Additional 10k - Roth, 529 or Mortgage

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FB01
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Joined: Fri May 20, 2011 12:36 am

Additional 10k - Roth, 529 or Mortgage

Post by FB01 »

Hi,

I have additional 10K and also have my emergency fund. What should be the boglehead approach where to put it

Option 1 : Should I put as additional Principal for my Mortgage which is 700K @ 3.25%
Option 2 : Put 10K in Roth IRA
Option 3 : Put 10K in 529 to fund kids education (Kids are 5 and 2)

Thanks,
JR
Thanks, | FB
bnes
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Re: Additional 10k - Roth, 529 or Mortgage

Post by bnes »

Your marginal tax bracket? do you itemize? The mortgage interest tax subsidy shifts these numbers.
Grt2bOutdoors
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Re: Additional 10k - Roth, 529 or Mortgage

Post by Grt2bOutdoors »

Roth - you'll never get that space back again, unless you practice Roth conversions at later age and you'll miss out on tax-free compounding.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
OatmealAddict
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Re: Additional 10k - Roth, 529 or Mortgage

Post by OatmealAddict »

Another vote for Roth. I just threw $11,000 into backdoors this morning. Took it out of my emergency fund even.
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powermega
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Re: Additional 10k - Roth, 529 or Mortgage

Post by powermega »

Roth IRA. If your retirement funding is already more than adequate than you can consider the 529, but most people aren't going to contribute to a 529 until they max out their retirement accounts first.
Even a stopped clock is right twice a day.
Topic Author
FB01
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Joined: Fri May 20, 2011 12:36 am

Re: Additional 10k - Roth, 529 or Mortgage

Post by FB01 »

bnes wrote:Your marginal tax bracket? do you itemize? The mortgage interest tax subsidy shifts these numbers.

Am in 25%.

I bought the house this year so will be itemizing from next year.

Thanks,
JR
Last edited by FB01 on Thu Aug 11, 2016 4:49 pm, edited 1 time in total.
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Engineer250
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Re: Additional 10k - Roth, 529 or Mortgage

Post by Engineer250 »

Roth! Just my opinion.
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queso
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Re: Additional 10k - Roth, 529 or Mortgage

Post by queso »

Roth..
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FiveK
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Re: Additional 10k - Roth, 529 or Mortgage

Post by FiveK »

Roth, unless you are (or, with maximum 401k contributions, could be) in the part of the 25% bracket that would allow a deductible traditional IRA contribution - in which case, tIRA.
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ruralavalon
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Re: Additional 10k - Roth, 529 or Mortgage

Post by ruralavalon »

Of the choices you listed, a Roth IRA.

Are you contributing the maximum of $18k/yr to your 401k or other work-based account?
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
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