quote:

Originally posted by Skins2881:

quote:

Originally posted by OKCGene:
^^^^^^

My comments were based on ROI, not on how it feels, but if you are extremely risk adverse, than comfort over returns may be important to some.

All of this is purely philosophical anyways, because we don't have the right information to actually make a suggestion, the only person that would, is a financial planner that has made a risk tolerance assessment and was aware of his goals/desires/emotions for investments.

skins,

You do realize Gene is a little bit, ahem, older than us?

All kidding aside, more information is needed. For someone in my situation who does not own a home, haven't lived in a single place long enough to establish roots, I would likely use some of that for a mortgage because of the low interest rates and then diversify in ETFs with some cash set aside.

A tear-down with zero view, but on the border of a burgeoning, up and coming neighborhood. Hold it for year (or less), put it back on the market at 50% more...and watch the rest of the speculating scavengers and increasingly desperate home buyers come it and fight over it.

That's the Seattle real estate market in a nutshell, even with a pandemic backdrop. I watched a house that's a couple of blocks away from one of my rental properties in town, built by the same developer in the 1950s, sell for just under $700k. Houses in that neighborhood less than a year ago were valued between $400k to $450k (though selling slightly over that valuation).

quote:

Originally posted by flesheatingvirus:
Pay off all debt.

quote:

Originally posted by OKCGene:
^^^^^^ There is a HUGE peace of mind when you walk into your paid for home, especially when you go to sleep at night and don't ever even think about not being able to make those monthly payments ever again.

That's priceless.

You're young, healthy, making money, life is good. Then you or your spouse gets sick or dies, or disabled, and you no longer have the money coming in like you did before. You can no longer make the house payment, you're fighting cancer and have that worry too.

A paid for home is priceless in more than one way.

All you have to do is keep up the taxes, which can be quite minimal depending on where you live, as well as insurance. Again, depending on where you live, that can be a very low amount of money.

Even better is having a paid for home, and since you have that, you have money to save and invest, and you have money available to weather the storms of life.

Yep, the storms of life. They come to all of us, some get their asses handed to them by the storms of life.

A paid for home is like a lifeboat.

Good luck to all of y'all.

This right here. Pay off the house, and cars. Then it’s just monthly utilities and property tax.

quote:

Originally posted by Aeteocles:

quote:

Originally posted by jimmy123x:

It depends how you look at it. If you pay off a $300k mortgage you have an extra $1300 a month (the payment) in your pocket each month. So it saves $15.6k a year in expenses (That's equivalent to making around 5.5% on your $300k plus whatever additional % of whatever tax bracket you're in. It's real easy to invest money each month, when you have no debt.

That seems...circular.

Perhaps, but if you have no debt, your living expenses are next to nothing. So even if you lose your job, one could pay their bills off of a Walmart or UBER type job.

Here in South Florida you can get a fairly nice home for $400k,and a liveable normal home for $300k, much less outside of South Florida. If you pay cash for it, your monthly expenses including insurance, taxes, electric, water, cable, are under $1000 a month. Versus let's say $2300+ a month with a mortgage. If you don't have car payments or any credit card debt, even better.......It's very easy to move forward in life, when you're not dragging an anchor behind you (of debt). Problem is, most Americans always want more and more and more.

Versus say investing $300k in something safe and tax free (muni bonds) at 5%, you're only making $15000 in interest. At 10% you're making $30000 a year in interest and paying taxes on it. Or saving $16,000 +/- in annual debt payments.......and having an extra $16k a year in mortgage savings to invest.

You already missed your big opportunity. Should have bought 200,000 shares of Novavax at the end of May at $2 a share and sell now at $140 a share. Voila, $28 million before taxes in a couple of months. Problem solved!

Invest in apartments. 8-10% cash return yearly and 75-100% overall return in 5 years. Do your homework...

quote:

Originally posted by sjtill:
….Because of these historic uncertainties, and the rather surprising current high levels of stocks, I am pulling out around 20% of stocks into cash, at the recommendation of my financial advisor, in expectation of being able to pick up some bargains in the next months or end of the year.

Given all the risks at this time, I have pulled about 40% of my portfolio out of stocks and into a two year bond fund.

I am now more concerned with the return OF my money than the return ON my money.

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Originally posted by sasquatch28:
First step-pay a fee only certified financial planner to build a financial plan to address your particular financial needs and goals.

This. We know nothing about you or your life situation to provide any credible advice whatsoever.

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Originally posted by mrw:
I would go to the Gold Nugget Fremont St Las Vegas, find a roulette table and put $200,000 on Red, one spin.

Maybe 20 yrs back I knew two guys who got a fairly large settlement from their employer regarding an underpayment of OT and shift differential, which had been going on for years.IIRC they got like $30K+ each.

Both are easily lead astray. Another guy at their job mentions getting a limo and going down to Atlantic City and doing high stakes poker, roulette, etc. "I mean...It's FOUND money right"?

They get picked up by a limo, whisked south to AC to I forget which casino.

Within ten minutes the three of them lost close to $100K! I always wonder what the ride back home was like? And...One of them DID do a one roll of the dice deal with about $30K and crapped out! Ouch!

Go back in time and put it all into Amazon.

Let's sayyyyyyy....

The suitcase you pulled out of the hooker's closet to stuff her body in turned out to contain, oh, 400,000 dollars...

Is this a real amount or hypothetical? If we're just pretending let's go into the millions, that's a lot more fun.

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Originally posted by parabellum:
Let's sayyyyyyy....

The suitcase you pulled out of the hooker's closet to stuff her body in turned out to contain, oh, 400,000 dollars...

Put up a sign that reads "dead hooker storage," tell Quinton "yes it does," take cash, and strut out of the place like you own it.

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Originally posted by jimmy123x:

quote:

Originally posted by Aeteocles:

quote:

Originally posted by jimmy123x:

It depends how you look at it. If you pay off a $300k mortgage you have an extra $1300 a month (the payment) in your pocket each month. So it saves $15.6k a year in expenses (That's equivalent to making around 5.5% on your $300k plus whatever additional % of whatever tax bracket you're in. It's real easy to invest money each month, when you have no debt.

That seems...circular.

Perhaps, but if you have no debt, your living expenses are next to nothing. So even if you lose your job, one could pay their bills off of a Walmart or UBER type job.

Here in South Florida you can get a fairly nice home for $400k,and a liveable normal home for $300k, much less outside of South Florida. If you pay cash for it, your monthly expenses including insurance, taxes, electric, water, cable, are under $1000 a month. Versus let's say $2300+ a month with a mortgage. If you don't have car payments or any credit card debt, even better.......It's very easy to move forward in life, when you're not dragging an anchor behind you (of debt). Problem is, most Americans always want more and more and more.

Versus say investing $300k in something safe and tax free (muni bonds) at 5%, you're only making $15000 in interest. At 10% you're making $30000 a year in interest and paying taxes on it. Or saving $16,000 +/- in annual debt payments.......and having an extra $16k a year in mortgage savings to invest.

Still seems...circular.

$300k invested at a very reasonable 6% rate of return will be worth $1,723,047 at the end of 30 years.

A 30 year mortgage of $300k at today's low rate of 3% will only cost you $155,000 in interest (or $455,000 total).

You literally gave up $1,268,047 in future money to pay off your house today.

But, even if you go through the longer calculation of "not having expenses" the logic still doesn't play out, because all you've done is spent cash on hand (principal) to pay down the principal on the mortgage. You aren't "saving" $16,000 a year-- you've already spent it. It's like saying I bought a $60k truck in 2020, but that's okay, because it saves me $1k a month for the next 60 months. You've spent the money buddy, you aren't saving anything.

Your cash has a future value. Why spend it now on the mortgage, when the mortgage rates are so low?

Invest the cash. You could withdraw $1265 a month from your big fucking pile of cash to make your monthly mortgage payment if you are concerned about the "freedom" of not having a payment. But, in the mean time, your mortgage interest is 3% and you could reasonably make 6% or more on your invested cash pile--even at 6%, you'll be returning $18k in year 1.

Even after paying taxes (lets say 33% rate, at the margin), you'll net $12k. So, by investing your $300k, you would have paid $15,180 of your mortgage using only $3,180 of your principal. You'll now have $296,820 in your bank account, but only $293,746 left on the mortgage. In year ONE. By the time you are done paying off the house, you'll still have a fairly sizeable chunk of cash in the bank--never having once put any additional money into it or made a single mortgage payment from your own pocket. AND that assumes the least favorable tax position. Haven't even considered long-term capital gains or mortgage interest deduction,

But that's not all folks, there's more!

Because you didn't blow your wad on the house all at once, you will always have cash on hand for emergencies, to chase other investments, to put a down payment on a second home, or to give you the flexibility of lining up a new home without having to sell this one first.

Having all of your money sunk into a house isn't freedom. If you get into a car accident and can't work, what happens to your property when you can't make the property tax payments? You'll end up having to firesale your house or having to refinance--good luck trying to refinance without a job, by the way.

Having a paid off house is nice, sure, but it's not the GOAL. The GOAL is financial freedome, and true financial freedom is about having money on hand, not a paid off house. I can look at a pile of money and say "I can use that to pay off my mortgage, anytime I want, no consequences...". But you can't turn a house into money at a moment's notice. You have to sell it, and selling takes time and its value is affected by a bunch of factors.

So yeah, not with you on this. I'd keep the pile of cash and invest it, rather than pay off a house.

Check with a financial planner instead of asking a bunch of gun nuts.

$400,000 will buy a few BMGs, K98s, M82s, SVD Tigers, Chey Tacs...

Then you'll need to buy a range, and some targets...

quote:

Originally posted by Aeteocles:
$300k invested at a very reasonable 6% rate of return ....

Please, kind sir, tell me where I can safely earn a 6% rate of return?

The ten year Treasury bond pays .6% per year, or 6% per DECADE. And that is before income taxes.

Growth stock mutual funds.

quote:

Originally posted by Hay2bale:

quote:

Originally posted by Aeteocles:
$300k invested at a very reasonable 6% rate of return ....

Please, kind sir, tell me where I can safely earn a 6% rate of return?

The ten year Treasury bond pays .6% per year, or 6% per DECADE. And that is before income taxes.

The SP500 has an an average rate of return of 10% going back to the 1920s. 6% is reasonable, allowing for someone to balance their portfolio into stocks, bonds, and cash.

You’re going to get mostly the kind of nonsense answers that you’ve been getting because you’re asking a nonsense question.

To get answers that make sense, you need to ask your question that provides context of your total picture including total financial picture, your age, any wealth transfer plans, and your risk tolerance. The short answer to your question is find a for fee certified financial planner who can look at your total picture and provide you with an answer that makes sense. Hell, for $400,000 in one component, you can pay for 3 different planners so you can compare.

Here’s why I say you’re getting mostly nonsense answers: the best answer in how to invest $400,000 is going to be different if you’re age 70, 60, 50, 40, etc. It’s going to be different if the $400,000 is in addition to $4 million in net worth you already have or if it’s the only asset you have or if you owe $200,000 in credit card debt. The answer will also be different based on the other considerations in your life.

Look at Fidelity’s Wellington II fund