So, I have a recent influx of cash from a sold home that I shared with my sibs.

[OAITW r.2.0]

I'm 68 and have 100K on my mortgage. I have enough cash to pay this off. Should I pay off the mortgage (and lose the interest deduction) or invest in higher yield investments? Any thoughts?

[Shellback Squid]

1. you have a interest deduction?

I thought that went away with the new level of personal deduction

[OAITW r.2.0]

11. Mortgage Interest deduction? When did that change?

[progree]

20. It's still around, but the standard deduction was doubled by Trump etc., so

one has to have more itemized deductions than before so that the sum of the itemized deductions exceed the standard deduction threshold and so does one some good.

In 2021 the standard deduction for a single person is $12,550. If one has itemized deductions that sum less than $12,550, then the itemized deductions are worthless. One takes the standard deduction. (For Married Filing Jointly the standard deduction is $25,100).

Ex. 2 - If one has $13,550 of itemized deductions, than one is just $1,000 better off deduction-wise to itemize deductions instead of taking the $12,550 standard deduction.

The personal and dependent exemptions were eliminated, but those have no relationship or interaction effects with mortgage interest or other deductions.

[lapfog_1]

2. call up a financial adviser

fiduciary... and a tax accountant.

[brush]

3. Invest it. Keep the mortgage tax deduction.

[iwillalwayswonderwhy]

4. I can't advise you on all of it, but

If it is an inheritance, do spend a bit on something tangible to remember your relative by. A piece of artwork or something you can point to. I bought a piano in honor of my grandfather and I think about him when I play it.

Otherwise, the money just gets absorbed and vanishes.

[crud]

5. Very cool idea!

[OAITW r.2.0]

7. Well, I have all of their artwork on my walls and their Oriental Rugs...

They would feel at home in my place, IMHO.

[iwillalwayswonderwhy]

15. That's great

I’m glad you have tangible things you can see everyday. It’s important.

[OAITW r.2.0]

16. Continuity, I think.

Tough to sell....a place 400 ft off the Atlantic Ocean in Southern ME. But, it was the right thing to do with my sibs.

[jpak]

6. Pay it off

I bought my house with cash from my IRA

I have no debt to anyone

I can sleep at night - no one can take it away from me.

Best thing evah

Yup

[OAITW r.2.0]

9. I like the idea of owing no one, nothing.

[Deuxcents]

8. Pay off your debts

Mortgage, too, if you can. Being debt free is a wonderful gift this can give you.

[OAITW r.2.0]

26. The only real debt I have is the mortgage.

Did invest in ground management equipment and upgraded my vehicle portfolio.

[Ocelot II]

10. Depends on your tax bracket, interest rate and other circumstances, but

when I got an influx of cash I paid off my mortgage. I was getting close to retirement (I'm retired now) and I didn't want to be making mortgage payments at that time, and anyhow you never know when something might happen financially where it would be nice to have the house paid for. I'm very glad I now have no debts, but you should talk to your finance person, since your situation is likely different from mine.

[padfun]

12. If it's a low interest rate, keep the mortgage

It will be gaining value while you have a loan that is less than inflation. If you're up to it, buy some rental property (and headaches).

Since you are getting on in years (We're almost the same age) go travel. Go to the places where you want to see. The problem with this that many countries are still having covid issues and it might not be the best time to travel around.

I have quite a bit saved, not quite as much as you, and what I do is eat good food, and feed my cats good food.

Use the money to do the things that bring you happiness.

[OAITW r.2.0]

13. I am happy where I am at.

Last edited Thu Nov 11, 2021, 12:23 AM - Edit history (1)

I have 50 acres of property that I am in the process of landscaping. Putting in wood chipped walking trails/cc trails. I will happily live on this property for the rest of my days. I got 50 mile clear views to Sugarloaf/Bigelow and 120 mile views to Mt Washington....and every day is a new perspective. I can sit on my back deck and enjoy every sunset, weather permitting. I ain't stupid.

Made a lot of home improvements on the log home I built in 2000. Solar power back-up. new roofs. Rebuilt the front entrance deck 8' x 50'. Winter - upgrade d/s - add a pool table. Next Spring - paint/stain. Dat's all folks!

[padfun]

14. Then I see no reason not to pay off the mortgage.

You're set for life. It's a nice feeling and will be a good haven if this country goes to shit.

I still have a mortgage but my car is almost paid off. That's like getting a $500 raise.

[OAITW r.2.0]

19. I budget the shit out of my finances.

Every time I've paid down a loan....it's a happy day around here!

[OAITW r.2.0]

18. There was no mortgage.

It was about, how we would use the place going forward. Only 1 sib and her kids used the property to the max. The rest us of, didn't have the same connection.

[Phoenix61]

17. The up side of paying off the house is it's

yours forever. That being said, should you need cash in the future it can be difficult to get a loan if you have stopped working.

[OAITW r.2.0]

21. Sadly, we never own....we use while we are alive, then other stuff happens.

[OAITW r.2.0]

27. Lucky me, I can work until I say, that's it.

Like my working situ. I built a document in Excel that I've used since 2000. A simple Spreadsheet that allows me to record total detail on what we quoted. Shows our GP. but the customer document gets only the stuff I want him to see...the quotation. Sweet.

[jmbar2]

22. Not an advisor, but...

If you pay off the house, make sure that you have adequate cash for any major expenses such as house repairs, dental, etc. etc. If your house payment and interest rate is low, it might be worthwhile to pay "rent" to yourself, and invest the rest.

Warren Buffett has famously said that when he dies, his wife should invest their entire personal wealth in the SPY. It pays $1.42/share quarter in dividends. Not a lot of money. But it has consistently increased in value since inception, and is where all the hedge funds and uber rich park their funds to grow without have to pay attention to it.

There is no higher and safer return in any other investment. Even in a recession, it may dip, but comes right back.

I am a daytrader and am plowing all of my earnings into SPY shares. Haven't been at it all that long, but the rapid growth has been amazing.

Here is a good description.
https://www.investopedia.com/articles/investing/122215/spy-spdr-sp-500-trust-etf.asp

Buy shares in tranches whenever the price dips. It recovers quickly.

[viva la]

23. At 68, you shouldn't be looking at 'higher yield"

My uncle did that. Turned the $200K he got from selling his house when he was 70 into $10K by investing in every "high-flyer" his broker suggested.

I'd pay off the mortgage. How much do you pay every month on it? $1200 maybe? What investment are you going to find that pays you $1200 a month?
And you'll have free housing... and SAFE. There's a wonderful relief knowing you own the house free and clear.

[OAITW r.2.0]

24. Learned my lesson back in 2000.

Fuck those dudes.

My mortagage is $600/mo. Taxes, insurance separately.

[OAITW r.2.0]

28. Very true about your point

"And you'll have free housing... and SAFE. There's a wonderful relief knowing you own the house free and clear."

To gain this financial freedom, I lost some important family history. So....2 sides to the coin.

[Scrivener7]

25. Invest. The S&P made 24% so far this year. Mortgage rates are about 3%.

So it costs you about 3% to make 24% on that money.

And you keep the interest deduction.

[OAITW r.2.0]

30. Yup....I am inclined to agree.

Any suggestions on how to divert funds to that Index? Best platform? I have Acorns, but I am thinking of setting up a 2 track investment vehicle - an S&P money market with some money to play directly in the market, small time.

[Scrivener7]

32. I use Vanguard for an S&P index fund. They also have plenty of other mutual funds and

money markets for parking money when I get skittish.

Their fees are much lower than other companies' fees. Over the long haul, that makes a bigger difference than you would think.

I use a separate account for my "mad money" that I invest directly in stocks. I'm not very good at it, so that account is very small. Most of the brokerage houses are free for transactions these days. Schwab is as good as any.

But keep in mind that everything could change tomorrow, so hold some money safe in case the world's finances blow up one of these days. I've gotten stuck in 87, the late 90s and 2008's crashes. It's heartbreaking.

[OAITW r.2.0]

33. The pain of the late 90's stock bubble killed.

Mainly because I listened to brokerage advice that swapped out big shark losers with my winners.

[Scrivener7]

34. I lost a lot in that. But those crashes can work the other way too. During the late 80s, early 90s

the bottom dropped out of the NYC housing market. People were just walking away from mortgages and apartments were almost free. I picked up a little studio for really nothing. I remember my mortgage was $398 per month! And that apartment just appreciated and appreciated. I sold it and with the equity I bought a much bigger one that I still live in. I recently looked and the little studio is now worth three times what I sold it for, which was 3 times what I bought it for!

[lastlib]

29. The home mortgage interest deduction has always been over-rated, IMHO.....

It's an above-the-line deduction, meaning it only reduces your taxable income, not the tax itself. Paying the interest is, in the words of my grandfather, "buying a dead horse." Reducing your debt builds your bottom line. With yields where they are, I'd come down on the side of paying off the mortgage, especially at age 68.
My opinion, YMMV.

[OAITW r.2.0]

31. But the logic of post 25 makes sense.

100K debt @ 3% (with deduction) and 200K in S&P. Seems like a no brainer.