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Niko120 OP t1_jaeylfu wrote

Reply to comment by bassjam1 in Should I pay off my mortgage early? by Niko120

Every one says INVEST! invest in WHAT? That 70k could be 1,000,000 with a 50% return over 30 years. Or it could be $0 with a 0% return

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bassjam1 t1_jaf2dne wrote

If your company offers a 401k and you aren't maxing it out I'd do that first and use this money to subsidize the lost income. Also a Roth IRA is a great option if you aren't over the income limit, $6500 is the most you can contribute annually. Both of those other tax advantages which is why you should focus on them first, but after that I'd just go through a regular taxable brokerage and put it in an index fund which tracks the s&p500.

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Niko120 OP t1_jaf3oca wrote

We don’t have a 401k unfortunately. We have a profit sharing plan and it sucks. As far as a Roth IRA I’m not necessarily trying to put a big chunk of my money towards retirement at 37 years old. There are still plenty of things we need the money for along the way. I’m definitely going to try to learn more about investments though

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bassjam1 t1_jaf4wf9 wrote

At 37 years old you absolutely need to be saving for retirement, especially if you have nothing saved yet. You're 25-30 years away from retirement which isn't as far away as it sounds as far as saving. And I'll be blunt, even turning that $70k into $1 million isn't going to be enough.

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wickedkittylitter t1_jaf0hf7 wrote

Invest in stocks. Read the Wiki linked at the top of this page. You need the information badly. $70k invested for 30 years at the market average return of 8% would end up being worth a bit over $700k. You need to learn about future value.

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Pretty_Swordfish t1_jaf494o wrote

Check out Boggleheads and the 3-fund portfolio for what specifically to invest in.

Personally, being in a very similar spot to you, we are not paying early. Instead, we put as much as we are comfortable with into the market and the rest into T-bills and I-bonds.

Also, note that you are comparing your 4% return at 6 years to the total mortgage term (30 years?). You clearly make more money at 4% rates than at 3% costs. The issue is that the 4% isn't guaranteed and the 3% is.

As well, if you have to borrow to pay something, it's hurting someone else who could have gotten me for their money, but they gave it to you instead. So if you want to borrow to pay it off, at least give them the rates they could have earned by putting it into a HYSA or T-bill, etc instead.

Finally, don't forget that insurance and taxes still get paid when the mortgage is done.

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