Lila is concerned about inflation and the risk of a recession. Should she invest in the stock market, despite the scary headlines? Or should she pay off her primary residence or her investment properties?
Linda invested in a 529 for her son’s college, and he’ll be starting in the fall. But, the value of the plan dropped right before she was planning on using it and she is wondering how to keep from losing more money.
Jen and her husband want to retire in 8 years. They’re hoping to have paid off their mortgage AND hit their net worth goals when they stop working. How should they prioritize between these two goals?
Do you have a question on business, money, trade-offs, financial independence strategies, travel, or investing? Leave it here and we’ll answer them in a future episode.
Enjoy!
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Lila asks (at 04:30 minutes):
My husband and I are 34 and we have a net worth of $1.5 million.
We have about $700,000 in index funds, between retirement and brokerage accounts. I contribute about $9,000 to my brokerage each month.
The rest of our net worth is in real estate. I owe $700,000 on my primary residence, and it’s worth $1.2 million.
I took out a home equity loan on my primary residence of $290,000, on top of the primary mortgage. I also have three investment properties, in the Midwest, where I owe about $200,000 for each. The mortgage interest rates on all of my properties are about between 2 percent and 3 percent.
Should I pay off my investments first or my primary residence first, or keep investing in the stock market right now?
Linda asks (at 45:31 minutes):
My son will be a freshman in college in the fall.
We’ve had a 529 plan for years and we haven’t contributed for at least five years. We have lost a little over $10,000 between December 2021 and April 2022, when the balance was $149,000.
We have it invested in a Fidelity Fund. It’s an age-based portfolio, a New Hampshire portfolio 2021. That equates to 15 percent stocks and 85 percent bonds.
We will be needing approximately $40,000 annually for college.
Normally, I’m a buy and hold investor, but I wanted to get your opinion since we’re so close to needing the money.
Should I just let it ride or should I cash it out? Or, should I keep it in the 529 plan, but put it into money market funds to ensure I don’t lose anymore?
Jen asks (at 58:55 minutes):
I’ll soon be 31 and my husband just turned 37. Our incomes have gone up significantly within the past couple years, to about $320,000.
We have an outstanding balance on our mortgage of about $200,000 at a 15 year loan of 2.625 percent. We just refinanced this within the past couple months. The house is worth about $300,000.
We also have about $320,000 in investments, and we would like to stop working in eight years or when our investments reach $1.5 million.
We would also like to have the house paid off when we stop working to mitigate the risk of a down market in the first few years of our retirement, to keep our living expenses low and to not have the mortgage payment looming over our heads.
I would like to hear your thoughts on paying off the mortgage in 15 years and shoveling all of our money into our investments.
Or we could put extra money on our mortgage every month and have it paid off at the same time that we stop working, while also continuing to invest in our 401k, backdoor Roth IRA, and our taxable brokerage account.
If anything catastrophic happened, we would know that we could go back to work, but we would like to not do that if at all possible.
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