Hi, guys im 21 and I just bought $ 80,000 small house four moths ago, and I would like to know what is better to pay extra payments to pay off the mortgage ASAP, or to pay the regular payments and the rest to invest it in the stock market or any other investment. The reason is that after 30 years im going to end up paying more than 288000, but if I paid sooner ill save hundreds thousands. In the other hand if the rest of the money I invested I can get a higher % gain, but is not secure. What do you guys believe is the best use that I can give to my money? Please give me your opinions, and ideas. Thank You.
2006-12-13 03:01:33 · 11 answers · asked by byron_loco 1 in Business & Finance ➔ Investing
Investing in stock market is not a sure business man.. Find someone to live with you and share some costs and pay off the mortage asap! :)
2006-12-13 03:06:41 · answer #1 · answered by Lorenzo 3 · 1⤊ 0⤋
First, pay off the PMI insurance. You need to have 20% to remove the PMI. Once this is done, pay the minimum towards the mortgage and put the rest into the market, particularly a 401k or IRA. This is the best way to invest. Your best investment is a 401k, because the money goes in untaxed. With tax benefits, you only pay a few percentage points on your mortgage. Your money will be better off in a 401k.
For stock market investing ideas, see what the best investors are buying and selling at http://www.top10traders.com - this is a free site that lets you create a portfolio of stocks with $100,000 in "play" money. Each day the site ranks the best performing portfolios, so you can see how your picks perform compared to other investors. You can also read posts on investing from the best traders, as well as share your own investing ideas. There is also a charting feature , so you can see how your portfolio performs compared to the S&P 500.
Here are this month's best traders:
http://www.top10traders.com/Top10Standings.aspx
Good luck.
2006-12-13 12:11:27 · answer #2 · answered by Anonymous · 0⤊ 0⤋
When financial advisers say 'invest' what they don't say is that for many people investments have not worked out. Virtually any investment carries a risk of loss as well as the prospect of gain. Anyone paying out a sizable chunk of their earnings each month on a mortgage would welcome the chance to pay it off, leaving their whole salary at their disposal. What they forget is that in normal times after each annual salary rise the mortgage represents a smaller percentage of their monthly income until eventually it becomes one of the smaller bills you pay. Mind you, mortgage rates have been very low for some time and chances are they could see a rapid increase at some future point. the 2nd house my wife and i bought was a new build off plan and we got a mortgage at 10.75% ~ by the time the house was built and we had been in it for a couple of years the mortgage rate was 14.5% {which may tell you that we are looking something like 35-40 years back. You don't say where the funds are coming from, nor should you, but if for example they were from a redundancy payout you would not be entitled to any benefits for as long as your cash in bank exceeded the break point for eligibility for benefits. Which means your finances would be a one way flow ~ out. Someone once said to me that people who have never had money don't know how to handle money. That sounds like a very snobby thing to say but sadly it is very true. Apparently about 50% of people who have won up to 2 million on the lottery, spend it all within 5 years! I last made a mortgage payment when i was 45 (i came into some money then from an inheritance) and have never regretted paying the mortgage. Going back to College then chilling out for a few years sounds great - at first. from personal experience let me tell you the reality of that, in the first place the money runs out more quickly than you might think, then, having chilled out for a few years you find you are considered virtually unemployable! While you still have some money, you are not 'hungry' and a would be employer realises' you do not actually 'need' the job. That is bad news for an employer! Think about it. Then when the money is gone you find that your skills are out dated and you are long out of the 'work' habit. Chilling out years are like retirement, time really ceases' to have much meaning. if you want to get up at 10, you do. You do chores around the house when you feel like it, no hurry, you have all the time in the world. the work habit is just that, a habit that you have got used to and becomes second nature. the alarm rings at 7, you get up. You get to work and are immediately into work mode and multi tasking with the best of them. If you had the (now) mis fortune to have been in a supervisory/management role before your chilling years, that counts against you because when applying for an non management role the employer assumes you will only want it as a short term stepping stone. Apply for a managerial role? Forget it, your skills and track record are out of date. Vicioius circle ! When i decided it was time to go back to work after 5 years self funded 'chilling' it took me 2 years to get a job and another 8 to get back to where i had been 15 years previously! When i got my inheritance i already had a degree and had been in management positions for quite a number of years. Whilst i enjoyed my 'chilling (your term) years, being wise after the event, they were the biggest mistake i have ever made in my life.
2016-05-23 17:51:00 · answer #3 · answered by Cheryl 4 · 0⤊ 0⤋
The stock market is unpredictable. Still I would advise you to open an IRA and invest your extra cash is SPY (stock market symbol for S&P 500, also called a Spider). SPY is like a mutual fund with very low costs. As inflation marches on the dollars you use to repay your mortgage get less and less valuable and easier to get.
2006-12-13 03:37:37 · answer #4 · answered by Anonymous · 0⤊ 0⤋
When I have big chunks of money to pay down debt or invest, I determine the interest rate of the debt I want to pay down and the per month payment. Then I compare that to my expected return on investment.
In my case all of my debt is at 0-1.6% so there is no complelling reason to pay off this debt because I can invest money and get more then I pay in interest.
On the otherhand cash on hand is critical. If I save enough to pay down a debt completely I weigh the return on investment vs. paying off a debt so I have $200 more per month.
Unless you can off your mortgage or have a really high rate, I would say invest it in stable funds.
2006-12-13 03:07:55 · answer #5 · answered by Wyleeguy 3 · 0⤊ 0⤋
Talk to your lender. Manylenders have programs that allow you to break your monthly payments in to 2 smaller payments amonth. This drastically lowers the overall amount you have to pay on your overall loan and you don't acturlly pay anymore money per month. The stock market is all well and good but requires quite a bit of expertice. Even people who really know what they are doing lose all the time. Keep your money safe and talk to your lender. It should work out ok for you. Good luck
2006-12-13 03:10:44 · answer #6 · answered by Traveler 7 · 0⤊ 1⤋
What interest rate on mortgage? What risk tolerance on investing? Stocks will likely beat that interest rate but maybe not after taxes & maybe not at all. Need not just high rate but higher rate adjusted for inflation & taxes. Even though I am totally in market & have been for decades you should cut debt 1st.
2006-12-13 03:07:29 · answer #7 · answered by vegas_iwish 5 · 1⤊ 0⤋
Pay off your mortgage of course. The roof over you head should be your top priority. Also property pays better. A win win situation.
2006-12-13 04:49:13 · answer #8 · answered by Anonymous · 0⤊ 0⤋
Do some of both.
2006-12-13 04:16:16 · answer #9 · answered by Ovrtaxed 4 · 0⤊ 0⤋
You already knew the answer.
2006-12-13 03:09:35 · answer #10 · answered by Alfretz T 3 · 0⤊ 1⤋