We are very close to being debt free. Paid the mortgage off Nov.2011. We have saved $10,000 to buy 2 IRA's but since my husband has a SEP plan already we can only purchase 1 for me. I have a 401K plan which is maxed out pretaxed.
Here's the question.
Home equity loan balance $15,000 . We could use the money to pay it down to $5000 and have the rest paid off in 2 months or we can invest the money.
Thoughts?
Invest or payoff home equity loan
- Noobvestor
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Re: Invest or payoff home equity loan
All depends on the interest rate.
"In the absence of clarity, diversification is the only logical strategy" -= Larry Swedroe
Re: Invest or payoff home equity loan
If the IRA contribution is for 2011, make sure you do that.
"Index funds have a place in your portfolio, but you'll never beat the index with them." - Words of wisdom from a Fidelity rep
Re: Invest or payoff home equity loan
Easy decision do one thing at a time,,,Pay off loan ,then think about investing we are talking 15k here not 150k
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
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Re: Invest or payoff home equity loan
It sounds like you're able raise 5K cash in two months. If this is the case, you can probably max out your IRA and pay off the loan in a few months. Pay attention to the IRA contribution deadlines and do both.
2011 IRA Contributions must be made by April 17, 2012 (tax filing deadline for 2011 tax returns)
2012 IRA Contributions must be made by April 15, 2013 (tax filing deadline for 2012 tax returns).
2011 IRA Contributions must be made by April 17, 2012 (tax filing deadline for 2011 tax returns)
2012 IRA Contributions must be made by April 15, 2013 (tax filing deadline for 2012 tax returns).
Re: Invest or payoff home equity loan
Home equity loan balance $15,000 . We could use the money to pay it down to $5000 and have the rest paid off in 2 months or we can invest the money.
You would likly not take out a new loan just to invest the money. Pay it off.
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Re: Invest or payoff home equity loan
Interest rate is 3%..does that change anyone's thoughts.
Re: Invest or payoff home equity loan
Repeat,pay it off guaranteed 3% return on money instantly, you will be glad you did ,one less thing to think about :peace :peaceofftocolorado wrote:Interest rate is 3%..does that change anyone's thoughts.
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
Re: Invest or payoff home equity loan
It barely matters since it is so low. If you pay it off in 2 months or 6, the difference in interest is quite small and it's a toss up as to whether you would do better or worse paying it off.offtocolorado wrote:Interest rate is 3%..does that change anyone's thoughts.
"Index funds have a place in your portfolio, but you'll never beat the index with them." - Words of wisdom from a Fidelity rep