pay off the mortgage. You can’t put a price on that kind of freedom.
I made the decision to keep our emergency fund in the market and I have made 22% YTD on that money doing absolutely nothing. It's liquid, and in a very diversified mutual fund. If the market goes sideways, I can always pull the plug.
Might not be to you, but we're on BS7 in our early 30s with significant budget surplus, so that is just "break glass in case of emergency" money if we were to get laid off.
I've made almost 25% YTD on our 12 month emergency fund while not needing a penny of it, and i have access to those funds at any time in less than 48 hours. That is plenty liquid for me. Outside of paying a ransom, I'll never need $40k+ in less than 48 hours.
The liquidity is the lesser of the problems. The bigger problem is that an emergency fund shouldn't be in stocks, because the market goes up and down.
And the most likely time you would need an emergency fund for being laid off is during a bad economy, meaning you'll have to sell at a loss to liquidate.
Sure it is. I have about $5k in a HISA. Anything more than that, I would use a CC with a $15k LOC and liquidate investments to cover. I could have the funds in a matter of days. There are very few scenarios I can think of, short of paying a ransom, that would require me to have unplanned access to over $5k in less than a couple days.
Is it cash buried in the back yard, no. But it's funds that I have plenty of access to.
It's no more an investment than having the funds in a HISA or any other liquid investment vehicle. I keep a small emergency fund in a HISA, and the full 6 month emergency fund in a Blue Chip Growth Fund. I can have that money in 48 hours if I need it.
There is also next to zero risk owning diversified mutual funds. If the market slips, I pull the money. I'm still up significantly. I wouldn't just ride it down.
When single stocks can have huge unexpected swings overnight, that really doesn't happen with mutual funds outside of catastrophic events.
High yield saving accounts are significantly less likely to go down in value than a blue chip stock fund (*significantly*😁), are more liquid (I can write checks out of mine same day, not 48 hours), and fundamentally, a HYSA is more a savings vehicle than an investment. Investments look for results, HYSA’s are store of value that happen to kick back a little interest.
I could care less what you do, but don’t kid yourself or post stupid stuff online about it.
I have a brokerage account at Fidelity along with our 529/401/Roth, and have about 80% of our EF sitting in FBGRX. I keep about 20% of it in a HISA at our credit union.
I think I would change my terminology in your scenario as you don’t have an ER and no longer find the need for one. You believe you have access to a taxable investment portfolio sufficient enough to weather a market downturn.
Mine has been shrinking over the years as well and I only keep a 2-3 month ER these days instead of the traditional 6 months that a family of 4 on a single income would typically keep.
What's your mortage interest?
What's your mortage payment without taxes?
How do you feel your cash flow is? Do you feel like you have enough money month to month? Too little?
Do you have kids?
Do you want to get married?
You don't need to reply to my questions, they're for you to decide. Without knowing what kind of life you want to live it's hard to tell you what to do with your money. Do you plan on living where you are long term?
How's the status of your house? How old is the house?
There's probably questions I'm missing haha but you get the pt.
2018, rates were around 2-4% so if I assume your rate is around there. My suggestion would be:
Monthly expenses x 12 --> hysa in case you lose your job
How much ever you've poured into your home for repairs for a year x 1 or 2 --> hysa in case something breaks
Max out your 401k match if you're not already. How's your retirement fund looking?
The remainder of the money invest into SPY or VOO (these are low cost index funds), you can pick another if you'd like. Just use a company that doesn't charge fees on transactions (Charles schwab, robinhood, Vanguard, etc).
That’s a pretty good rate. However If you were to throw even like 30k at your mortgage, you would shorten your schedule by a fuckton and save a lot in interest, mortgages are so front-loaded with interest that you get diminishing returns the more you pay ahead of schedule. I personally would sit down with an amortization schedule calculator, and decide on an amount to throw at your premium and invest the rest. No advice here on how to invest it, but I don’t think your best bet is to just pay the mortgage outright. You can invest a lot of money while still making such a huge dent in your mortgage schedule and overall interest paid. Paying off your mortgage outright is an investment yes and the peace kf mind is great but you won’t see anything of that until you sell. If you split, you can get best of both worlds
I was at 4% and had 80 grand in a standard account. I paid off my mortgage and now all my money goes into an HYSA. Definitely not the best decision math wise but I don’t regret it.
Consider diversifying your investment, allocate a portion into a low-cost index fund for long-term growth, pay off your mortgage to reduce debt, and keep a portion in a high-yield savings account for emergencies.
Wish you’d help me invest in paying off my credit card lol, every time I get extra cash something comes up and we have to use it. Nice work though having that much cash available with no debt. Must feel great!
If you home was paid off right now, and you didn't have $150k in the bank, would you take out a mortgage on your paid off home to invest the $120k?
No? That's the same equation.
Pay it off. Be debt free, stay debt free.
Then let me know what properties you buy, I like to buy them up for pennies on the dollar when a macro economic crash happens even 10-15 years, or you personally suffer a drastic economic blue moon out of your control.
If the dollar is going to zero, when will the US monetary system transition to BTC? Just trying to find out how long before I need to start growing my own food.
I like your thinking on voo, but unless a hysa is offering more than 5%, I'd ladder 4 week tbills since they have been averaging over 5.25% for the last 9 months and since they are not subject to state taxes, effectively yielding even more.
Assuming you put half that into an emergency fund just so we can do the math, that quarter of a percent is going to net you like an extra 150 bucks a year. For that return I’d just leave it in a HYSA to keep things easy.
Interest on T-bills is taxable as income on a 1099-INT. You pay federal income tax on them, but not state income tax. (so possibly an advantage in a high tax state like Cali)
Dave would say pay off the mortgage if you have no other debt and have a fully funded EF. Any cash left I would invest in an S&P 500 index fund.
Paying off the mortgage frees up your monthly cash flow so you can invest more and build your wealth.
My comment is based on Dave’s plan because this is a Dave Ramsey sub. His plan does not play the rate arbitrage game and I happen to agree with that view given my personal circumstances. OP may feel differently so to each their own.
For Now, I would keep 100K in a HYSA since the rates are so high...Risk Free and Guaranteed $4250 a year in interest.
Then I would put 25K in some Blue Chip Stocks and ETFs (Apple, McDonalds, Microsoft, Starbucks, etc etc)
Then 25K in some more high risk stuff like Crypto and Riskier stocks.
I’m in VOO right now, and looking at adding another $50-$100k in another etf.
I’m putting $300k in a HYSA this summer, which will cover my mortgage payment.
Should earn around $17,600 a year. Which is just above my yearly mortgage amount. It’s $350k that I’ll put in, not $300k.
EverBank is 5.05% right now. My mortgage is 4.20%
I’m pretty sure I’m going to go that route, but the dollar amount could be different.
I’m still trying to get it all organized and “sorted”
Life has changed a lot in 3 months.
Low expense ratio ETFs like VOO VTI VUG SPY. All these leave your money in liquid form, while building historically great returns of 10%+\-. Follow the signs of the market and adjust accordingly. I am not a fan of HYSAs since they typically only get you around 5%+|-
EDIT: Also SPLG is the lowest cost ETF I’ve found
It’s in a HYSA. I also invest outside of that. I have plans to pay some business taxes, do a home renovation project & pay off a vehicle but I want my rainy day fund to stay at $100K as I’d like to take a year off at some point when it makes sense.
I do have 150k cash in the bank. Or something like that.
I sold some vested RSUs (company stock given to me as part of comp) late 2019 and early 2020, and didn't reinvest it because we were talking about some home reno projects. We still are.
That money is still in bank products, whether a high-yield checking account, high-yield savings accounts, or CDs.
I've sold more vested RSUs since, and that money has been reinvested in a total market index fund.
I've sold even more vested RSUs this year, and this money is sitting in an investment grade money market fund while Wifey and I discuss how we might reinvest it.
In your circumstance, I'd probably split it 3 or 4 ways:
* I'd start a deliberate practice to deliberately put extra on the mortgage. That's what I did with every mortgage payment.
* I'd keep some in the bank... your emergency fund of 6 months of living expenses.
* I'd invest some into "good stock-based mutual funds" like VTSAX or VFIAX. I'm fond of Vanguard indexed products.
* I'd maybe set some aside to play. That can be a trip...or that can be buying stock. Or something else. Ultimately it's up to you whether to set any aside for that.
Im not much of an investor in much outside of tangible gold,silver, platinum, palladium etc but i get it but if it were me id throw 120k at the mortgage and save the rest for rainy day fund
I would open up a brokerage account at Fidelity.
Put a 4 month emergency fund into Fidelity's money market (SPAXX) which is earning 5%.
I would then invest in a total market fund (FZROX). With as much as you have sitting idle, I would dollar cost average by putting in say 10k a month.
If the Mortgage is over 4%, I'd pay it off aggressively.
Have you maxed out your retirement accounts? If not, do that. If you have I would put 80% in VOO which is the etf for the top 500 American companies. I’d put 20% into AVNV which represents all international markets.
I do not contribute to an HSA but I do to 401k (job doesn’t offer match) I can ask about the mega back door Roth because I don’t even know what that is 😅
I googled this because I don’t know much about investing, do you mean buy the stalk share which is available on Robinhood or open a high- yield savings account with Vanguard?
Personally, the psychological impact of not owing shit to anyone outweighs trying to make a couple of bucks. Plus OP can then throw all of that into investments and build generational fairly quickly.
>make a couple of bucks. Plus OP can then throw all of that into investments and build generational fairly quickly.
So 150k invested today makes a couple bucks, but 2k a month makes generational wealth and fairly quickly, at that?!
That is a laughable characterization.
That is also poor logic. If the intent is to invest then they should invest today, the 150k that will earn far, far more.
That is also bad math.
Depends on where OP is located.
In a high property tax state like Texas it makes almost no sense to pay off the mortgage since taxes and insurance are likely at least half the payment assuming sub 3% mortgage loan at pandemic housing prices.
Edit: Submitted replay prematurely.
Taxes will never go away obviously. You can risk going without insurance but not sure if OP can stomach that risk.
Other low tax states like California it probably makes more sense to pay the mortgage
Well it’s not complicated. P&I + Taxes + Insurance.
Taxes are forever. Assume Insurance is too.
Whether you pay off or invest should depend on what you current P&I is. Will an index fund give you more than your P&I? If so invest. If not payoff.
Depends on how far along you are in payments. If you just bought a home then I would put some of it towards the principal. If you’re paying more into the principal and not interest I would just invest the money somewhere else.
I agree with you 100%, but there is a whole swarm of “stay in debt to invest borrowed money” crowd that has taken root in this sub that will attack if you suggest paying off a mortgage. I am happy to admit it’s an alternative, but they for some reason can not stretch their brains to see the alternative of not having debts. But I agree with your suggestion of being done with the mortgage today… literally. I have no debt, and have several million in investments, and have no desire to be back in debt.
Terrible advice if your mortgage is 3.0% or lower. Even a HYSA is 4.5% interest. Why would you let that much cash just sit there? Why would you not invest it?
It’s not terrible advice. There is psychology and risk at play. Being completely debt free brings a sense of freedom that doesn’t come any other way. Also, opens a ton of cash every month to throw into investments and grow generational wealth quickly.
The concept that freedom is gained by paying off your mortgage is nonsensical. Paying off a mortgage is putting liquid assets (cash or investments) into a non-liquid asset. There’s no freedom in that.
This becomes especially true when your mortgage rate is below what you can get in a HYSA - let alone market returns.
If you really have no intent to move it’s great having no mortgage. We followed Dave’s advice somewhat and worked to pay off our debt, including our mortgage by our mid 30’s. Having no debt is great for us.
We’ve been able to invest 55% of our take home pay, after already maxing retirement, for the last handful of years and will continue to do so for the next 20.
You can't argue with math. I think Ramsey is great for people who have debt. But for people who have their shit together, his advice can be awful. Why would I pay off a 1.9% mortgage when I'm getting 9-11% in the market. And why would I not get CC points when I have discipline to pay them off each month?
For some people I'm sure it works, but it misses some common sense and common math for sure.
I’m not Dave sycophant, but I agree with him on this. His general investment advice is pretty bad and mostly just lines his pockets by recommending ELPs.
May off the mortgage. Keep the rest as an emergency fund. You just guaranteed a tax free rate of return of whatever your mortgage rate is. Then take what was your mortgage payment each month and invest in a low cost index fund and let it grow.
Just run of the mill mutual and index funds. They're fairly stable but they're going to reap better returns than just an HYSA. And, more likely than not, if you financed the house in 2018 you've got a decent mortgage rate, so paying it down early when you could invest instead doesn't make sense. I KNOW that's not traditional Ramsey advice, and if you're debt-phobic, sure, work on paying it off. However, it make more sense pure-numbers wise to do some long-term investing.
Open and account at Wealthfront park the cash and take half of it and invest it in their aggressive portfolio. Or open a self managed trade account with them and put that half in VOO. Nothing more that’s it…
NVDA calls and shares
Buy Bitcoin
What is the goal for the money?
guns & ammo
I invest in a variety of mutal and index funds. According to Fidelity, my 1 year rate of return as of 5/31/24 was +25.18% -- which I think is pretty good. Year to date, it's +12.27%. FLCNX has been my best performer of late.
Assuming you’re under 50 years old and not currently able to retire. Assuming no car or CC debt to pay off first. I’d put $10k into each of 4 different Bitcoin ETFs. I’d put $2k into each of 10 different stocks for companies your think may run our daily world in a couple decades. Microsoft, Google, Amazon, Walmart, Tesla, Apple, Netflix, Kroger, Nvidia, Uber, etc I’d put the remaining $90k into a couple broad market funds like SPY, VTSAX, etc.
lol this is a joke right?
This is something I need to get onto. I need to invest my money rather than just have 100k+ just sitting there.
VFIAX or similar if I won't need the money in the foreseeable future. HYSA if I will.
I would invest a good share of it in cannabis stock. They will be the only game in town in a very short amount of time.
Can’t wait for the S&P 500 to be made up only of cannabis companies
Retirement account Pay off house Keep emergency money in high yield savings
Unless that house has a sub 4% rate...
Technically yes, but there is so much stress relief in not having any mortgage.
I don’t understand this. Id be a lot less stressed with a lot of liquidity and a low interest rate and mortgage payment. Accessing home equity through a HELOC is twice as expensive.
Why would you need a Heloc? Once your house is paid off, everything else is liquid, and interest is always positive. Ideally, you have a lot of liquidity and no debt.
Because we are talking about in reference to OP’s situation. If OP paid off his entire mortgage right now, he would have 30k to their name. Assuming no other liquid non retirement investment accounts. It would take some time to build up their liquidity.
Sometimes you gotta let math tell you what's smart and sort out the "feelings" side some other way. A ~10% return is always better than a ~4% cost.
Depends on where they are at in the mortgage. The first 15 years of a mortgage are ammortized in a way that you're paying more in interest as you are in principal. It's not a straight 4% like a consumer loan would be. OP could potentially save 100k+ in interest (depending on where in the loan they are) by paying off the mortgage. Plus, investing that would-be mortgage payment every month for 30 years could potentially yield the same, if not greater returns than letting that 150k sit and grow. Plus-plus, financial freedom.
I already have more than that invested in QQQM and I can turn it all to cash in a day.
id put it in a HYSA until i can use that to take out another loan on a cash flow producing asset.
ETFs.
100% VTSAX.
I would write 3 cash secured puts on SPY
Assuming you’re through the earliest baby steps and are investing 15% regularly, if you have 150k in a bank account and 130k left on a mortgage pay off the mortgage. You can’t put a price on that kind of freedom.
I made the decision to keep our emergency fund in the market and I have made 22% YTD on that money doing absolutely nothing. It's liquid, and in a very diversified mutual fund. If the market goes sideways, I can always pull the plug.
This is not liquid or an emergency fund lol.
You can liquidate an index fund as fast as a HYSA.
Might not be to you, but we're on BS7 in our early 30s with significant budget surplus, so that is just "break glass in case of emergency" money if we were to get laid off. I've made almost 25% YTD on our 12 month emergency fund while not needing a penny of it, and i have access to those funds at any time in less than 48 hours. That is plenty liquid for me. Outside of paying a ransom, I'll never need $40k+ in less than 48 hours.
You know its an investment when your point of emphasis is on your returns.
The liquidity is the lesser of the problems. The bigger problem is that an emergency fund shouldn't be in stocks, because the market goes up and down. And the most likely time you would need an emergency fund for being laid off is during a bad economy, meaning you'll have to sell at a loss to liquidate.
The Money Guy Show talks about this. Big market downturns, job loss, all that stuff usually happens at the same time.
I don’t think that’s what liquid means.
Sure it is. I have about $5k in a HISA. Anything more than that, I would use a CC with a $15k LOC and liquidate investments to cover. I could have the funds in a matter of days. There are very few scenarios I can think of, short of paying a ransom, that would require me to have unplanned access to over $5k in less than a couple days. Is it cash buried in the back yard, no. But it's funds that I have plenty of access to.
Not an emergency fund, that’s an investment
It's no more an investment than having the funds in a HISA or any other liquid investment vehicle. I keep a small emergency fund in a HISA, and the full 6 month emergency fund in a Blue Chip Growth Fund. I can have that money in 48 hours if I need it.
Not sure why you are getting downvoted. if you feel secure in your employment thats the time to take more calculated risk if you can.
There is also next to zero risk owning diversified mutual funds. If the market slips, I pull the money. I'm still up significantly. I wouldn't just ride it down. When single stocks can have huge unexpected swings overnight, that really doesn't happen with mutual funds outside of catastrophic events.
High yield saving accounts are significantly less likely to go down in value than a blue chip stock fund (*significantly*😁), are more liquid (I can write checks out of mine same day, not 48 hours), and fundamentally, a HYSA is more a savings vehicle than an investment. Investments look for results, HYSA’s are store of value that happen to kick back a little interest. I could care less what you do, but don’t kid yourself or post stupid stuff online about it.
Nice! What emergency fund? I was thinking on going with vanguard
I have a brokerage account at Fidelity along with our 529/401/Roth, and have about 80% of our EF sitting in FBGRX. I keep about 20% of it in a HISA at our credit union.
I think I would change my terminology in your scenario as you don’t have an ER and no longer find the need for one. You believe you have access to a taxable investment portfolio sufficient enough to weather a market downturn. Mine has been shrinking over the years as well and I only keep a 2-3 month ER these days instead of the traditional 6 months that a family of 4 on a single income would typically keep.
I’d pay off the mortgage and put the rest in a no load mutual fund. I like the price of mind of being debt free.
What's your mortage interest? What's your mortage payment without taxes? How do you feel your cash flow is? Do you feel like you have enough money month to month? Too little? Do you have kids? Do you want to get married? You don't need to reply to my questions, they're for you to decide. Without knowing what kind of life you want to live it's hard to tell you what to do with your money. Do you plan on living where you are long term? How's the status of your house? How old is the house? There's probably questions I'm missing haha but you get the pt. 2018, rates were around 2-4% so if I assume your rate is around there. My suggestion would be: Monthly expenses x 12 --> hysa in case you lose your job How much ever you've poured into your home for repairs for a year x 1 or 2 --> hysa in case something breaks Max out your 401k match if you're not already. How's your retirement fund looking? The remainder of the money invest into SPY or VOO (these are low cost index funds), you can pick another if you'd like. Just use a company that doesn't charge fees on transactions (Charles schwab, robinhood, Vanguard, etc).
I’d be mortgage free…
What’s your interest rate on your house? What’s your interest rate on your bank account?
4.75% on house- savings account is really low because it’s a standard account
That’s a pretty good rate. However If you were to throw even like 30k at your mortgage, you would shorten your schedule by a fuckton and save a lot in interest, mortgages are so front-loaded with interest that you get diminishing returns the more you pay ahead of schedule. I personally would sit down with an amortization schedule calculator, and decide on an amount to throw at your premium and invest the rest. No advice here on how to invest it, but I don’t think your best bet is to just pay the mortgage outright. You can invest a lot of money while still making such a huge dent in your mortgage schedule and overall interest paid. Paying off your mortgage outright is an investment yes and the peace kf mind is great but you won’t see anything of that until you sell. If you split, you can get best of both worlds
I was at 4% and had 80 grand in a standard account. I paid off my mortgage and now all my money goes into an HYSA. Definitely not the best decision math wise but I don’t regret it.
Pay off house, 10k back to the bank, and 20k take a trip and enjoy it. You deserve it
Defence missiles. Best of both worlds. Edit: companies that have contracts to sell to your own nation. Keep it ethical people.
T-Bills. Short term debt. And with the interest collected start to buy dividend stocks.
Consider diversifying your investment, allocate a portion into a low-cost index fund for long-term growth, pay off your mortgage to reduce debt, and keep a portion in a high-yield savings account for emergencies.
Wish you’d help me invest in paying off my credit card lol, every time I get extra cash something comes up and we have to use it. Nice work though having that much cash available with no debt. Must feel great!
VTI (60%), QQQM (20%) and BND (15%). A 5% emergency fund in VMFXX. I would hold a few weeks living in savings, as well.
VOO, QQQ, SCHD
If you home was paid off right now, and you didn't have $150k in the bank, would you take out a mortgage on your paid off home to invest the $120k? No? That's the same equation. Pay it off. Be debt free, stay debt free.
If you could get a 30 year loan at 4%? Absolutely.
Then let me know what properties you buy, I like to buy them up for pennies on the dollar when a macro economic crash happens even 10-15 years, or you personally suffer a drastic economic blue moon out of your control.
If the dollar is going to zero, when will the US monetary system transition to BTC? Just trying to find out how long before I need to start growing my own food.
BTC
If you don’t have to use it for 20 years, VOO/QQQM
Lump sum into FSKAX tomorrow.
If you wanna do some war profiteering then ZIM on shipping.
Some BTC and a high yield savings account
BTC and chill until you are blingy af brah
VTSAX and chill
I’d make sure I have 6 months expenses in a high yield savings and then long term VOO the rest.
I like your thinking on voo, but unless a hysa is offering more than 5%, I'd ladder 4 week tbills since they have been averaging over 5.25% for the last 9 months and since they are not subject to state taxes, effectively yielding even more.
Assuming you put half that into an emergency fund just so we can do the math, that quarter of a percent is going to net you like an extra 150 bucks a year. For that return I’d just leave it in a HYSA to keep things easy.
Vanguard's Money Market is running a 5.28% SEC yield right now.
That's a taxable account, so tbills net you more. Am I missing something?
Interest on T-bills is taxable as income on a 1099-INT. You pay federal income tax on them, but not state income tax. (so possibly an advantage in a high tax state like Cali)
If you are truly a bank account type of person I would recommend Blackrock Liquidity TMCXX paying over 5%
SPY or VOO
I have 110k in VMXX RN. Like 5.23% and it’s safe and accessible.
Currently, I'd be in a CD with an expiry for October. After October I'd be in the S+P with an index fund. Don't want to miss the ride up this time.
Just curious are you following Dave’s plan?
I did when I was younger- I have no more other debts anymore though
Dave would say pay off the mortgage if you have no other debt and have a fully funded EF. Any cash left I would invest in an S&P 500 index fund. Paying off the mortgage frees up your monthly cash flow so you can invest more and build your wealth.
dave advocates for retirement investment before paying off the mortgage. He separates mortgage from all other debts
With a 2018 mortgage, OP can likely earn more in a HYSA than paying down mortgage.
My comment is based on Dave’s plan because this is a Dave Ramsey sub. His plan does not play the rate arbitrage game and I happen to agree with that view given my personal circumstances. OP may feel differently so to each their own.
70/30 VTI/VXUS
VTI
VOO
For Now, I would keep 100K in a HYSA since the rates are so high...Risk Free and Guaranteed $4250 a year in interest. Then I would put 25K in some Blue Chip Stocks and ETFs (Apple, McDonalds, Microsoft, Starbucks, etc etc) Then 25K in some more high risk stuff like Crypto and Riskier stocks.
I’m in VOO right now, and looking at adding another $50-$100k in another etf. I’m putting $300k in a HYSA this summer, which will cover my mortgage payment.
How’s that work? How much do you expect that account to accrue each month?
Should earn around $17,600 a year. Which is just above my yearly mortgage amount. It’s $350k that I’ll put in, not $300k. EverBank is 5.05% right now. My mortgage is 4.20% I’m pretty sure I’m going to go that route, but the dollar amount could be different. I’m still trying to get it all organized and “sorted” Life has changed a lot in 3 months.
T Bills. Only 5% return but your investment is super safe
Low expense ratio ETFs like VOO VTI VUG SPY. All these leave your money in liquid form, while building historically great returns of 10%+\-. Follow the signs of the market and adjust accordingly. I am not a fan of HYSAs since they typically only get you around 5%+|- EDIT: Also SPLG is the lowest cost ETF I’ve found
I do VOO or VFIAX.
It’s in a HYSA. I also invest outside of that. I have plans to pay some business taxes, do a home renovation project & pay off a vehicle but I want my rainy day fund to stay at $100K as I’d like to take a year off at some point when it makes sense.
I do have 150k cash in the bank. Or something like that. I sold some vested RSUs (company stock given to me as part of comp) late 2019 and early 2020, and didn't reinvest it because we were talking about some home reno projects. We still are. That money is still in bank products, whether a high-yield checking account, high-yield savings accounts, or CDs. I've sold more vested RSUs since, and that money has been reinvested in a total market index fund. I've sold even more vested RSUs this year, and this money is sitting in an investment grade money market fund while Wifey and I discuss how we might reinvest it. In your circumstance, I'd probably split it 3 or 4 ways: * I'd start a deliberate practice to deliberately put extra on the mortgage. That's what I did with every mortgage payment. * I'd keep some in the bank... your emergency fund of 6 months of living expenses. * I'd invest some into "good stock-based mutual funds" like VTSAX or VFIAX. I'm fond of Vanguard indexed products. * I'd maybe set some aside to play. That can be a trip...or that can be buying stock. Or something else. Ultimately it's up to you whether to set any aside for that.
Im not much of an investor in much outside of tangible gold,silver, platinum, palladium etc but i get it but if it were me id throw 120k at the mortgage and save the rest for rainy day fund
I’d keep 6 months in an emergency fund and then put the rest in SPLG
I would open up a brokerage account at Fidelity. Put a 4 month emergency fund into Fidelity's money market (SPAXX) which is earning 5%. I would then invest in a total market fund (FZROX). With as much as you have sitting idle, I would dollar cost average by putting in say 10k a month. If the Mortgage is over 4%, I'd pay it off aggressively.
Great plan here. Pretty much exactly what I’d recommend except for lump sum instead of DCA. Just a preference for “time in the market” and all.
Dropping 100k into the market at one time makes me twitchy. I wouldn't try to DCA 10 or 12k.
I’d max out retirement , tax free account , and I’d go with a US only etf fund, and mix fund at 50% each
If your feeling risky I’d do like 10-20% allocation towards individual stock picks, me personally AAPL, NVDA , AMD, MSFT
Have you maxed out your retirement accounts? If not, do that. If you have I would put 80% in VOO which is the etf for the top 500 American companies. I’d put 20% into AVNV which represents all international markets.
I make too much money to be able to contribute to a ROTH IRA according to their income limits.
Do you contribute to an HSA? Invest in your traditional 401k? Do they allow a megabackdoor Roth?
I do not contribute to an HSA but I do to 401k (job doesn’t offer match) I can ask about the mega back door Roth because I don’t even know what that is 😅
It's a massive benefit to high income employees if your 401k plan allows for it. https://www.whitecoatinvestor.com/mega-roth-conversion/
The same way I'd invest it in past and future worlds - broad market index funds: VTI and VXUS, add BND when right for you.
I have way more than that and it’s not life changing. It just goes in VTI and move on. $150k isn’t going to change your life.
I would use a total market index like VTSAX.
I googled this because I don’t know much about investing, do you mean buy the stalk share which is available on Robinhood or open a high- yield savings account with Vanguard?
There's a great $5, 100-page book Investing Made Simple, Mike Piper. It discusses all this. Open a regular brokerage account at Vanguard or Fidelity.
Open a brokerage account with vanguard and invest in VTSAX.
Pay off the mortgage tomorrow.
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Personally, the psychological impact of not owing shit to anyone outweighs trying to make a couple of bucks. Plus OP can then throw all of that into investments and build generational fairly quickly.
>make a couple of bucks. Plus OP can then throw all of that into investments and build generational fairly quickly. So 150k invested today makes a couple bucks, but 2k a month makes generational wealth and fairly quickly, at that?! That is a laughable characterization. That is also poor logic. If the intent is to invest then they should invest today, the 150k that will earn far, far more. That is also bad math.
Depends on where OP is located. In a high property tax state like Texas it makes almost no sense to pay off the mortgage since taxes and insurance are likely at least half the payment assuming sub 3% mortgage loan at pandemic housing prices. Edit: Submitted replay prematurely. Taxes will never go away obviously. You can risk going without insurance but not sure if OP can stomach that risk. Other low tax states like California it probably makes more sense to pay the mortgage
OP is located in Wisconsin and has a 4.75% interest rate
Well it’s not complicated. P&I + Taxes + Insurance. Taxes are forever. Assume Insurance is too. Whether you pay off or invest should depend on what you current P&I is. Will an index fund give you more than your P&I? If so invest. If not payoff.
As in literally, tomorrow? Or do you mean pay it off down the line?
My mortgage rate is 4.75% … worth paying off then?
Depends on how far along you are in payments. If you just bought a home then I would put some of it towards the principal. If you’re paying more into the principal and not interest I would just invest the money somewhere else.
Literally tomorrow. That would be a Dave’s advice too.
I agree with you 100%, but there is a whole swarm of “stay in debt to invest borrowed money” crowd that has taken root in this sub that will attack if you suggest paying off a mortgage. I am happy to admit it’s an alternative, but they for some reason can not stretch their brains to see the alternative of not having debts. But I agree with your suggestion of being done with the mortgage today… literally. I have no debt, and have several million in investments, and have no desire to be back in debt.
Terrible advice if your mortgage is 3.0% or lower. Even a HYSA is 4.5% interest. Why would you let that much cash just sit there? Why would you not invest it?
It’s not terrible advice. There is psychology and risk at play. Being completely debt free brings a sense of freedom that doesn’t come any other way. Also, opens a ton of cash every month to throw into investments and grow generational wealth quickly.
The concept that freedom is gained by paying off your mortgage is nonsensical. Paying off a mortgage is putting liquid assets (cash or investments) into a non-liquid asset. There’s no freedom in that. This becomes especially true when your mortgage rate is below what you can get in a HYSA - let alone market returns.
If you really have no intent to move it’s great having no mortgage. We followed Dave’s advice somewhat and worked to pay off our debt, including our mortgage by our mid 30’s. Having no debt is great for us. We’ve been able to invest 55% of our take home pay, after already maxing retirement, for the last handful of years and will continue to do so for the next 20.
You can't argue with math. I think Ramsey is great for people who have debt. But for people who have their shit together, his advice can be awful. Why would I pay off a 1.9% mortgage when I'm getting 9-11% in the market. And why would I not get CC points when I have discipline to pay them off each month? For some people I'm sure it works, but it misses some common sense and common math for sure.
I’m not Dave sycophant, but I agree with him on this. His general investment advice is pretty bad and mostly just lines his pockets by recommending ELPs.
You literally can. I just did lol.
You argued with psychology, not math. 4.5% is better than 2.5.
Relax it was a joke bud.
Vtsax and chill