Where to allocate lump sum payout

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beth65
Posts: 30
Joined: Mon May 08, 2017 1:51 pm

Where to allocate lump sum payout

Post by beth65 » Mon Jul 17, 2017 1:28 am

Looking for advice on best use of a large profit on the sale of a home.

We sold a home and currently have $160k cash surplus.
No consumer debt other than one car loan at $400 per month.
Our new mortgage is $2455 a month on a 15 year fixed (we put 20% down).
There is a total of $250k of school loans that we can refi (current offer with Sofi is a 10 year fixed at 4.5% at $2486 per month).
Income is $350k per year.
We had a great employer match at the last job, and total retirement/investments are $290k.
Current employer has no 401 for first year, so we plan to backdoor into Roth this year.

What is the best use of the $160 profit? Put some or all towards student loans? Keep the majority liquid in savings/investment accounts for emergency funds? Other suggestions? We are not risk adverse or debt adverse, but just trying to figure what is the best option.

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FiveK
Posts: 3155
Joined: Sun Mar 16, 2014 2:43 pm

Re: Where to allocate lump sum payout

Post by FiveK » Mon Jul 17, 2017 2:23 am

beth65 wrote:What is the best use of the $160 profit?
You will only know "best" for sure in hindsight. Reasonable cases can be made for any of the options you listed (e.g., pay student loans or invest in stocks), except perhaps for a $160K emergency fund (seems a bit much).

See Investment Order for some general suggestions.

mortfree
Posts: 584
Joined: Mon Sep 12, 2016 7:06 pm

Re: Where to allocate lump sum payout

Post by mortfree » Mon Jul 17, 2017 2:42 am

I think I would put 100k to the student loans prior to refi.

Or invest all 160k in a taxable account.

dogagility
Posts: 11
Joined: Fri Feb 24, 2017 6:41 am

Re: Where to allocate lump sum payout

Post by dogagility » Mon Jul 17, 2017 5:04 am

One vote here for putting it all into your student loan. Hard to beat a guaranteed after tax 4.5% return.

MotoTrojan
Posts: 798
Joined: Wed Feb 01, 2017 8:39 pm

Re: Where to allocate lump sum payout

Post by MotoTrojan » Mon Jul 17, 2017 5:13 am

No brainer; student loans.

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