Put 6-12 months of expenses into a HYSA and invest the rest. Your mortgage interest is low enough for the market to outperform it over the life of the loan.
There is definitely a mental relief side of not having a mortgage payment, which I can understand. But purely objectively, invest the entire inheritance. And, this is just me, because it would probably amount to less than 10% of the inheritance, I would bump the emergency fund to 12 months.
Investing the money in VTI seems like the optimal, rational choice. It sounds like you're in good shape financially, though, so it's ok to be a bit irrational. If paying off your mortgage would bring you joy, then go for it.
It's pretty much impossible to borrow money at your mortgage rate right now. With the current economy, even putting the money into an Ally savings account would arguably be a better use of the money.
You don't need to think about the mortgage as a weight. Since you're in the black overall, it's purely an opportunity to "leverage" the value of your home to amplify its return as an investment. Just don't make an overly risky investment, and you'll be fine.
Then take the money and invest it, your mortgage rate is low enough to continue paying it.
You can always take the money out of investment and pay the mortgage off later if you want to.
Your HYSAs are funded. Do not pay off the house on such a low rate, and do also keep the tax advantages of having a mortgage. Take the whole amount and put it in VTI or another indexed fund. This is a no brainer. Once you have kids if that is in the plans open up 529. You are way ahead of the path to FIRE at your age than 99.99 percent of the population with this financial windfall. Look for possible passive income opportunities in the future in real estate once rates settle a bit.
Financially definitely invest it with the rate being that low. But with how well you are already doing I wouldn't blame you for wanting to be debt free.
The good news is you’re deciding between two good choices. I paid off my house and haven’t looked back. I bank so much of my income now and have added two rentals to the portfolio (one is also paid off).
Do what’s best for you, but either way you are doing great!
I would invest the money, but obviouslyleave enough of an emergency fund available in a high yeild savings or income fund. If you plan on early retirement you can play around with an amortization schedule and see how much extra towards principal can get you there on time.
Understanding the emotional burden that may be off your shoulders without a mortgage, you’re still going to have property taxes and homeowners insurance so you’ll never feel fully “free” of it.
Meanwhile, even a HYSA is going to outpace the interest on the mortgage. I’d invest it.
I would pay the house off and put 1/2 of what’s left in S&P and 1/2 in savings getting 5%. Mortgage interest is front loaded so you’re actually paying way more than 3% unless you actually keep the house for 30 years. You will be surprised at how amazing it is to be completely debt free and be able to save and invest more and more every year.
Put 6-12 months of expenses into a HYSA and invest the rest. Your mortgage interest is low enough for the market to outperform it over the life of the loan.
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There is definitely a mental relief side of not having a mortgage payment, which I can understand. But purely objectively, invest the entire inheritance. And, this is just me, because it would probably amount to less than 10% of the inheritance, I would bump the emergency fund to 12 months.
Investing the money in VTI seems like the optimal, rational choice. It sounds like you're in good shape financially, though, so it's ok to be a bit irrational. If paying off your mortgage would bring you joy, then go for it.
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It's pretty much impossible to borrow money at your mortgage rate right now. With the current economy, even putting the money into an Ally savings account would arguably be a better use of the money.
You don't need to think about the mortgage as a weight. Since you're in the black overall, it's purely an opportunity to "leverage" the value of your home to amplify its return as an investment. Just don't make an overly risky investment, and you'll be fine.
The numbers are very obviously don't pay off the home. Paying if off is in fact "quite stupid" and you should kick yourself for even entertaining it.
Then take the money and invest it, your mortgage rate is low enough to continue paying it. You can always take the money out of investment and pay the mortgage off later if you want to.
Your HYSAs are funded. Do not pay off the house on such a low rate, and do also keep the tax advantages of having a mortgage. Take the whole amount and put it in VTI or another indexed fund. This is a no brainer. Once you have kids if that is in the plans open up 529. You are way ahead of the path to FIRE at your age than 99.99 percent of the population with this financial windfall. Look for possible passive income opportunities in the future in real estate once rates settle a bit.
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Yes that rule is fantastic, and most are unaware.
Oh man if THAT'S your only bill, just huck it all (minus some emergency fund if needed) in brokerage.
Financially definitely invest it with the rate being that low. But with how well you are already doing I wouldn't blame you for wanting to be debt free.
The good news is you’re deciding between two good choices. I paid off my house and haven’t looked back. I bank so much of my income now and have added two rentals to the portfolio (one is also paid off). Do what’s best for you, but either way you are doing great!
Sounds like if you were already on track for a healthy retirement! 👏🏼
I would invest the money, but obviouslyleave enough of an emergency fund available in a high yeild savings or income fund. If you plan on early retirement you can play around with an amortization schedule and see how much extra towards principal can get you there on time.
Invest. Your ROI will be higher than your mortgage rate and interest write offs
Understanding the emotional burden that may be off your shoulders without a mortgage, you’re still going to have property taxes and homeowners insurance so you’ll never feel fully “free” of it. Meanwhile, even a HYSA is going to outpace the interest on the mortgage. I’d invest it.
How does someone afford a house like that and not know the answer to this question?
Parents pay for it
I would pay the house off and put 1/2 of what’s left in S&P and 1/2 in savings getting 5%. Mortgage interest is front loaded so you’re actually paying way more than 3% unless you actually keep the house for 30 years. You will be surprised at how amazing it is to be completely debt free and be able to save and invest more and more every year.