IRA vs mortgage payoff
Hi Terry,
Recently my husband got a raise and we now have an extra $400 a month. We are trying to decide if we should put that money in our IRA (we do not have 401k and there is no company match), OR if we should use that money to payoff our investment property mortgage faster. Currently our investment property (that we rent out full time) is at 4.95% interest. Our IRA just keeps dropping right now. So we thought instead of throwing more money at it at this moment maybe it’s better to pay off the mortgage. Any guidance would be appreciated. Thank you!
Terry Says
Over the long run — at least 20 years — a diversified portfolio of large company stocks with dividends reinvested has never lost money, even when adjusted for inflation. Think S&P 500 stock index fund.
So how long is your time horizon? At least 20 yars? If you’re putting $400/month away, sometimes you’ll be buying in a decline. You have to have the discipline to stick with that plan, even in scary times. Assuming you are under 60, I’d go with the stock investment.
