Swivelguy wrote: ↑
Fri Jul 31, 2020 2:52 pm
CyclingDuo wrote: ↑
Thu Jul 30, 2020 8:42 pm
Unbrokenspark wrote: ↑
Thu Jul 30, 2020 7:59 pm
Emergency Fund: 3 months of expenses.
Debt: None House is Paid off (65K)
Right now we have roughly 82K invested between work Roth 401k and Roth's and HSA
I will be investing 20K+ for the forseable future a year
Do NOT, I repeat - do not
get another mortgage so you can invest. That would be insane and an entrance ticket to the NUT HOUSE material.
Hmm. Let's say OP already had a mortgage with 80% LTV. Then the situation would look like this:
$52k mortgage at 3% = monthly payments of $219
$134k invested in 100% stocks, $82k in Roth and $52k in taxable with no unrealized gain or loss
Would we advise him to sell the stocks in taxable and pay off the mortgage in full? Hell no, I wouldn't. The portfolio value is AT MOST 22% of what OP would want to have on hand to retire on ($25k of expenses / 4% withdrawal rate = $625k), it's absolutely the time to be staying fully invested and build that portfolio.
Well, first things first...
He doesn't have a mortgage as his house is paid off. Therefore, he should not borrow money to invest in the stock market at age 25. That's just noodles. He is already on a path to investing $20K per year to add to his current $82K in his investments and has $0 debt. Plenty of time for the additional investments to accumulate over the next 35-40 years.
If one did have a mortgage and had enough money to pay it off in taxable investments, depending on one's overall goals and strategy, paying off the mortgage early could indeed be a worthwhile step (many of us have done that). It's called Baby Step 6 in the Ramsey Baby Steps. That's an argument that seems to never get put to rest, but it doesn't have anything to do with the OP.
Back to where the OP currently stands. I do like the Fidelity "journey" shown below on how much money one needs for retirement - which we know is based on working to 65, taking SS at FRA (67), having no pension, and investing 15% of your income each year (starting at age 25) throughout your working career to have 10X your salary by age 67. That's a lot of assumptions and it doesn't matter if it is a perfect. It is simply a very good starting point to use as a path. The OP may have a higher multiple and even the potential to retire earlier at his rate.
You will see that at age 25, the OP is ahead of the path in his current financial standing since he has more than 1X his current salary already saved and invested at age 25 - plus his house is debt free.
So if he is adding $20K per year from his income to his savings and investments, by the time he hits age 30 in 5 years, he could very easily be over $200K or 4X his current salary at age 30 give or take market returns and what his salary is in 5 years. I don't think I will retract my advice that borrowing money on his already paid off house to take out a mortgage on it to invest in the stock market would be anything short of nutty or crazy.
https://www.fidelity.com/viewpoints/ret ... -to-retire